TaxTMI 
TaxTMI 
2023 (9) TMI 1513
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....value of Rs. 370.46 per share determined as per Rule 11UA. 3. Whether on the facts and circumstances of the case, the Ld. CIT(A) is correct on facts and in law in ignoring the applicability of Section 56(2)(x) of the Income Tax Act, 1961 on the transaction of buy back of shares at a price less than its Fair Market Value by holding that provisions of section 56(2)(x) of the Act are not applicable on buy back of shares. 4. Whether on the facts and circumstances of the case, the Ld. CIT(A) is correct on facts and in law in allowing the appeal of the assessee by holding that buy back shares does not fall under the category of acquisition of "Property" as defined in section 56(2)(vii) of the Act, as it results in reduction in capital by ignoring the fact that such reduction of it's share capital would lead to increase in value of per share of the company and thereby enhancing its valuation. 5. Whether on the facts and circumstances of the case, the Ld. CIT(A) is correct in ignoring the fact that at the time of buy back, the shares being bought back actually were in the nature of immovable property. 6. (a) Where on law and facts of the case the ord....
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....visions of section 56(2)(x) of Income Tax Act, 1961 or Rule 11UA of Income Tax Rules 1962 are applicable on the transactions of buyback of its own shares by the appellant company. In fact, applicability of Rule 11UA is consequential to applicability of the provisions of section 56(2)(x) of the Act. The pre- requisite for applicability of Rule 11UA is the applicability of the provisions of section 56(2)(x) of the Act. The provisions of section 56(2)(x) of the Act are as under:- "where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017- (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum: (b) any immovable property,- (A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (B) for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely:-- (i) the amount of fifty thousand rupees, and (ii....
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....e applicable when an assessee acquires any property (as defined above) which is the capital asset of the company. The present case of the appellant is buyback of its own shares. In the transaction of buyback of its own shares, the appellant company does not acquire any "property" leave alone the question of that property to be "capital assets". The transaction of buyback of share results into reduction of share capital of the company and not the acquisition of any "capital Assets". The Hon'ble Delhi Bench of ITAT in the case of DCIT versus TPS Infrastructure Ltd. 2022 (12) TMI 693- ITAT Delhi Vide its decision dated 14/12/2022 has held that provision of section 56(2) (via) are not applicable in respect of buy back of shares as shares bought back are to be extinguished by reducing the paid up capital of the company and that provision of section 56(2) (via) of the Act are applicable only in the cases where the purchased shares become property in the hands of the buyer company and if the shares are of any other company. In the case of Vora Financial Services P. Ltd. v. ACIT 2018 (7) TMI 64 ITA Mumbai the Mumbai bench of ITAT vide its decision dated 29/06....
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....n which the public are substantially interested' who is recipient. Otherwise, the provisions of the aforesaid sections are pari-materia and similarly worded. There is no dispute on this. 9. Identical issue came up for consideration before co-ordinate Benches of Delhi, Mumbai, Hyderabad and Chennai Tribunals. In DCIT Circle-25(2), New Delhi vs. TPS Infrastructure Ltd., the Delhi Tribunal in its order dated 14.12.2022 in ITA No. 6433/Del/2018 reported in 2022(12) TMI 693 followed the order of Mumbai Bench of the Tribunal in the case of M/s Vohra Financial Services Pvt. Ltd. 2018 (7) TMI 64 and held that the provisions of section 56(2)(viia) of the Act are applicable only in the cases where the purchased shares became property in the hands of the buyer company and, if the shares are of any other company. However, in the case under consideration the assessee purchased its own shares under buyback scheme and, as per the submissions made by the Ld. Counsel at the bar, the same has been extinguished by reducing the paid up capital of the assessee company. 10. We observe that, before Chennai Bench of the Tribunal, it was argued by the Ld. Counsel of the assessee in an identical case ....