TaxTMI 
TaxTMI 
2022 (11) TMI 1362
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....e entity. For the assessment year under dispute, assessee filed its return of income on 11.10.2016 declaring nil income. Assessee's case was selected for limited scrutiny to examine large share premium received during the year. In course of assessment proceeding, the Assessing Officer noticed that the assessee, in the year under consideration, had allotted 10,000 equity shares having face value of Rs. 100 per share at a cost of Rs. 1,500/- per share, including premium of Rs. 1,400/- per share, to its holding company M/s. Puran Associates Pvt. Ltd. Noticing this fact, the Assessing Officer called upon the assessee to justify the share premium of Rs. 1,400/- per share and to further explain, why the share premium received being in excess of t....
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.... year, the Assessing Officer made addition of an amount of Rs. 41,70,000/- under section 56(2)(viib) of the Act. Though, the assessee contested the aforesaid addition before learned Commissioner (Appeals), however, the addition was sustained. 4. Before me, learned counsel appearing for the assessee submitted that section 56(2)(viib) of the Act is an anti-abuse provision introduced by the legislature, keeping in mind the devices adopted by public at large to convert unaccounted money as accounted money. He submitted, if the transaction undertaken is not meant for the purpose of tax avoidance or converting unaccounted money to accounted money, then the provision cannot be attracted to make any addition or disallowance. In this context, learn....
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....e assessee, the major asset is a land at Salarpur Brijwasan admeasuring 5.35 acres. He submitted, the registered valuer applying Net Value Asset method as prescribed in section 56(2)(viib) of the Act has determined the value of the land at Rs. 26,75,00,000/- and on that basis he has determined the FMV of the shares. He submitted, while undertaking similar transaction of allotment of shares to the holding company in financial year 2013-14 corresponding to assessment year 2014-15, another registered valuer has determined the fair market value of the very same land at Rs. 42,00,00,000/- by applying the circle rate prescribed by State Government for stamp duty purpose. He submitted, while dealing with the issue of identical addition made in ass....
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....see, on a careful analysis of the speech of Hon'ble Finance Minister while introducing Finance Bill, 2012, section 56(2)(viib) is an antiabuse provision introduced to the statute to check and regulate introduction of unaccounted money through share premium. 10. In the facts of the present appeal, the transaction relating to allotment of shares is between a holding company and its wholly owned subsidiary. Therefore, no outsider is benefited through such transaction. When the assessee-company has been promoted by the holding company, infusion of additional fund through share premium can only benefit either the holding company or the subsidiary and no third party is involved. In such a scenario, logically, no addition can be made under sectio....
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....ot be accepted. The reasoning of learned Commissioner (Appeals) while rejecting the valuation of land, in my view, is unacceptable when the fact that the circle rate of the land is much higher remains uncontroverted. 12. On a reading of Explanation to section 56(2)(viib) of the Act, it is very much clear that the FMV of shares shall be either the value determined under rule 11UA or based on the value of its assets, including, intangible assets on the date of issue of shares, whichever is higher. So the assessee can determine the FMV by adopting either of the two methods as provided under the Statute. The expression "substantiated by the company to the satisfaction of the Assessing Officer" as used in clause (a)(ii) of Explanation to sectio....