TaxTMI 
TaxTMI 
2022 (5) TMI 1646
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....d 23.03.2018 in appeal no. 328/16-17 for assessment year 2014-15 passed u/s 250(6) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act) by Commissioner of Income Tax (Appeals)-1, Gurgaon ( hereinafter referred as the Ld. First Appellate Authority or in short Ld. F.A.A), in appeal before it against order dated 05.12.2016 u/s 143(3) of the Act passed by the Assessing, Dy. Commissioner of Income Tax, Circle-2, Gurgaon,( Officer or hereinafter referred to as ' Ld. AO). Assessee has preferred Cross-Objections. 2. The facts in brief are the assessee company was incorporated on 01.03.2012 on the basis of joint venture agreement between a resident company namely M/s. Sysmech Industries LLP and the other non-resident company M/s. Dem....
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.... :- S.No. Share Holder's Name Date of allotment No. of Shares Face value Share Premium Amount Paid 1. Sysmech Industries LLP Regd. Off: Plot no. 1221 sector- 46 gurgaon- 122003 30/05/2013 18/10/2013 16/11/2013 30/12/2013 813246 213222 220260 240934 10 10 10 10 0 30 30 30 81,32,460 85,28,880 88,10,400 96,37,360 Keeping the above discussion into consideration and applicability of section 56(2)(viib) of the Act, the assessee company has received the benefit which is calculated as under :- S.No. Share Holder's Name No. of Shares Allotted Face value Share Premium Amount Paid Share premium 1. Sysmech Industries LLP Regd. 813246 213222 220260 240934 10 10 10 10....
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....fore or at the time of hearing of appeal." 4.1 Assessee in Cross objections has raised following grounds of:- "1. That Ld. AO and subsequently Ld. CIT(A) have erred in law and on facts and circumstances of the case in not appreciating the fact that the valuation of the shares of the assessee is based on the prescribed method (DCF Method) under Rule 11UA (2)(b) by a prescribed expert, i.e., Chartered Accountant, and the same can neither be varied nor disregarded by the Ld. AO for determination of fair market value for the purposes of section 56(2)(viib)." 5. Heard and perused the record. The grounds of appeal and the cross objections arise from same set of facts and law so are taken up together for determination. 5.1 On beh....
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....Rules, 1962 for the reason that the share issued to the resident company was much below the price at which shares were allotted to the non-resident company. The Ld. AO also observed that there was loss in the previous assessment years therefore, the value determined by DCF Method was not correct. 7. It appears that Ld. AO has fallen in error in not considering objectively the facts and circumstances of the case as reflected in the joint ventures agreement between the resident and non-resident entity. This agreement holds the key for reasons why there was difference in valuation of the shares for each one of them. Clause 4.2.1 of the joint ventures agreement provided that initial share capital of the assessee company shall be by contribut....
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....en Hon'ble Supreme Court of India in Duncans Industries Ltd. vs. State of UP, 2000 ECR 19 (SC) which is relied in ITAT Delhi Bench's order in Cinestaan Entertainment Pvt. Ltd. vs. ITO, New Delhi (2019) 106 taxman.com 300, as relied by the Counsel for assessee, has held that question of valuation is basically a question of fact. Thus, where the law by virtue of Section 56(2)(viib) read with Rule 11UA (2)(b) makes the prescribed expert's report admissible in evidence, then without discrediting it on facts, the valuation of shares cannot be rejected. 9.1 Here is a case where the Ld. Assessing Officer has not disputed or questioned the financial, technical and professional credentials of the venturists for entering into the joint ventures ag....