20TH MARCH VENTURES PVT LTD,PUNE vs. ITO, WARD-12(3), PUNE, PUNE

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.2130/PUN/2025 िनधा�रण वष� / Assessment Year : 2016-17 20th March Ventures Pvt. Vs. ITO, Ward-12(3), Pune. Ltd., Office No.105, Mittal Chambers, J. M. Road, Shivajinagar, Pune- 411005. PAN : AAACZ7357E Appellant Respondent Assessee by : Shri C. V. Deshpande Revenue by : Shri Aviyogi Ambadkar (Virtual) Date of hearing : 25.03.2026 Date of pronouncement : 28.04.2026 आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 15.07.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2016-17. 2. The appellant has raised the following grounds of appeal :- “1. On the facts and in the circumstances of the case and in law the lower authorities gravely erred in making addition to the income of the appellant company of Rs 93,36,853/- by invoking the provisions of section 56(2)(viib).

2 ITA No.2130/PUN/2025 2. On the facts and in the circumstances of the case and in law the Orders of the lower authorities are bad in law and are against the facts and circumstances of the case hence unsustainable. 3. On the facts and in the circumstances of the case the lower authorities gravely erred by arbitrarily rejecting the valuation determined by DCF method in terms of Rule 11UA. 4. On the facts and the circumstances of the case the lower authorities gravely erred in invoking provisions section of 56(2)(viib) when the appellant company had a specific exemption vide letter dated 1-10-2019 exempting appellant company from provisions section 56(2)(viib). 5. The appellant would like to leave, add, alter, amend, modify, delete, above grounds of appeal before or during the course of hearing in the interest of natural justice.” 3. Facts of the case, in brief, are that the assessee is a private limited company engaged in the business of production of mineral water bottles and corrugated boxes and claims to be a start-up company and has furnished its return of income on 17.10.2016 by declaring loss of Rs.22,98,347/-. The case was selected for scrutiny under CASS for the reason of large share premium received during the year. Accordingly, statutory notices u/s 143(2) and 142(1) respectively were issued to the assessee. The assessee company was incorporated on 10.01.2014 and there were no sales during the year under consideration however the assessee start-up company received Rs.1,16,35,200/- against the share premium on preference shares. The assessee company was having certificate of recognition

3 ITA No.2130/PUN/2025 issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India registered bearing number the DIPP18400, & listed on the website of Department of Industrial Policy and Promotion entities recognised by DIPP as start-ups as on 16.10.2018. The Assessing Officer found that the provisions of section 56(2)(viib) are attracted in the case of the assessee company since the assessee company has received share premium of Rs.1,16,35,200/- on preference shares of the face value of Rs.10 per share. Accordingly, after considering the reply and submissions of the assessee company the Assessing Officer completed the assessment proceedings u/s 143(3) of the IT Act and vide order dated 28.12.2018 determined the income of Rs.93,36,853/- as against the loss of Rs.22,98,347/- returned by the assessee company. The above assessed income includes addition of Rs.1,16,35,200/- u/s 56(2)(viib) of the IT Act being share premium received on preference shares over and above the face value of Rs.10/- per share. 4. Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. After considering

4 ITA No.2130/PUN/2025 the reply and submissions of the assessee, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee. 5. It is the above order against which the assessee company is in appeal before this Tribunal. 6. We have heard Ld. counsels from both the sides and perused the material available on record including the paper book furnished by the assessee wherein various notifications and circulars have been furnished by the assessee. In this regard, we find that the addition of Rs.1,16,35,200/- was made u/s 56(2)(viib) of the IT Act since the assessee company has received share premium on preference shares in excess of the face value of Rs.10/- per share. In this regard, it was the contention of Ld. counsel of the assessee that the assessee company is a start-up company having turnover of less than Rs.25 crores and vide intimation dated 07.10.2019 bearing Reference No.41019001786, Government of India, Ministry of Finance, Department of Revenue Central Board of Direct Taxes has issued an intimation wherein the name of assessee company has specifically been mentioned and stated that the provisions of clause (viib) of sub-section (2) of section 56 of the IT Act shall not apply to the assessee company on the amounts received as consideration

5 ITA No.2130/PUN/2025 for issue of shares subject to fulfilment of certain conditions. In the light of above intimation dated 07.10.2019 (which was not available at the time of assessment), we find some force in the arguments of Ld. counsel of the assessee that the above intimation has substantial bearing on the case of the assessee & the same could not be produced before the Assessing Officer for examination/ verification, since it was issued by the Government subsequent to the impugned assessment was completed. 7. Considering the totality of the facts of the case & in view of above discussion, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and restore the matter back to the file of the Assessing Officer with a direction to verify the claim of the assessee in the light of intimation, notifications and circulars above referred and pass assessment order afresh and as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by the Assessing Officer in this regard and to produce evidences, documents, submissions and reply in support of its claim regarding non-applicability of section 56(2)(viib) of the IT Act. Accordingly,

6 ITA No.2130/PUN/2025 the grounds raised by the assessee company are allowed for statistical purposes. 8. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on this 28th day of April, 2026. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 28th April, 2026. Sujeet/DOC Sujeet Kumar Digitally signed by Sujeet Kumar Sharma Sharma Date: 2026.04.30 11:55:58 आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : +05'30' अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr.CIT concerned. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “A” ब�च, 4. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.