The Tax Publishers2022 TaxPub(DT) 1602 (Sur-Trib)

INCOME TAX ACT, 1961

Section 263 Section 56(2)(viib)

AO during assessment stage examined DCF valuation report including latest audited balance sheet, as on, 31-3-2014 with reference to assessment year 2015-16,which did not give a different valuation. Data used in the report of year 2014 was supported by the techno-economic valuation done by independent expert for State Bank of India(The Lender Bank), with suitable modification to the projections for the reason of delay and change in the market conditions at that point of time. Hence, AO having examined these valuation reports, took a possible view, and order passed by AO was neither erroneous nor prejudicial to the interest of revenue.

Revision under section 263 - Erroneous and prejudicial order - Plausible view taken by AO -

Assessee-company issued shares at a premium of Rs. 40 per share and face value of Rs. 10 per share, thus at a total consideration of Rs. 50 per share. As per latest audited balance sheet for the year under consideration, i.e., Balance Sheet as on 31-3-2014, book value of shares comes to about Rs. 22 per share. Considering this as fair market value (FMV) of shares, the amount of Rs. 28 (Rs. 50 minus Rs. 22) per share was required to be taxed under section 56(2)(viib). Hence, Pr. CIT treated order passed by AO as erroneous and prejudicial to the interest of revenue. Held: AO during assessment stage examined DCF valuation report, including latest audited balance sheet, as on 31-3-2014 with reference to assessment year 2015-16,which did not give a different valuation. Data used in the report of year 2014 was supported by the techno-economic valuation done by independent expert for State Bank of India(The Lender Bank), with suitable modification to the projections for the reason of delay and change in the market conditions at that point of time. Hence, AO having examined these valuation reports, took a possible view, and order passed by AO was neither erroneous nor prejudicial to the interest of revenue.

Relied:CIT v. Sunbeam Auto Ltd. (2010) 332 ITR 167 (Del) : 2011 TaxPub(DT) 88 (Del-HC), Malabar Industries Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC), Cinestaan Entertainment (P) Ltd. v. ITO (2019) 177 ITD 809 (Del) : 2019 TaxPub(DT) 4550 (Del-Trib) and Rameshwaram Strong Glass (P) Ltd. v. ITO (2018) 172 ITD 571 (JP-Trib) : 2018 TaxPub(DT) 5780 (JP-Trib).

REFERRED :

FAVOUR : In assessees favour.

A.Y. : 2015-16



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