TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 1201
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.... the unquoted shares. 2. Whether in the facts and circumstances of the case and in law, the L. CIT (A) erred in considering other various aspects as per the valuation standard as per the Companies Act, 2013, Valuation Standard issued by ICAI, other factors like discount on marketability, purpose of valuation & availability of willing buyers, realisability of Immovable property and margin of safety as they are not applicable for determining the FMV of unquoted shares for the purpose of section 56(2)(x) & 50CA in accordance with the Rule 11U & 11UA of Income Tax Rules, 1962. 3. Whether in the facts and circumstances of the case and in law, the Ld. CIT (A) erred in accepting the second valuation report furnished by assessee for the purpose of land situated at Survey No. 79, 82, 63 & 86 Village-Yarer valuing at Rs. 7,44,67,966/- and not accepting the value of said land as determined by AO at Rs. 9,84,25,980/- in accordance with the Rule 16(c) of Stamp Duty Act based on first valuation report furnished by assessee. 4. Whether in the facts and circumstances of the case and in law, the Ld. CIT (A) erred in accepting the second valuation report furnished by assessee....
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....Act, which has an evidentiary value until not proven otherwise along with supporting documentary evidences. 11. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the disallowance made of Rs. 1,49,910/- out of agricultural income only on the basis of land holding ignoring the fact that assessee could not produce any supporting documentary evidences with respect to the agricultural activities carried out by him and subsequent sale of agricultural produces. 12. The appellant reserve the right to alter, amend and add & modify any grounds of appeal during the Appellate Proceedings." 3. The facts of the case, in brief, are that the assessee is an individual deriving income from salary, capital gain, income from other sources and also income as partner in partnership firm. The assessee filed return of income on 14.02.2022 declaring total income of Rs. 2,64,28,720/-. A search u/s 132 of the IT Act was carried out in the case of the assessee on 23.09.2021. Notices u/s 142(1) were issued and assessee furnished information during the course of assessment proceedings. After considering the reply of the assessee, the Assessing Off....
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....Meta Rolls Ispat Private Ltd (MIPL). During the year under consideration, the appellant has transferred the equity shares of MIPL to Smt Radhika Birla. The appellant has submitted that while estimating the FMV of equity shares, various aspects need to be considered as per the valuation standards accepted under the Companies Act, valuation standards issued by the ICAI which are in line with international valuation standards, factors like- lack of discount on marketability, purpose of valuation and availability of willing buyers, realisability of immovable properties, margin of safety, WDV of depreciable assets as per the Income Tax Act etc. The Ld. AO has determined the fair market value (FMV) of the shares as per rule 11UA and rejected the contentions of the appellant as under. 5.2.1 On the basis of the submission made by the appellant the AO observed that one of the immovable properties which belongs to the appellant is situated at Survey No. 79, 82, 83, and 86 of Yerur Village (adjacent to Tadali MIDC). The Ld. AO has not accepted the valuation determined by the appellant. The value determined by the appellant based on guideline rate is Rs. 7,44,67,966/- whereas the ....
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....lue worked out by Ld. AO and Appellant divided by / Rs. 2,34,67,670/- paid up capital * Rs. 10/- face value of equity shares. 5.2.3 Further, in the valuation report of the valuer Shri Vishal Holani, CA, he has deducted the provision for gratuity and considered as liability which is payable in near future as most of the employees of the appellant company have submitted that they have their continuous service of more than 5 years and eligible for the gratuity entitlement, thus provision for gratuity is a certain liability, and the shareholders/members of the company are bound to be paid the gratuity. Thus, it is accounted as per the accounting standards. It is to be noted that the gratuity is mandatorily to be paid to those employees who have completed their service as per the rules and regulations of receipt of gratuity and payment is required to be made to the employees once they are retired. Most of the employees have crossed the requisite limit of service and are eligible for gratuity. On perusal of the same, it is seen that such provision of gratuity is made based on some scientific approach and the same has been derived by analyzing past data. Therefore, liability ....
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....is WDV as per the Income Tax Act. In the present case the book value as per books is higher than the WDV as per the Income Tax Act. Further as per the section 50C of the Income Tax Act, the capital gain is calculated by considering the WDV as per Income Tax Act. The reason behind the difference in these two mechanisms for arriving at the fair valuation is the question of law. However, the new shareholders might lose the benefit of tax saving on depreciation. Consequently, this element to determine the valuation of the unquoted equity shares is to be considered in a broader way. 5.2.6 Further while determining the deeming income under the Income Tax Act, various concepts are there such as Safe Harbor Rule, Section 50C etc. for dealing with the practical difficulties and uncertainties. However, the section 50CA is silent on such deeming fiction. The same issue of Fair valuation is dealt with in section 50C where the Income Tax Act allows 10% of the difference between stamp duty value and the sales consideration in case of Immovable property. This rate of variation is increased from 5% to 10% in the Finance Act 2020 keeping in mind the practical difficulties and uncertainties while....
