INDIASOFT TECHNOLOGIES PVT.LTD,,PUNE vs. INCOME-TAX OFFICER, WARD - 11(2),, PUNE

The crux of the grievance of the assessee is that provisions of Section 56(2)(vii-b) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) are not applicable to the facts of the case of the assessee and additions have been confirmed by the Ld. CIT(Appeal) without properly appreciating the provisions of that Section.

The brief facts in this case are that the assessee company had received Rs.1.78 Crores from Roshun Consultants Pvt. Ltd. as share application money in the month of September, 2008. This share application money was shown as such till 31st March, 2013. During the year under consideration, the assessee company issued 22,250 Equity shares of Rs.100 each fully paid up and the remaining amount of Rs.1,55,75,000/- was shown as share premium. The assessee after applying Rule 11UA has found that fair market value of the share of the assessee company was Rs.64.64 and therefore, the assessee was asked to explain why the provisions of Section 56(2)(vii-b) read with Rule 11UA should not be applied in this case. Before doing so, the Assessing Officer also referred the matter to Joint Commissioner of Income Tax, Range-11 under section 144A of the Act and directions were received vide letter dated 23.12.2016. The assessee submitted before the Department that there was vital difference in the transaction in the sense that directors of both the companies were common and therefore, investment of capital was in

Before the Ld. CIT(Appeal), the assessee filed detailed submissions which are on record. The Ld. CIT(Appeal) after considering the submissions of the assessee, facts of the case summarily disposed of the appeal of the assessee holding that the assessee and M/s. Roshan Consultants Pvt. Ltd. are two different entities irrespective of the facts that directors of both the companies were common and therefore, the assessee‟s claim that provisions of Section 56(2)(vii-b) of the Act cannot be invoked as own funds were invested in the assessee company, cannot be accepted.

That further we have also perused Form-35 filed before us and in ground No.1 of the appeal memo, the assessee has challenged that the provisions of Section 56(2)(vii-b) of the Act are not applicable to the facts of the case of the assessee and in this respect, the Ld. CIT(Appeal) has not passed a speaking order nor any reasons or findings is given to that effect. That further, in ground No.2 in the said appeal memo of Form-35, the assessee has stated that the Assessing Officer has not appreciated properly as to why provisions of Section 56(2)(vii-b) of the Act were not applicable and thereafter, on these issues, the Ld. CIT(A) has not given any speaking order.

In the result, appeal of the assessee is allowed for statistical purposes.