2023 (5) TMI 164

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.... (hereinafter referred to as Act) dated 11.03.2016 by the ld. Income Tax Officer, New Delhi (hereinafter referred to as ld. AO). 2. The ground No. 1 is with regard to challenging the jurisdictional ground on the issuance of notice u/s. 143(2) of the Act. No arguments were advanced by the ld. AR at the time of hearing on this ground. Hence the same is dismissed as not pressed. 3. The grounds no. 2, 3 and 4 raised by the assessee are challenging the addition made in the sum of Rs. 1,75,00,000/- u/s. 56(2)(viib) of the Act. 4. We have heard rival submissions and perused the materials available on record. The assessee is engaged in the business of software development, market research and public opinion polling, business and management....

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....ished the workings of valuation of per share based on 'asset approach' as under:- Particulars Amounts Fixed Assets Rs. 19,72,000/- Investment in properties Rs. 79,75,000/- Investment in properties Rs. 61,71,178/- Loan and Advance Rs. 18,97,482/- Cash in hand Rs. 1,11,125/- Cash at bank Rs. 81,845/- Total (A) Rs. 1,82,08,630/- Short Term provision (B) Rs. 18,185/- Net Assets (A) - (B) = (C) Rs. 1,81,90,445/- Fair market value of unquoted equity shares = 1,81,90,445/- divided by 8,67,000/- = 20.98 per share. The assessee submitted that using Net Asset Value (NAV) Method was in accordance with Rule 11UA of the Income Tax Rules which is the prescribed method for the purpose of secti....

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....tal (L) Rs. 62,18,185/- Fair Market Value of unquoted equity shares = (Rs. 1,82,08,630 (-) 18,185) / 8670000 * 10 = 13.82/- say 14/- Difference where share premium is taken in excess of FMV = Rs. 17.5 -14 = 3.50 per share. 8. Accordingly, the ld. AO determined the fair market value of the share of the assessee company @Rs.14 as against the issue price of 17.50 per share. Hence the excess portion of Rs. 3.50 per share * 50 lakhs shares worked out to 1,75,00,000/- which was sought to be added by the ld. AO as income u/s. 56(2)(viib) of the Act. This action of the ld. AO was upheld by the Ld. CIT(A). 9. From the aforesaid valuation method carried out by the ld. AO, we find that the ld. AO had under 'liability approach' ignored s....