TaxTMI 
TaxTMI 
2025 (8) TMI 1038
X X X X Extracts X X X X
X X X X Extracts X X X X
....the case and in law, the Ld. CIT(A) has rightly allowed the ground of appeal in relation to the addition of Rs. 16,13,49,825/- by not considering the fact that the valuation report following DCF method is based on far-fetched projection?" ii. "Whether on the facts and in the circumstances of the case and in law the Ld. IT(A) has erred in deleting the addition of Rs. 16,13,49,825/-, entirely ignoring the fact that there is a huge variation in the profit after tax calculation as per Valuation report and Audited Financial Statements and how these unrealistic projections, can be relied upon." iii. "Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs. 16,1....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Method and simply deleted the addition by holding that investor company is wholly owned subsidiary of Ruchi Infrastructure Ltd., a public limited company with Bombay Stock Exchange (BSC) and National Stock Exchange (NSC) and deleted the entire addition. 3. On the other hand, the learned Authorised Representative (ld. AR) of the assessee submits that assessee is a wholly owned subsidiary of Ruchi Infrastructure Limited. The assessee allotted share to its parent company. The assessing officer during the assessment invoked the provisions of section 56(2)(viib) by holding that share premium received by assessee while allotting share to the investor company is unjustified and needs to be taxed as income under section 56(2)(viib). Though, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inancial statement of assessee for assessment year under consideration and the previous year. The assessing officer also issued notice on applicability of provisions of section 56(2)(viib). In response to such show cause notice, the assessee filed detailed explanation vide reply dated 01.11.2018. The contents of such reply are restricted at page no. 3 & 4 of assessment order. The assessing officer by referring the report share valuation disregarded valuation as recorded in para 5.11 of assessment order and held that the receipt of premium of share has no justification and is not sustainable in law. The assessing officer brought the share premium of Rs. 16,13,49,825/- to tax under section 56(2)(viib). The assessing officer has not doubted th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g valuation method under DCF is incorrect and deleted the addition. We find that there is no dispute that investor which is the parent company of assessee is a public limited company within the meaning of section 2(18)(b)(B)(c) and thus, the rigorous of section 56(2)(viib) is not applicable in case of assessee. The similar view was taken by co-ordinate bench of Hyderabad Tribunal in Apollo Sugar Clinics Ltd. vs DCIT relevant part of aforesaid decision is extracted below: "9. As regards ground nos. 3 to 8 regarding addition of receipt in the nature of share premium, the ld. AR submitted that the year under consideration is the first year of operation and assessee-company is the second level subsidiary of M/s. Apollo Hospitals Enterp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any is step-down subsidiary of Apollo Hospitals Enterprises Ltd., The AHEL is a listed company in Stock Exchange in India with the Securities Contracts (Regulations) Act, 1956. Therefore, this company falls under the category of the company in which public are substantially interested. The subsidiary companies viz. AHLL and assessee-company come under the definition of Section 2(18)(b)(B) of the Act, as per which public are substantially interested. This fact was also acknowledged by the Assessing Officer in his order at Pg. 6. para 3.2 as it was agreed that the assessee's case does not fall u/s. 56(2)(viib). In order to invoke the provisions of Section 56(2)(viib), the assessee-company should be a company in which public are not substa....