TaxTMI 
TaxTMI 
2026 (6) TMI 419
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....arising out of the assessment order dated 12.02.2016 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') passed by DCIT, Circle-11(1) New Delhi for AY: 2013 -14. 2. Heard and perused the records. The assessee is a private limited company and engaged in the business of providing medical and surgical services. It operates a flagship Oncology Centre at Fortis Noida Hospital. The assessee filed its return of income on 17.09.2013 along with audited financial statements. During the relevant assessment year, the assessee issued equity shares to venture capital investors, non-residents, and residents. The assessee received share application money amounting to Rs. 18,99,69,197/- against issuance of 20,75,264 equity share....
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....y AAR & Co. dated 08.06.2012 (PB Pg 62-63) * Details of shares allotted during the year to the venture capital, Non- Residents and Residents (PB Pg 64) * RBI Letter in respect of shares issued to non-residents. (PB Pg 65-66) * Form FC-GPR filed through the Authorised Dealer to RBl in respect of shares issued to non-residents. (PB Pg 67-73) * Form 2 filed to report the allotment of shares to non-residents. (PB Pg 74-77) * Extract of Minutes of meetings of BOD for allotment of shares. (PB Pg 78-80) * Ledger of legal and professional charges in the books of assessee. (PB Pg 81-90) * Invoice of M/s Rajasthan Asset Management Company Pvt. Ltd. (PB Pg 91) 4. However, the Ld. AO, wi....
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....from a non- resident, by an amount not exceeding ten per cent. of the valuation price, the issue price shall be deemed to be the fair market value of such shares". 7. A plain reading of the above provision makes it abundantly clear that where the variation between the issue price and the value determined under Rule 11UA does not exceed 10%, the issue price itself is to be deemed as the Fair Market Value (FMV). 8. In the present case, the issue price of shares is Rs. 92.45/- per share and the valuation as per report is Rs. 85.88/- per share. The difference works out to 76.57 per share, which is within the permissible safe harbour limit of 10%. 9. Thus, once the variation is within the statutorily permitted range, the issue price is ....
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....fair market value of such shares." 13. From perusal of above notification, it is evident that where the difference between the issue price and value adopted by the AO is 10% or less, in such cases issue price will be deemed to be the fair value of shares for the purpose of Rule 11UA of the Income Tax Rules, 1962. In the present case the issue price is Rs. 15 per share and the value adopted by the AO is Rs. 14.68/per share, hence the difference between the issue price and value adopted by AO is Rs. 0.32 i.e. 2.21% (0.32/15) which is less the then the safe harbor of 10% variation in value introduced by CBDT notification 81/2023 dated 25.08.2023. 14. Hence, in view of above-mentioned submission and curative amendment introduc....
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....impugned addition deserves to be deleted. 11. Next issue is disallowance of Rs. 15,50,000/- on account of legal and professional charges and the relevant facts are during the course of assessment proceedings, the Ld. AO alleged that an amount of Rs. 15,50,000/- incurred by the assessee under the head "legal and professional charges" pertains to capital financing and is not related to regular business operations. The relevant para 3 of AO order is reproduced as under: "3. During the assessment proceedings from the details filed by the assessee it was observed that assessee had claimed legal & professional charges of Rs. 57,61,725 & out this, an amount of Rs. 15,50,000/- has been paid for capital financing......" 11.1 In this r....
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....he assessee's business to be carried on more efficiently or more profitably is devoid of merit. Assessee has not substantiated its claim with the help of any example/illustration or documentary evidence. The sole purpose of payment made to Rajasthan asset Management Company Pvt. Ltd. for due diligence undertaking is to attract investment from the venture Capital Fund. Thus, it is clear the expense incurred by the assessee to the tune of Rs. 15.50 lacs for the purpose of capital financing is capital expenditure and hence liable to be disallowed. In view of above discussion. The contentions raised by the assessee on this ground may be dismissed." 13. We are of considered view that where assessee claims that the impugned expend....