ALLIANZ INTERNATIONAL PVT LTD,NEW DELHI vs. ITO WARD - 2(2), NEW DELHI

Undisputedly, invoking the provisions of section 56(2)(viia) of the Act, the Assessing Officer has treated the difference between the sale price and FMV of the shares of the assessee as income of the assessee. On careful reading of section 56(2)(viia) of the Act, it is observed that the Assessing Officer can invoke the provision in two contingencies. Firstly, if the shares are received by the assessee without consideration and aggregate FMV of shares exceeds Rs.50,000 then whole of such amount shall be treated as FMV of the shares and added to the income of the assessee. In the second situation, if the consideration for which shares are received is less than the aggregate FMV by an amount exceeding Rs.50,000, such excess amount shall be treated as consideration of the shares and added to the income of the assessee. In the facts of the present appeal, admittedly, the sale price of shares at Rs.100 per share is more than the FMV of the shares determined at Rs.99.13. Therefore, in the first place, the provisions of second 56(2)(viia) of the Act are not applicable.

Therefore, I direct the Assessing Officer to delete the addition of Rs.2.12.161. Grounds are allowed.

In the result, the appeal is allowed. Order pronounced in the open court on 31st March, 2023.