TaxTMI 
TaxTMI 
2024 (9) TMI 785
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....hat the order dt. 30.03.2019 u/s 263 passed by the Id. PCIT Delhi-06 New Delhi, is bad from different factual & legal angles. 2. That the order dt. 30.03.2019 u/s 263 passed by the Id PCIT Delhi-06 New Delhi, in pursuance to his Show Cause Notice dt. 06.03.2019, is liable to be quashed because the said Show Cause Notice was the outcome of the incorrect appreciation of facts. The observation of the Id PCIT Delhi-06 New Delhi that the AO had passed the assessment order, without taking into consideration the aspect of valuation of shares for the purposes of justification of charging of premium, is not correct. As a matter of fact, during the course of assessment proceedings, the Id AO had taken into consideration the aspect o....
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....) was not at all called for in the hands of the assessee." 3. Brief facts of the case are that, the assessee filed its ITR declaring the income at Rs. 86,84,960/- for the Assessment Year 2014-15. The case was selected for limited scrutiny through CASS and the reason for the limited scrutiny was "Large Share Premium received during the year (verify applicability of Section 56(2) (viib)" and the assessment was completed on 18/11/2016 u/s 143(3) of the Act. 4. The Ld. PCIT called for the assessment record, examined and found that the assessment order passed u/s 143 (3) of the Act dated 18/11/2016 was prima facie found to be erroneous and also prejudicial to the interest of revenue, accordingly, issued show cause notice u/s 263 of the Act....
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....in the absence of the Valuation Report, it has been found that the A.O. has not made proper enquiries and omitted to take any view, therefore, the assessment order passed u/s 143(3) of the Act is erroneous and failed to make addition of Rs. 1,18,93,440/-, thus the Ld. PCIT has rightly invoked the provisions of Section 263 of the Act which requires no interference. 7. We have heard both the parties and perused the material available on record. 8. It is the case of the assessee that the assessee has produced the share valuation report before the A.O. and the Ld. A.O. after verifying the records not objected for the method adopted by the assessee. The Ld. PCIT invoked provision of Section 263 of the Act on the ground that the valuation r....
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....hares to the family members of our directors. We may clarify here that when we had decided to invite share subscription, we had referred the matter to an independent Chartered Accountant to work out the fair market value at that point of time. The said Chartered Accountant had carried out such exercise, while taking into consideration our balance sheet as on 30.06.2013. Thereafter, the said Chartered Accountant had worked out the fair market value of each share of our company at Rs. 319.63 and given his report. On the basis of such report, we had proposed to charge premium of Rs. 310/- per share from the prospective share subscribers. As & when the share subscribers had agreed to subscribe our shares on premium of Rs. 310/- per share, we ha....
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....n for the A.O. not to doubt the quantum of premium charged by us @ Rs. 310/- per share on allotment of shares to the family members. For your ready reference, copy of the said Valuation Report is enclosed herewith. We state that when we had decided to allot shares on premium, we had referred the matter to an independent Chartered Accountant to work out the fair market value of our shares. The said Chartered Accountant had carried out such exercise while taking into consideration our balance sheet as on 30.06.2013. Thereafter, the said Chartered Accountant had worked out the fair market value of each share of our company and given his report dt. 30.09.2013. Thereafter, we had proposed to charge premium of Rs. 310/- per share from th....
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....h is not on the other method i.e. discounted free cash flow method. The A.O. had got himself satisfied with the premium of Rs. 310 per share charged by the Assessee on allotment of shares to family members and the entire amount was received by the Assessee in the month of October, 2013 and also allotment was done thereafter. Therefore, there was no reason for the A.O. to doubt the quantum of premium charge at Rs. 310 per share on allotment of share to family members. The Assessee has also produced the Valuation Report before the Ld. PCIT. The Ld. PCIT neither verified the said Valuation Report produced by the Assessee nor found any fault in the method/manner adopted in the Valuation Report and without giving any reasoning set aside the asse....