KUMARI INFIN (P) LTD,NEW DELHI vs. ITO WARD - 14(4), NEW DELHI

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ITA 5546/DEL/2019Status: DisposedITAT Delhi01 September 2022AY 2014-156 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The CIT(A) upheld the addition made by the AO. The Tribunal found no error in the CIT(A)'s findings and therefore did not interfere with the order.

What were the facts?

The assessee received shares at a rate lower than their fair market value, as determined by the Assessing Officer (AO) based on Net Asset Value (NAV). The AO made an addition for the difference between the issue price and the fair market value.

What were the issues?

Whether the difference between the issue price of shares and their fair market value, determined by the AO, is taxable as income under Section 56(2)(viia).

Which sections of the Income-tax Act were involved?

Section 56(2)(viia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘H’, NEW DELHI

Before: SH. N. K. BILLAIYA & SH. ANUBHAV SHARMA

Hearing: 01/09/2022Pronounced: 01/09/2022

ORDER PER N.K. BILLAIYA, AM:

This appeal by the assessee is preferred against the order of the CIT(A)-5, New Delhi dated 28.03.2019 for A.Y.2014-15.

2.

The solitary grievance of the assessee is that the CIT(A) erred in upholding the addition of Rs.1,81,91,344/- made by the Assessing Officer in terms of section 56 (2)(viia) of the Act.

3.

None appeared on behalf of the assessee inspite of notice we decided to proceed exparte. The DR was heard at length. Case records carefully perused.

4.

We find that the assessee has received 90,000 shares of Bhawani Portfolio Limited @ rate of Rs.1000/- per share which was found to be less than fair market value by the AO on the basis of NAV as per Audited Financial Filed. According to the AO as per Rule 11 UA it comes to Rs.1202/- per share basis this the AO proceeded to make the addition of difference of Rs.202.13 per share and made addition of Rs.1,81,91,344/-.

5.

Assessee strongly agitated the matter before the CIT(A). It was strongly contended that if the FMV determined by the AO is considered as income then the value of share allotted will automatically have the same effect, therefore, no addition is called for.

6.

After considering the facts and the submissions the CIT(A) held as under :-

7.

We have given a thoughtful consideration to the findings of the CIT(A) (supra) we do not find any error or infirmity in the above findings, therefore, no interference is called for. The appeal filed by the assessee is dismissed.

8.

Decision announced in the open court on 01.09.2022.

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