ITO WARD -3(1), NEW DELHI vs. APPEALING INFRASTRUCTURE PVT LTD, NEW DELHI

ITA 1958/DEL/2019Status: DisposedITAT Delhi23 May 2023AY 2015-168 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that Section 56(2)(viib) is applicable from the date of share allotment, not from the date of receiving share application money. It also held that the assessee has the option to choose the valuation method for unquoted shares, and the AO cannot arbitrarily reject it without proving its incorrectness.

What were the facts?

The assessee company received share application money in FY 2010-11 and allotted shares at a premium in FY 2014-15. The Assessing Officer (AO) added the premium amount under Section 56(2)(viib) as the company's net worth was negative. The CIT(A) deleted the addition, holding that Section 56(2)(viib) was not applicable as it came into force after the money was received.

What were the issues?

Applicability of Section 56(2)(viib) based on the date of share application money receipt versus share allotment, and the AO's power to reject the assessee's valuation report.

Which sections of the Income-tax Act were involved?

Section 56(2)(viib)

AI-generated summary — verify with the full judgment below

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

Before: Dr. B. R. R. KumarSh. Yogesh Kumar US

For Appellant: Ms. Shweta Bansal, CA
Hearing: 14.03.2023Pronounced: 23.05.2023

Per Dr. B. R. R. Kumar, Accountant Member:

The present appeal has been filed by the Revenue against the order of the ld. CIT(A)-I, New Delhi dated 07.12.2018. 2. Following grounds have been raised by the Revenue:

“1. Whether on the facts and in the circumstances of the case, the ld. CIT(A) has erred in deleting the addition of Rs.1,63,35,000/- made by AO on account of excessive share premium u/s 56(2)(viib) of the Income Tax Act, 1961. 2. Whether on the facts and in the circumstances of the case, the ld. CIT(A) has failed to appreciate that provisions of Section 57(2)(viib) of the Income Tax Act, 1961 are applicable in the y

The order continues below.

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