M/S. SIRENA TECHNOLOGIES PRIVATE LIMITED,DOMLUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 6(1)(1), BENGALURU

This appeal at the instance of the assessee is directed against CIT(A)’s order dated 10.07.2019. The relevant assessment year is 2016-2017.

The solitary issue raised is whether the CIT(A) is justified in confirming the addition made by the Assessing Officer u/s 56(2)(viib) of the I.T.Act amounting to Rs.69,98,110.

The brief facts of the case are as follow: The assessee is a company. For the assessment year 2016-2017, the return of income was filed on 30.08.2016 by declaring loss of Rs.2,02,19,832. The assessment was taken up for scrutiny by issuance of notice u/s 143(2) of the I.T.Act. During the course of assessment proceedings, the Assessing Officer proposed to make addition u/s 56(2)(viib) of the I.T.Act in respect of share premium received from Mr.Hariharan

Aggrieved by the addition made u/s 56(2)(viib) of the I.T.Act, the assessee preferred an appeal to the first appellate authority. The CIT(A) confirmed the view taken by the Assessing Officer.

Aggrieved by the order of the CIT(A), the assessee has preferred this appeal before the Tribunal. The learned AR submitted that the assessee-company falls under the category of “Start-up company” and the Government has issued Notification No.13/2019 F.No.370142/5/2018-TPL (Pt.) dated

The learned Departmental Representative supported the orders of the Income Tax Authorities.

We have heard the rival submissions and perused the material on record. It is contended by the assessee that the start-up companies have been exempted from the provisions of section 56(2)(viib) of the I.T.Act by the Government, as per the Notification / Circular referred above. It was submitted that the same would apply to assessments completed prior to 19.02.2019 also. In our view, in the interest of justice, this claim of the assessee that it is eligible to claim benefit of the Notification / Circular issued by the CBDT needs to be examined by the tax authorities. Accordingly, we restore the case to the files of the A.O. to examine the above said claim of the assessee on merits. The A.O. shall afford adequate opportunity to the assessee and shall take appropriate decision in accordance with law. It is ordered accordingly.