TaxTMI 
TaxTMI 
2022 (8) TMI 786
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.... Sole issue in the present appeal relates to addition made to the income of the assessee on account of share premium received on issue of shares which were not justified to be at fair market value as per the provisions of section 56(2)(viib) of the Act, and the addition made in this regard amounted to Rs.45,48,583/- ,which after adjusting brought-forward business loss and unabsorbed depreciation resulted in NIL assessed income. The assessee was accordingly subjected to tax on its book profits as per the provision of section 115JB of the Act and adjustment to the book profit was also made on account of addition made as above under 56(2)(viib) of the Act. It was contended that this was solitary issue arising in the present appeal and the grou....
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....es issued. The ld.counsel for the assessee contended that Revenue authorities rejected this valuation by simply stating that it was not as per the Rule 11U and 11UA of the IT Rules and in this regard he drew our attention to the finding of the ld.CIT(A) at para 2.3 of his order as under: "2.3. I have carefully considered the facts of the case, assessment order and submission of the appellant. The AO has made the addition of Rs.45,48,583/- invoking the provisions of section 56(2)(viib). Appellant company has issued 25,19,393 equity share at a face value of Rs.10/- with a premium of Rs.6/- on 08/09/2014 and 19,28,414 equity share at a premium of Rs.9/- on 31/03/2015. The appellant was asked to justify the share premium in view of sec....
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....ant ground of appeal is accordingly dismissed." 5. The ld.counsel for the assessee contended that the AO calculated fair market value of the shares as prescribed under Rule 11UA and determined allowable share premium at Rs.5/- and Rs.8/- for two blocks of shares allotted by the assessee on 8.9.2014 and 31.3.2015 respectively as against premium of Rs.6/- and Rs.9/- respectively charged by the assessee. Accordingly, excess premium as per the AO charged by the assessee at Rs.1/- per share in the case of both set of allotments was treated as not allowable, to be added to the income of the assessee under section 56(2)(viib) of the Act amounting to Rs.45,48,583/-. The relevant details with respect to the above are reproduced at page no1.2 of t....
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.... Explanation.-For the purposes of this clause,- (a) the fair market value of the shares shall be the value- (i) as may be determined in accordance with such method as may be prescribed68; or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, whichever is higher; **** ***** ****** 7. The ld.counsel for the assessee drew our attention to various decisions of the ITAT to the effect that the Revenue authorities could not force the as....