INCOME TAX ACT,1961

Section 56(2)(viib)

Income from other sources - Difference between the share premium received in excess of valuation as determined under rule 11UA - Chargeability -

Assessee company was engaged in business of setting up advance machines for diagnosis and treatment of cancer in association with hospitals all over India. AO observed that difference between the share premium received in excess of valuation as determined under rule 11UA was treated as income of the assessee as per the provisions of section 56(2)(viib) and added the same to the income of assessee as income from other sources. CIT(A) dismissed the appeal of assessee.Held:Keeping in view of the facts and circumstances of the case and legislative intent behind insertion of section 56(2)(viib), addition made by AO on account of alleged excess share premium was unjustified when those very shares were sold in next financial year at much higher amount after proper due diligence, that to a non-resident buyer and further, there was no case of unaccounted money being brought in garb of stated share premium, hence, addition made under section 56(2)(vii) was deleted.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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