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Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI ANUBHAV SHARMA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the Revenue is preferred against the order of the
Commissioner of Income Tax [Appeals] - 8, New Delhi dated 03.04.2019
pertaining to assessment year 2015-16.
The solitary grievance of the Revenue is that the ld. CIT(A) erred
in deleting the addition u/s 56(2)(viia)(ii) of the Income tax Act, 1961
(hereinafter referred to as 'the Act') amounting to Rs. 64,20,99,900/-.
Briefly stated, the facts of the case are that the assessee filed its
return of income electronically on 30.09.2015 declaring loss of Rs.
11,300/-. Return was selected for scrutiny assessment through CASS
and, accordingly, statutory notices were issued and served upon the
assessee.
The assessee is engaged in the business of construction and
development of warehouse and godown. While scrutinising the return
of income, the Assessing Officer noticed that the assessee has made
investment in shares of M/s Soma Punjab Warehousing (P) Ltd wherein
the assessee has purchased 1,45,70,000 shares at face value of Rs. 10/-
and premium value of Rs. 94/- per share totalling to Rs. 104/- per
share.
The assessee was asked to furnish the fair market value of the
shares in which the investment was made. The assessee submitted the
fair market value of shares at Rs. 148.08 per share and purchase price
is Rs. 104 per share. The assessee has paid lesser value by Rs. 44.07
per share. Multiplying the same with number of shares purchased by
the assessee, the Assessing Officer made addition of Rs. 64,20,99,900/-
u/s 56(2)(viia(ii) of the Act.
The assessee challenged the addition before the ld. CIT(A) and
submitted that the valuation report, as per the method prescribed in
the sub-clause (b) of Rule 11U(1) of the Rules wherein the fair market
value was computed at negative figure Rs. 340.56. It was claimed that
since the fair market value determined as per the IT Rules is in
negative, therefore, there is no question of making any addition in
purchase of shares @ Rs. 104/- per share.
The Id. CIT(A) having admitted the valuation report, called for
remand report from the Assessing Officer and the Assessing Officer
furnished the remand report dated 26.06.2018, which is exhibited at
pages 37 to 41 of the Paper Book. Accepting the valuation as per the
I.T. Rules, in light of remand report, the ld. CIT(A) deleted the
addition made by the Assessing Officer.
Before us, the ld. DR vehemently stated that it was the assessee
who submitted the valuation report of the fair market value before the
Assessing Officer from which the Assessing Officer came to know that
the fair market value of the share was Rs. 148.07 per share. It is the
say of the ld. DR that basis this valuation report, the Assessing Officer
made the impugned addition of Rs. 64.20 crores and, therefore, there
is no error in the assessment and the same should be upheld.
Per contra, the ld. counsel for the assessee vehemently stated
that the valuation report submitted to the Assessing Officer was basis
for making investment and the said valuation report was not as per
Rule 11UA(1) of the IT Rules. It is the say of the ld. counsel for the
assessee that before the Id. CIT(A), the assessee submitted the
valuation of the fair market value as per I.T Rules and as per that
report, the fair market value is negative figure of Minus 340.56 per
share and, therefore, the Id. CIT(A) has rightly deleted the addition
made by the Assessing Officer.
We have given thoughtful consideration to the orders of the
authorities below. We have also gone through the remand report
submitted by the Assessing Officer on the valuation of fair market
value as per Rule 11UA(1) of the Rules. We find that in the remand
report, other than supporting the assessment, the Assessing Officer has
not commented at all on the determination of fair market value as per
book value prescribed u/r 11UA(1) of the I.T. Rules.
No error or infirmity was pointed out by the Assessing Officer in
the said valuation report. Since the valuation report is based on the
method prescribed under the I.T. Rules and since the same has
determined the fair market value at Minus 340.56, the Id. CIT(A) has
rightly followed the same while deleting the addition, which calls for
no interference.
In the result, the appeal filed by the Revenue in ITA No.
5600/DEL/2019 is dismissed.
The order is pronounced in the open court on 12.06.2023.
Sd/- Sd/-
[ANUBHAV SHARMA] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 12th JUNE, 2023.
VL/