AI Drafter 
TaxTMI 
TaxTMI 
2026 (5) TMI 1485
X X X X Extracts X X X X
X X X X Extracts X X X X
....u/s 143(3) r.w.s. and penalty order dated 18.2.2022 passed u/s. 271(1)(c) of the Income Tax Act, 1961 (in short "the Act") pertaining to A.Y. 2015-16. 2. The grounds raised in quantum appeal being ITA No.7187/Del/ 2025 read as under:- 1. On the facts and in the circumstances of the case, NFAC erred in passing a completely non-speaking and mechanical order and has confirmed the AO's findings without testing the same. 2. On the facts and in the circumstances of the case, NFAC erred in holding that the provisions of section 56(2)(viib) of the Act applied in the facts of the present case. 3. On the facts and in the circumstances of the case, NFAC erred in confirming addition u/s. 56(2)(viib) of the Act in a sum of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see sold the said shares of M/s Urjani Buildwell Pvt. Ltd. @ Rs. 100/- per share is more than their fair market value of Rs. 98.30 per share, and attracts taxability u/s. 56(2)(viib) of the Act. In the facts and circumstances of the case, therefore, where these issues were neither enquired into nor examined for basis of determination of fair market value of shares, I am satisfied that the assessment order passed by the AO is both erroneous and prejudicial to the interest of revenue, to this extent, as per Explanation 2 to section 263 of the Act." 3.1 Accordingly, the assessment order u/s. 143(3) of the Act, passed by the AO on 24.10.2017 was set aside to the above extent with a specific decision to make the assessment afresh after taking....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Fair market value of Rs. 98.30 per share and sale price of Rs. 100 per share of 164000/- shares sold during the year under consideration should not be added in the income of the assessee company u/s. 56(2)(viib) of the Act. However, the assessee company did not file any reply in response to the notice. Therefore, the consideration of Rs. 2,78,000/- (i.e., the amount for which the assessee sold the said shares of M/s Urjani Buildwell Pvt. Ltd. @ Rs. 100 per share was more than their Fair Market Value of Rs. 98.30 per share, and attracts taxability u/s. 56(2)(viib) of the Act,) was added by the AO to the income of the assessee company and completed the assessment proceedings u/s. 143(3) r.w.s. 263 of the Act, on 29.9.2021. Against the abo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (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 conditions specified in the notification issued under clause (ii) of the first proviso and such company fails to comply with any of those conditions, then, any consideration received for issue of share that exceeds the fair market value of such share shall be deemed to be the income of that company chargeable to income-tax for the previous year in which such failure has taken place and, it shall also be deemed that the company has under reported the said income in consequence of the misreporting re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hed under the Indian Trusts Act, 1882 (2 of 1882) or under any other law for the time being in force; (b) "venture capital company", "venture capital fund" and "venture capital undertaking" shall have the meanings respectively assigned to them in clause (a), clause (b) and clause (c) of Explanation to clause (23FB) of section 10;" 4.1 Upon careful consideration of the provisions of section 56(2)(viib), it is observed that the said section is applicable where a company in which the public is not substantially interested, had received any consideration for issue of shares that exceeds the fair market value of such shares. As observed above, in the instant case, assessee has purchased /subscribed the shares and not received any con....