TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 759
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....atter is taken for adjudication. 3. The assessee has taken the following grounds of appeal:- "1. The Learned CIT (A)-54, Mumbai erred in confirming the action of the Learned Assessing officer in making an addition of Rs. 1,40,00,000/- on account of alleged difference in fair market value and actual consideration received for allotment of equity shares without appreciating the facts of the case in the right perspective. 2. The Learned CIT (A)-54, Mumbai erred in confirming the action taken by the Learned Assessing officer in disallowing interest incurred on late payment of TDS of Rs. 1,53,531/- without appreciating the facts of the case in the right perspective. 3. The Appellant reserve the right to amend, alter on add to the grounds of appeal. 4.The ground of appeal is without prejudice to the other." 4. The brief facts of the case are that the assessment in the case of the assessee was originally completed under section 143(3) of the Act vide order dated 31.03.2016. Subsequently, the Ld. Principal Commissioner of Income Tax (Pr. CIT), invoking the provisions of section 263 of the Act, revised the said assessment order passed by the Ld. AO under section 143(3), on the gro....
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....has issued 10,00.000 shares at a price of Rs. 200/per share to Chinar Commercial Pvt. Ltd. and Chinar Fervest Pvt Ltd. for a total consideration of Rs. 20 Crores. The value per share as per the valuation report dated was Rs. 186/ It is submitted that the valuation of Rs. 186per share wat worked out on the basis of book value of the assets as on 31.03.2013 without considering the intrinsic value or the market value of the assets of the Appellant. It is submitted that as per the categorical provision contained in explanation (a) of section 56(2)(viib), the fair market value of the shares shall be the value as determined in accordance with such method as may be prescribed (rule 11UA) or the value as substantiated to the satisfaction of the AO, based on the value. on the date of issue of shares, of its assets, including intangible assets being goodwill etc whichever is higher. In the course of original assessment proceedings, the Appellant explained the valuation of shares on the basis of value of various noncurrent investment held by the Appellant which has been taken on its books value rather than its intrinsic value while determining the FMV of shares, the value determined at Rs. 18....
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....s and after negotiations issued the shares at the value which was reasonable considering the overall facts and circumstance existed at the time of the issue. Without prejudice to the above submissions, it is submitted that though the provisions of Clause (viib) of sub section (2) of section 56 were inserted vide Finance Act, 2012 w.e.f 01.04.2013, it is most humbly submitted that out of the total impugned amount of share application money. 50% of the amount i.e. Rs. 10 crores was received from Chinar Commerce Pvt. Ltd. before 01.04.2012 i.e, the amount under question to this extent was received by the Appellant at the time when the provisions of this section were not in force. For this reason also no addition under section 56(2)(viib) is warranted in this respect it is submitted that the appellant substantiated the fact that the value of Rs 200/per share was proper and hence was the fair market value under clause (a)(ii) of explanation to section 56(2)(viib). Hence, the addition of Rs. 1,40,00,000/- u/s 56(2) (viib) of the Act is not justified the and hence the Appellant your goodself to kindly the delete the addition..." 5.3 The facts recorded and finding of the AO in the asse....
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.... value of shares at Rs. 200 per share was accepted by the AO in earlier assessment order which could not be accepted that the value which was required to be determined as per rule 11UA or to the satisfaction AO was not correct. Further the provisions of section 56(2)(viib) are applicable for the year in which the shares are issued. Therefore, the argument taken by the appellant that Rs. 10 crore was received before 01.04.2012 and therefore provisions of section 56(2)(viib) are not applicable is not a valid argument and it is rejected. 5.3.4 In number of the judgments, courts have upheld addition made u/s 56(2)(viib) where there is a difference in fair market value and issue price of shares." 6. The Ld.AR placed that the assessee is holding the share value of Rs. 207/- per share in the financial year 2011-12. So, the issuance of shares at Rs. 200/- per share is not contravening the provisions of section 56(2)(vii)(b) of the Act. The assessee also submitted a valuation report duly certified by the Chartered Accountants, M/s A.B. Tandan & Co dated 17/07/2013 and the relevant part of the valuation report is reproduced as below:- "VIIICONCLUSION We have determined Fair Market Valu....