TaxTMI 
TaxTMI 
2024 (2) TMI 538
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....sessment observed that the assessee company in the year under consideration has allotted 9223 number of equity shares of Rs. 10/- each at a premium of Rs. 4435.76/- per share amounting to Rs. 4,09,11,014/- to M/s. SunEdison Solar Power India Pvt. Ltd. which is an existing shareholder and 100% holdings company of the assessee. The Assessing Officer disputed the amount of share premium received per share on the ground that the premium received exceeded the Fair Market Value (FMV) of such shares contemplated under Section 56(2)(viib) r.w. Rule 11UA of the Income Tax Rules, 1962. The AO rejected the DCF Method adopted by the assessee and adopted Net Asset Liability Method described in Rule 11UA of the Income Tax Rules, 1962 to ascertain the value of shares and thereby concluded that no premium of shares allotted is justified. An amount of Rs. 4,09,11,014/- was thus added as deemed income under Section 56(2)(viib) of the Act to the loss returned by the assessee. 4. Aggrieved, the assessee preferred appeal before the CIT(A). The CIT(A) took note of the factual matrix as submitted by the assessee and the position of law prevailing in this regard. The CIT(A) found merit in the plea of the....
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....bmitted all these details along with the details of the project installed by the appellant. The main arguments of the appellant to defend the valuation of shares as per the valuation report are as under: i. The valuer has considered various factors including the feasibility report while doing the valuation; ii. The valuer has considered Plant Load Factor (PLF) of 18.61% as against 19% specified by CERC (Central Electricity Regulatory Commission) in its publication, a copy of which was sought from the AR; iii. The valuer has considered the price per unit at Rs. 17.91 which is fixed for all years as per the power purchase agreement(PPA) entered with DISCOM for 25 years whereas the AO has mentioned in the assessment order that the price per unit of solar power is continuously going down, which is not applicable to the applicant in view of the PPA (Para 3.7 of the assessment order); iv. The tax rate has been taken at 20.0075% after considering the fact that the appellant is eligible for deduction u/s. 80IA of the Act and is also eligible for MAT Credit; v. Since the shares have been issued to the holding company, there was no rationale to charge excess premium as the appellan....
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....ialize in subsequent year due to different business reasons such as delay in the project. The assessee has shown that there is a delay in the project and subsequently the LLC company has started earning the sum. If that be the case that if there is a variation in the discounted cash flow shown by the assessee with actual result in subsequent years, then the basic fallacy will arise that discounted future cash flow should be equal to the actual cash flow of the assessee. According to us it will result in absurdity. However it can also not be subscribed to the view that if there are wide variations in subsequent years with actual results compared with the projected cash fow submitted by the assessee, then in such situation if the projected cash floor is accepted then provisions of section 56(2)(vib) will become redundant. Therefore an objective evaluation of the valuation report submitted by the assessee deserves to be carried out. Further, the valuation report is prepared by the professionals such as chartered accountant, or merchant bankers for which their respective professional bodies have laid down specific disclosure requirements. Those disclosure requirements are binding on th....
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....ee is a loss making company. The ld. DR submitted that once the case of the assessee falls within the four corners of a deeming provision, such provision requires to be strictly construed and there is no scope for deviating from legal position enunciated in the provisions of the Act. The ld. DR thus sought cancellation of the order of the CIT(A) and restoration of the additions made by the Assessing Officer. 7. The ld. counsel for the assessee, on the other hand, submitted at the outset that the valuation of shares as per DCF Method has backed by valuation report. Besides, the shares have allotted to the holdingcompany i.e., existing shareholders and not to an outsider and therefore, it does not make any difference to a shareholder in bringing money to its subsidiary company at premium or at cost when seen holistically. A reference was made to the decision rendered by the Co-ordinate Bench of Tribunal in the case of BLP Vayu (Projects-I) Pvt. Ltd. vs. Pr.CIT (20213) 151 taxmann.com 47 wherein it has been observed that such deeming fiction seeking to charge unjustified premium as taxable is wholly inapplicable for transactions between holding and its subsidiary company where no inc....