TaxTMI 
TaxTMI 
2025 (12) TMI 1341
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....ted that the addition by the Ld.AO was based upon an arbitrary application of Rule-11UA of the Income Tax Rules. 3.0 During the course of present proceedings, the Ld.Counsel for the assessee vide its application dated 08.09.2025 requested for admission of an additional ground as under:- "....In addition to the grounds urged in the above appeal, your Petitioner prays leave of the Hon. Tribunal to urge and to be heard the following additional grounds of appeal. It is also prayed that the additional grounds of appeal as under may be taken on record and heard by the Hon. Tribunal along with main appeal. Additional Grounds a. The Learned Assessing Officer and the Learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts in invoking the provisions of Section 56(2)(viib) of the Income-tax Act, 1961 in respect of share premium received by the Appellant. b. Provisions of sec.56(2) (viib) of the Act explicitly excludes company in which the public are substantially interested', which is defined in Section 2(18) of the Income Tax Act, as reproduced below (18) "company in which the public are substantially interested" - ....
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....public are substantially interested" as per Section 2(18) of the LT Act, 1961. Hence, by virtue of Section 2(18)(b)(B)(c) of the I.T Act, since during the whole of the Financial Year 2015-16 (relevant to AY 2016-17), "shares in the company currying not less than fifty per cent of the voting power" was held by Manappuram Finance Limited as stated above, the appellant is also a "company in which the public are substantially interested" during the entire duration of FY 2015-16 (AY 2016-17). e. Therefore, the petitioner company is excluded from the provisions of sec.56(2)(viiib) of the Income Tax Act, and hence, the addition made under Section 56(2)(viib) of the Act is, therefore, contrary to law, and liable to be deleted in toto. f. The Hon'ble ITAT, Hyderabad Bench, in the case of Sembcorp Energy India Limited, has upheld the order of the CIT(A) holding that the provisions of section 56(2)(viib) are not applicable, since the assessee-company is a company in which the public are substantially interested within the meaning of section 2(18) (b)(B)(c) of the Income-tax Act. g. The Hon'ble ITAT, Hyderabad Bench in the case of Apollo Sugar Clinic....
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.... under the provisions of Companies Act, 1956. The main objectives of the company are micro credit activities through the formation of Joint Liability Groups. The Registered office of M/s Asirvad Microfinance Private Limited, is situated at First Floor, Deshbandhu Plaza, No.47, Whites Road, Chennai-600 014. The authorized share capital of the Company is Rs. 31,00.00.000 (Rupees Thirty One Crores Only) divided into 3,00,00,000 (Three Crores) equity shares of Rs. 10 (Rupees Ten) each ("Equity Shares") and 10,00,000 (Ten Lakhs) redeemable preference shares of Rs. 100 each (Rupees Hundred) each. The issued. subscribed and paid-up share capital of the Company on a Fully Diluted Basis is Rs. 26,27,66,360/- (Rupees Twenty Six Crores Twenty Seven Lakhs Sixty Six Thousand Three Hundred Sixty Only). The company is one of the leading Microfinance Company having operation all over Tamil Nadu engaged in the activities of Micro financing in the unorganised sector. On perusal of the financials of the assessee company it was seen that assessee has allotted 1,05,10,655 shares of Face Value (Rs.10/-) to Manappuram Finance Limited and the directors of the company at a Rs. 83.42/-. The Company had rece....
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..... The Ld.Counsel thus argued that once the charging section 56(2)(viib) of the Act is not present in its, the very foundation for the addition would go and there would not be any case for making any addition in its case invoking provisions of section 56(2)(viib) of the Act. 8.0 We have heard the rival submissions in the light of material available on records. At this stage we deem it appropriate to first examine the statutory provisions of 2(18) and section 56(2)(viib) of the Act. Section 2(18). .. ".....2. In this Act, unless the context otherwise requires,- --------------------------------------------------- (18) "company in which the public are substantially interested"-a company is said to be ^89 a company in which the public 89 are substantially interested- ^90[(a) if it is a company owned by the Government or the Reserve Bank of India or in which not less than forty per cent of the shares are held (whether singly or taken together) by the Government or the Reserve Bank of India or a corporation owned by that bank ; or] ^91[(aa) if it is a company which is registered under section 25 of the Companies Act, 1956 (1 of 1956....
