2022 (12) TMI 693

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....s.5,62,93,450/- made by the AO by applying the provisions of Section 56(2) (viia) of the Income Tax Act, 1961, without appreciating the detailed reasons given in the assessment order." 2. "The Ld.CIT(A) has erred in law and on facts by not treating the buy back of its own shares by the assessee company as "property" in the hand within the meaning of Section 56(2)(viia) of the Income Tax Act, 1961. 3. "The Ld.CIT(A) has erred in law and on facts by ignoring the fact that the buy back of its own shares by the assessee company and subsequently cancelling them under the provisions of the Company Act doesn't exempt it from fulfilling the conditions laid down in Section 56(2)(viia) of the Income Tax Act, 1961. 4. "That ....

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.... 29.06.2018, in ITA No.532/Mum/2018 and, therefore, the appeal of the Revenue may kindly be dismissed. He also drew our attention towards various judgements and orders on the issue and also drew our attention to relevant operative paras 30-32 of the order of the coordinate Bench of ITAT Mumbai in the case M/s Vora Financial Services Pvt. Ltd. vs. ACIT (supra) and submitted that the provisions of section 56(2)(viia) should be applicable only in cases where the recipient of shares become property in the hands of recipient and the shares shall become property of the recipient only if it is 'shares of any other company.' The ld. Counsel also submitted that the assessee in the present case has purchased its own shares under buy-back scheme and t....

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....judicated the issue in favour of the assessee as follows:- "30. We have heard rival contentions on this issue and perused the record. The provisions of sec. 56(2)(viia) reads that "where a firm or a company not being a company in which the public are substantially interested, receives, in any previous year, from any person or persons, on or after the 1st day of June, 2010, any property, being shares of a company not being a company in which the public are substantially interested" The words "firm or a company" "any property, being shares of a company" are important here. In this regard, we may refer to the Memorandum explaining the insertion of Provisions of sec. 56(2)(viia) by the Finance Act, 2010, which reads as under:- ....

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....ic are substantially interested)." 31. A combined reading of the provisions of sec. 56(2)(viia) and the memorandum explaining the provisions would show that the provisions of sec. 56(2)(viia) would be attracted when "a firm or company (not being a company in which public are substantially interested)" receives a "property, being shares in a company (not being a company in which public are substantially interested)". Therefore, it follows the shares should become "property" of recipient company and in that case, it should be shares of any other company and could not be its own shares. Because own shares cannot be become property of the recipient company. 32. Accordingly we are of the view that the provisions of sec. 56(2)(v....