TaxTMI 
TaxTMI 
2025 (1) TMI 1335
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....ssing Officer [AO] u/s. 143(3) of the Act on 30-12-2018. The registry has noted a delay of 40 days in the appeal, which stands condoned. The grounds raised by revenue read as under: - 1. The order of the Ld. CIT(A) in ITA No. ITBA/NFAC/S/250/202324/1059799418(1) dated 17.01.2024 for the AY 2016-17 is erroneous in law, facts and circumstances of the case. 2. The Ld. CIT(A) erred in holding that the addition made by the AO u/s 56(2)(viib) of Rs. 37.21 Crores by treating it as excess share premium is not correct, without appreciating that: a. the assessee company had received a loan of Rs. 37.23 Crores from one of the shareholders which was required to be reduced from the total value of assets while determining the value per share. b. ....
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....sessment Proceedings 3.1 The assessee being resident corporate assessee is stated to be engaged as real estate developer. It transpired that during this year (on 24-03-2016), the assessee issued 10060 equity shares of face value of Rs. 10/- each to one of its promoters i.e., Smt. Sasikala Raghupati at a premium of Rs. 36,990/- per share. The assessee submitted that the shares were allotted as per the fair market value (FMV) computed in accordance with Sec.56(2)(viib) read with Rule 11U / 11UA. In support of the same, the assessee furnished valuation report dated 24-02-2016 issued by a Chartered Accountant firm i.e., M/s Raghu & Gopal along with audited financial accounts. It also transpired that this money was not introduced in this year b....
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....s any consideration for issue of shares that exceeds the face value of such shares, such excess shall be deemed to be the income of the company. The explanation (a) provides that the FMV of the shares shall be higher of the value as determined in accordance with prescribed method or as may be substantiated by the company to the satisfaction of the Ld. AO based on the valuation of its assets on the date of issue of shares. Appellate Proceedings 4.1 The assessee assailed the addition before first appellate authority. It was submitted that entire shareholding was held by the mother and daughter. The conversion of loan into equity could not be brought within the scope of Sec. 56(2)(viib). The assessee referred to the decision of Tribunal in t....
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.... consideration received by the assessee against issue of shares and FMV of such shares as adopted by Ld. AO. The consideration amount exceeding the FMV would be added to total income of the assessee u/s 56(2)(viib). If the consideration does not exceed FMV, no addition could be made. Aggrieved, the revenue is in further appeal before us. Our findings and Adjudication 5. From the facts, it emerges that the assessee has received promoter loan of Rs. 37.18 Crores from Mrs. Sasikala Raghupati during the period from 10-01-2014 to 31-03-2014. A small loan of Rs. 15 Lacs has been received subsequently. Out of this, amount of Rs. 37.22 Crores has been converted into equity share capital on 24-03-2016 which include share premium of Rs. 37.21 Crore....
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....ous since the assessee had not carried out any business activities in subsequent there years viz. AYs 2017-18 to 2019- 20 whereas this fact was known to the valuer as on the date of the valuation i.e., on 27-07-2020. Therefore, Ld. CIT-DR assailed both the valuations. 7. We find that in terms of the extant provisions of Sec.56(2)(viib), it was the onus of the assessee to justify the valuation of shares. The report furnished by the assessee during regular assessment proceedings has not considered the loan liabilities and therefore, the same is clearly flawed. The Ld. CIT(A) directed Ld. AO to carry out valuation from two valuers, at the option of the assessee and restricted the scope of enquiry which cannot be held to be justified. No optio....