TaxTMI 
TaxTMI 
2024 (8) TMI 1714
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....nt framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s 144C(3) of the Act on 21-03-2017. The grounds of appeal raised by the assessee read as under: - 1. The order of the learned CIT (Appeals) is contrary to law and the facts of the case and is devoid of reasoning. 2. The learned Assessing Officer ought to have appreciated that capital gains have to be computed based on the statutory provisions and that Section 48 requires that capital gains be computed by adopting the "full value of consideration received or accruing as a result of the transfer of the capital asset" and does not permit the actual consideration to be substituted by the fair market value. 3. The learned Assessing Officer erred in adopting the fa....
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....he sole that arise for our consideration is addition made by Ld. AO under the head capital gains. 2. The Ld. AR advanced arguments taking support of various documents as placed on record along with various judicial decisions and assailed the impugned additions. The Ld. CIT-DR controverted the same and supported the additions made by Ld. AO. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Assessment Proceedings 3.1 The assessee being non-resident corporate assessee incorporated in USA is stated to be holding company of another entity by the name M/s Sulekha.com New Media Private Ltd. (Sulekha.com in short). The shareholders of the assessee were promoters of Sulekha.com. The assess....
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.... obtained a valuation which valued the shares at Rs. 27.43 per share based on net book value method. On the basis of the same, the assessee assailed adoption of any other value by Ld. AO. 3.4 The Ld. AO noted that during 2012, the shares were valued by independent valuer at Rs.645 wherein the shares were issued at Rs. 835.94 per share. The Ld. AO then attempted to arrive at valuation shares during 2013 based on assumptions / projections relied upon by Sulekha.com for earlier / subsequent year valuation and valuation made as per discounted cash flow (DCF) working. The value per share for 2013 was worked out to be Rs.1162/- per share. Accordingly, adopting the same, Ld. AO made additions under the head capital gains for Rs.14.76 Crores. It....
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....eration is the consideration agreed to be paid and not the market value. The assessee also cited various other subsequent decisions taking the same view. The assessee also submitted that in case of unlisted companies, the only statutory basis for valuation was provided under Rule 11UA which has been prescribed u/s 50CA which permit substitution of FMV for sale consideration only from AY 2018-19 and not before that. The assessee also submitted that it obtained a valuation report which yielded value of Rs.27.43 per share which was much lower than the sale price received by the assessee. 4.2 However, Ld. CIT(A) endorsed the computation of Ld. AO by holding that fair market value was not arrived on scientific basis. Sulekha.com was performin....
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....rely on the basis of projections alone. There is no finding that the shares were sold at an under-valued price. 6. Pertinently, in terms of Sec. 48 of the Act, the capital gains have to be computed by adopting full value of consideration received or accruing as a result of the transfer of the capital asset. In other words, full value of consideration could not be substituted with any other value unless specified. There is no material to believe that the assessee received higher sale consideration. The actual sale price negotiated between two unrelated parties in a commercial transaction could not be substituted by the valued determined by Ld. AO. The case law of Hon'ble Supreme Court in CIT vs. Gillander Arbuthnot & Co. (87 ITR 407) supp....