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| The Tax Publishers2019 TaxPub(DT) 7789 (Mum-Trib) : (2020) 203 TTJ 0672 INCOME TAX ACT, 1961
Section 56(2)(viia) Rule 11U
Section 56(2)(viia) refers to transaction of acquisition of any property being shares of a company not being a company in which public are substantially interested. Since foreign company does not fall in the said category section 56(2)(viia) could not be applied to impugned transaction. Further amendment in the rule 11U specifically bringing Valuuation Rules in respect of foreign company brought with effect from 1-4-2019 under rule 11U(b)(ii) is only prospective in nature and, therefore, did not apply to assessee's case, accordingly, addition made under section 56(2)(viia) could not be sustained.
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Income from other sources - Transfer of shares for a lesser consideration - Applicability of section 56(2)(viia) in case assessee-company acquired shares of a foreign company from its directors -
Assessee-company acquired shares of a foreign company from its directors. AO invoked section 56(2)(viia) and made addition. Held: Section 56(2)(viia) refers to transaction of acquisition of any property being shares of a company not being a company in which public are substantially interested. Since foreign company does not fall in the said category section 56(2)(viia) could not be applied to impugned transaction. Further amendment in the rule 11U specifically bringing valuuation Rules in respect of foreign company brought with effect from 1-4-2019 under rule 11U(b)(ii) is only prospective in nature and, therefore, did not apply to assessee's case, accordingly, addition made under section 56(2)(viia) could not be sustained.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2015-16
IN THE ITAT, MUMBAI H BENCH
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