| The Tax Publishers2021 TaxPub(DT) 3211 (Hyd-Trib) INCOME TAX ACT, 1961
Section 56(2)(viib) Rule 11UA
Applicability of section 56(2)(viib) triggers only in a case where the shares are issued at a premium by a company in which public are not substantially interested. As, in the instant case, the allotment of shares at premium made by company in assessment year was in the status of assessee company in which public was substantially interested as per section 2(18)(b)(B)(c), the CIT(A) rightly deleted the addition made by AO under section 56(2)(viib).
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Income from other sources - Addition made under section 56(2)(viib) - Shares issued at premium - NAV method adopted for valuation of shares
Assessee filed its return of income for assessment year 2014-15 in the status of the then existing company in which the public are substantially interested and allotment of shares was made at premium. AO assessed the income of assessee after carrying an addition of Rs. 4,52,02,269 to the returned income under section 56(2)(viib). The quantum of addition was worked out by AO assessing to tax the value realized by appellant company from shareholder Gayatri Energy Ventures Ltd. at the rate of Rs. 13.378 per share over and above value of Rs. 11.5 per share as arrived at as per Net Assets Value Method prescribed under rule 11 of the Income Tax Rules, 1962. On appeal, CIT(A) deleted the addition.Held : As regards the issue whether assessee qualifies to be a company eligible for section 56(2)(viib) exemption since covered under the clinching legislative expression 'where a company, not being a company in which the public are substantially interested' as per section 2(18)(b)(B)(c) since the said other company was a listed one holding more than 50% of its stake in the relevant previous year the assessee had duly filed its shareholding chart before CIT(A), the correctness of which was nowhere rebutted it was noted that the assessee had duly filed its shareholding chart before the CIT(A) whose correctness had nowhere been rebutted in Revenue's pleadings in the instant appeal. CIT(A) had also placed reliance on Co-ordinate Bench's decision adjudicating the very issue in assessee's favour and against the department. Therefore, there was no reason to interfere with CIT(A)'s correct approach in deleting the impugned section 56(2)(viib) addition in question.
Relied:Vodafone India Services (P) Ltd., (2014) 368 ITR 1 (Bom-HC) : 2014 TaxPub(DT) 3959 (Bom-HC), D.P. Sandu Bros. Chembur (P) Ltd. (2005) 273 ITR 1 (SC) : 2005 TaxPub(DT) 1286 (SC), CIT v. Allahabad Bank Ltd. (1969) 73 ITR 745 (SC) : 1969 TaxPub(DT) 0329 (SC), Nalinikant Ambalal Mody v. CIT (1966) 61 ITR 428 (SC) : 1969 TaxPub(DT) 329 (SC).
REFERRED : Apollo Sugar Clinics Limited, Hyderabad v. Dy. CIT Circle 1(1), Hyderabad.
FAVOUR : In assessee's favour.
A.Y. : 2014-15
IN THE ITAT, HYDERABAD BENCH
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