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....(c) any company to which this clause applies or any subsidiary company of such company ^99[if the whole of the share capital of such subsidiary company has been held by the parent company or by its nominees throughout the previous year.]...." "...Section 56(2)(viib) 56. Income from other sources. (1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head "Income from other sources", if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E. (2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head "Income from other sources", namely :- (i) dividends ;(ia) income referred to in sub-clause (viii) of clause (24) of section 2;(ib) income referred to in sub-clause (ix) of clause (24) of section 2;(ic)income referred to in sub-clause (x) of clause (24) of section 2, if such income is not chargeable to income-tax under the head "Profits and gains of business or profession";(id)income by way of interest on securities,....
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....y sum of money, the aggregate value of which exceeds fifty thousand rupees, is received without consideration, by an individual or a Hindu undivided family, in any previous year from any person or persons on or after the 1st day of April, 2006 but before the 1st day of October, 2009, the whole of the aggregate value of such sum: Provided that this clause shall not apply to any sum of money received- (a) from any relative; or (b) on the occasion of the marriage of the individual; or (c) under a will or by way of inheritance; or (d) in contemplation of death of the payer; or (e) from any local authority as defined in the Explanation to clause (20) of section 10; or (f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or (g) from any trust or institution registered under [section 12AA or section 12AB]. Explanation.-For the purposes of this clause, "relative" means- (i) spouse of the individual; (ii) brother or sister of the individual; (iii) b....
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....nd sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections : Provided further that this clause shall not apply to any sum of money or any property received- (a) from any relative; or (b) on the occasion of the marriage of the individual; or (c) under a will or by way of inheritance; or (d) in contemplation of death of the payer or donor, as the case may be; or (e) from any local authority as defined in the Explanation to clause (20) of section 10; or (f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or (g) from any trust or institution registered under [section 12AA or section 12AB]; or (h) by way of transaction not regarded as transfer under clause (vicb) or clause (vid) or clause (vii) of section 47. Explanation.-For the purposes of this clause,- (a)"assessable" shall have the meaning as....
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.... regarded as transfer under clause (via) or clause (vic) or clause (vicb) or clause (vid) or clause (vii) of section 47. Explanation.-For the purposes of this clause, "fair market value" of a property, being shares of a company not being a company in which the public are substantially interested, shall have the meaning assigned to it in the Explanation to clause (vii); (viib) where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares: Provided that this clause shall not apply where the consideration for issue of shares is received-(i)by a venture capital undertaking from a venture capital company or a venture capital fund or a specified fund; or(ii)by a company from a class or classes of persons as may be notified by the Central Government in this behalf: Provided further that where the provisions of this clause have not been applied to a company on account of fulfilment of c....
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....f,- (a) such sum is forfeited; and (b) the negotiations do not result in transfer of such capital asset; (x) where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017,- (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; (b) any immovable property,- (A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (B) for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely:- (i) the amount of fifty thousand rupees; and (ii) the amount equal to [ten] per cent of the consideration: Provided that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purposes of this sub-clause : Provided further th....
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....12AB]; or (VIII) by any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or (IX)by way of transaction not regarded as transfer under clause (i) or clause (iv) or clause (v) or clause (vi) or clause (via) or clause (viaa) or clause (vib) or clause (vic) or clause (vica) or clause (vicb) or clause (vid) or clause (vii)[or clause (viiac) or clause (viiad) or clause (viiae) or clause (viiaf)] of section 47; or (X) from an individual by a trust created or established solely for the benefit of relative of the individual; *(XI) from such class of persons and subject to such conditions, as may be prescribed;*[(XII) by an individual, from any person, in respect of any expenditure actually incurred by him on his medical treatment or treatment of any member of his family, for any illness related to COVID-19 subject to such conditions, as the Central Government may, by notification in the Official Gazette, specify in this behalf; *(XIII)by a member of the fa....