TaxTMI 
TaxTMI 
2022 (11) TMI 581
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.... "Ground No. 1 On the facts and circumstances of the case and in law the learned CIT (A) erred in Confirming the addition an account of investment in share API INDUSTRIES PVT LTD. Of Rs 5000000/- A U/S 69 of the Income tax Act without appreciating the fact that. a. The Appellant has Transfered Rs 50 lakhs in the assessment year 2012-13 from his account Ground No. 2 On the facts and circumstances of the case and in law the learned CIT (A) erred in on share investment of API Industries Pvt Ltd. Confirming the addition of Rs. 8195000/- u/s 56(2)(VII)(C)(II) as per rule 11UA of IT rules without appreciating the facts That a. Due to losses and closure of business the valuation of share @ 26.3....
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.... the AO computed the FMV of equity shares at Rs. 26.39/- per share, and added the difference of Rs. 16.39/- per equity share between the FMV of shares at Rs. 26.39 per equity share and face value of equity share of Rs. 10/- in the hands of the assessee under section 56(2)(vii)(c)(2) of the Act. Accordingly, a sum of Rs. 81,95,000/- was added in the hands of the assessee under section 56 of the Act. 4. In appeal, Ld. CIT(Appeals) confirmed the additions made by the AO with the following: "It is seen that the AO noted that in Balance Sheet of API Industries Ltd, it was shown that the appellant had been allotted 5,00,000 equity shares of face value of Rs. 10/- each for full consideration of Rs. 50,00,000/-. The AO further noted tha....
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....the appellant was allotted 5,00,000 equity shares of API Industries Ltd at face value of Rs. 10/-. The AO noted that Rs, 10 /- per share was not as per market value of share as provided under Rule 11LJA of the Rules, The AO worked out the market value at Rs, 26,39 per share as per valuation method provided in Rule 11 UA of the Rules and worked out deemed gift u/s 56(2)(vii)(c )(2) of the Act at Rs. 81,95,000/- and added the same. During appeal proceedings, the appellant submitted that 'the AO has wrongly worked out share price at Rs. 26.39 and that it should be Rs. 16.40 per share. The appellant further submitted that after taking into consideration share application money of Rs. 2.5. cr., the share value works out to Rs, 11,85....
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....ection 69 of the Act: 6. With respect to this ground of appeal, the counsel for the assessee drew our attention to page 8 of the paper book (Ledger account of API industries Private Ltd) and submitted that the said Ledger account clearly demonstrates that the assessee had transferred a sum of Rs. 50 lakhs as share application money towards allotment of shares in the immediately previous financial year i.e. financial year 2011-2 relevant assessment year 2012-13. The Ld. Counsel for the assessee submitted that perusal of the Ledger account of API industries Private Limited demonstrates that the sum of Rs. 50 lakhs was transferred by way of account payee cheque by the assessee to "API industries Ltd share application money account on" 31-03....
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....ar 2011-12 is yet to be verified. Therefore, it cannot be concluded that a transaction in question pertains to financial year 2011-12, and not the impugned assessment year under consideration. Ground No.2: addition of Rs. 81,95,000/- under section 56 of the Act as per Rule 11UA of the Income Tax Rules: 8. The counsel for the assessee submitted firstly that there is an arithmetical error committed by the AO while computing the market value of shares of API industries Private Limited at Rs. 26.39 per share. The said error was brought to the notice of Ld. CIT(Appeals), who completely ignored the assessee's submission in this regard in the appellate order. The counsel for the assessee also submitted that the AO erred in facts and in law i....