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....lity of shares needs to be applied. Accordingly, as discussed above the fair market value of equity shares of MIPL comes to Rs. 544 and rounded to Rs. 540. Thus, the estimated addition under section 50CA or 56(2)(x) of the Act needs to be restricted. Addition u/s 50CA of the Act of Rs. 12,92,000/- on account of sale of equity shares of MIPL (i.e. 9500 equity shares * Rs. 136 (Rs. 661- Rs. 525). The appellant has sold the equity shares below the FMV as discussed above and the FMV worked out is Rs. 540/-). Thus, the addition is restricted to Rs. 1,42,000/- [i.e. 9500*(Rs. 540/- i.e. FMV determined as discussed above- Rs. 525/- i.e. selling price of shares)]." 8. From perusal of the above order of Ld. CIT(A), we find that Ld. CIT (A) has considered various factors such as different rules for valuation of Industrial NA plots based on criteria like open area, amenity area & parking area. Further, he has also given a finding that the land situated at Survey No. 79, 82, 83 & 86 of Yerur village was an undeveloped industrial NA Land & the said land was a barren Land. Even as per the Stamp Duty Authority Rules, the said land is not demarca....
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....h the description of Jalna property, sold by the assessee. We find that Ld. CIT (A) has deleted the above addition by observing as under :- "6.2 I have considered the submission of the appellant and the facts of the case and the seized documents. It is observed that the seized documents do not contain anything to show that the appellant has received on money on sale of residential house of Jalna. The appellant has raised various points as stated above. From the seized documents, it is clear that the appellant has not received any on money on sale of residential house at Jalna, as the area of residential house at Jalna is different and property mentioned on seized documents is written as Vimannagar, the said area is in Pune and not in Jalna. Thus, addition made on probability and presumption on the basis of dumb documents is not sustainable. The AO has not been able to prove that the appellant has received on money on sale of residential house. Therefore, the impugned addition of Rs. 20,00,000/- is hereby, deleted. The Ground No. 6 of the appeal is therefore, ALLOWED." 12. From a perusal of the above order of Ld. CIT (A), we find that while deleting the above addition ....
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....e the Ld. AO as per the assessment order is tabulated below to analyze the exact position of unaccounted expenses for construction of house. xxxxxxxx From the above table, it is clear that the Ld. AO has rejected the summary of cash flow submitted by the appellant without any valid grounds i.e. when the appellant has offered commission income of Rs. 3,99,832/- in the ITR why the Ld. Assessing Officer has reworked the same to Rs. 1,50,000/- is not clear. The appellant has earned agricultural income of Rs. 2,49,910/-. The Ld. AO has reworked the same to Rs. 1,00,000/- arbitrarily. Moreover the Ld. AO also made further addition of Rs. 1,49,910/- on account of unexplained agricultural income. This amounts to double addition of the same income. Further the Ld. AO has increased drawings by Rs. 4,75,000/- just by stating that the social status of the Appellant is high and inflation nowadays is low. Thus, the AO increased drawings arbitrarily without any corroborative evidence. The reworking of cash flow by the Ld. AO is purely on assumption and guesswork. Further, the Ld. AO miscalculated the addition of Rs. 23,10,817/-. It clearly indicates that t....
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.... Ld. CIT (A) on this issue. Accordingly, the same is upheld and the ground nos. 8 and 9 raised by the Revenue are dismissed. 17. In ground no. 10, the Revenue has challenged the deletion of addition of Rs. 1,00,000/- made on account of unexplained cash expenditure u/s 69C which was admitted in the statement recorded u/s 132(4) of the IT Act. 17.1 In this regard, Ld. DR appearing from the side of the Revenue submitted before us that during the search proceedings statement of assessee was recorded on oath u/s 132(4) of the IT Act and he himself has accepted that Rs. 1,00,000/- was paid to Shri Sandeep for purchase of items for the house and Ld. CIT (A) erred in deleting the same. 18. Ld. AR appearing from the side of the assessee reiterated the submission as made before Ld. CIT (A) and relied on the order passed by Ld. CIT (A) in this regard and requested to confirm the same. 19. We have heard Ld. Counsel from both the sides and perused the material available on record including paper book furnished by the assessee. We find that Ld. CIT (A) deleted the addition of Rs. 1,00,000/- by observing as under :- "8.2 I have considered the submission of the appellant and t....