2024 (7) TMI 1231

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....12.2018 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as 'the Act'), by the ACIT, Circle 25(2), Delhi, (hereinafter referred to as the Ld. AO). 2. The assessee's return of loss was selected for limited scrutiny and the AO has examined the issue of equity and preferential shares by the assessee to the residents of India for the purpose of application of section 56(2)(viib) of the Act. The assessee has justified the share application money received from M/s Pandra Trust Scheme and M/s Advantage Incubators on the basis of valuation report from the Chartered Accountant who had used DCF Method to determine the fair market value of the shares of the company. As per the valuation report, the fair market value was Rs. 29,01....

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.... basis of intangible assets which in case of the assessee was in the form of its own developed software for which international patent was also applied. It was also submitted to the CIT(A) that the discretion is with the assessee to choose between the net asset method or DCF Method as per sub-rule (2) of Rule 11 UA of the Act and the AO cannot substitute his choice. It was also submitted that the assessee had issued shares to the non-resident investors on the same price on which shares were issued to Indian investors and M/s Pandra Trust Scheme and M/s Advantage Incubators were issued shares as seed funding. In this context, the assessee had provided the list of six non-residents to whom shares were allotted on 21.11.2015 i.e., after 2 mont....

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.... Ltd. vs. ITO, ITA No.8113/Del/2018, order dated 23.05.2019. The ld. AR has also relied the Notification of M/o Commerce & Industries, Department of Industrial Policy and Promotion dated 11.04.2018 with regard to the benefits extended to start ups including for the purpose of section 56(2)(viib) of the Act. We consider it convenient here itself to reproduce the relevant part:- "Approval for the purposes of clause (viib) of sub-section (2) of section 56 of the Act 4. (1) A Startup being a private limited company and in conformity with the definition as per definition stipulated at Para 1(a) shall be eligible to apply for approval for the purposes of clause (viib) of sub-section (2) of section 56 of the Act, if the following....

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....reproduced hereinbelow for convenience:- "New Delhi, the 14th June, 2016 S.O.1160 - In exercise of the powers conferred by the clause (ii) of the proviso to clause (viib) of sub-section (2) of section 56 of the Income-tax Act 1961 (43 of 1961), the Central Government, hereby notifies the 'classes of persons' for the purposes of the said clause as being the 'person' defined under sub-section (31) of section 2 of the said Act, being resident, who make any consideration exceeding the face value for issues of shares of a 'startup' company. Explanation - For the purposes of this notification, "startup" shall mean a company in which the public are not substantially interested and which fulfills the con....