“Section 56(2)(viib)”

Section References (mined)Section 56Section 56(2)(viib)483 judgments

The decision most relied on for Section 56(2)(viib) is Vodafone India Services (P.) Ltd. v. Union of India (368 ITR 1), cited in 172 judgments on BharatTax.

Leading authorities on Section 56(2)(viib)

Vodafone India Services (P.) Ltd. v. Union of India

368 ITR 1 · 2014 · High Court

172

citing judgments

The issue of shares and share premium is a capital account transaction, not an income-generating event, therefore Chapter X (Transfer Pricing) provisions are not attracted to deem notional or hypothetical income from such transactions.

National Insurance Co. Ltd. v. Pranay Sethi

16 SCC 680 · 2017 · Reported

152

citing judgments

The Supreme Court in Pranay Sethi laid down the principles for determining 'future prospects' to be added to the income of a deceased person for calculating compensation under the Motor Vehicles Act. It also clarified principles of judicial discipline, including the binding nature of coordinate bench decisions and how to resolve conflicting Supreme Court judgments.

SA Builders, 288 ITR 1 (SC) and CIT v. Panipat Woollen and General Mills Company Ltd.

103 ITR 66 · 1976 · Supreme Court

105

citing judgments

The Income Tax Department cannot sit in the armchair of a businessman or question their commercial wisdom and business decisions. Expenses incurred for business expediency, determined from the businessman's point of view, are allowable business expenses.

PCIT v. Chain House International (P) Ltd.

98 Taxmann.com 47 · 2018 · High Court

104

citing judgments

The Assessing Officer cannot arbitrarily reject a share valuation report prepared by an expert using recognized methods like NAV or DCF for the purpose of Section 56(2)(viib) without providing valid reasons to demonstrate its perversity or unreasonableness.

CIT v. Tin Box Company

260 ITR 637 · 2003 · High Court

citing judgments

When an assessee possesses sufficient interest-free funds, it is presumed that any interest-free advances or investments made are from these funds, preventing disallowance of interest under Section 36(1)(iii). This principle applies if own capital and interest-free loans exceed the interest-free advances given.

Vodafone M-Pesa Ltd. v. PCIT

164 DTR 257 · 2018 · High Court

citing judgments

An assessee has the option to choose either the Discounted Cash Flow (DCF) method or the Net Asset Value (NAV) method for share valuation under Section 56(2)(viib) read with Rule 11UA. The Assessing Officer cannot substitute the chosen method or value without identifying a specific error in the assessee's valuation.

CIT v. Green Infra Ltd.

78 Taxmann.com 340 · 2017 · High Court

citing judgments

The valuation of shares is not relevant for determining the genuineness of a transaction under Section 68 of the Income Tax Act. Interest income earned on the deposit of surplus funds is taxable as business income.

PCIT v. Cinestaan Entertainment Pvt Ltd.

433 ITR 82 · 2021 · High Court

citing judgments

The Assessing Officer cannot reject the share valuation method adopted by an assessee under Section 56(2)(viib) if it adheres to prescribed methodologies and commercial prudence. The valuation cannot be challenged based on future performance or by substituting another method.

Judgments citing Section 56(2)(viib)

The Deputy Commissioner of Income Tax, Central Circle-2, Visakhapatnam vs. Poosarla Satyavathi, Vizianagaram

In the result, appeal of the revenue is dismissed in limine and Cross objection filed is assessee is dismissed as infructuous

ITA 117/VIZ/2021[2014-15]Status: DisposedITAT Visakhapatnam30 Oct 2024AY 2014-15

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Ble

Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 56(2)(viib)Section 68

framed the assessment by making an addition of Rs.3,11,30,000/- as unexplained cash credit and Rs. 4,60,12,500/- under section 56(2)(viib) of the Act. Page No. 3 I.T.A. No. 227/VIZ/2020 I.T.A. No. 117/VIZ/2021& C.O. No. 13/VIZ/2023 M/s. Linton Projects Private Limited& Smt. Poosarla Satyavathi

Linton Projects Private Limited, Vizianagaram vs. The Income Tax Officer, Ward-1, Vizianagaram

In the result, appeal of the revenue is dismissed in limine and Cross objection filed is assessee is dismissed as infructuous

ITA 227/VIZ/2020[2014-15]Status: DisposedITAT Visakhapatnam30 Oct 2024AY 2014-15

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Ble

Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 56(2)(viib)Section 68

Fly With Vip Online Private Limited, Sewri Mumbai vs. Dy. Commissioner of Income Tax - 5(1)(2), Mumbai

In the result, the appeal of the assessee bearing ITA No

ITA 4656/MUM/2024[2013-14]Status: DisposedITAT Mumbai29 Oct 2024AY 2013-14

Bench: Shri. B.R. Baskaran & Shri. Anikesh Banerjee

For Appellant: Shri Ravikant PathakFor Respondent: Shri Ashish Kumar (SR.AR.)

Section 143(3)Section 250Section 56(2)Section 56(2)(vib)Section 56(2)(viib)

being the aggregate consideration received for shares as the same exceeds the fair market value of the shares by invoking section 56(2)(viib) of the Act. Aggrieved, the assessee filed an appeal before the CIT(A). The Ld.CIT(A) issued notices of hearing on many occasions, but none ... assessee is a start-up company, so the notification No.45/2016 dated 14/06/2016 is coveredwhich exempts the start-up companies from provisions of section 56(2)(viib) of the Act. Butthe Ld.CIT(A) had denied the claim of assessee as this exemption is not applicable for A.Y. 2013-14. The relevant

Assistant Commissioner of Income Tax, Circle -1, Nagpur vs. M/S Raghav Finvest Pvt Ltd, Nagpur

In the result, appeal filed by the Revenue is dismissed

ITA 121/NAG/2020[2012-13]Status: DisposedITAT Nagpur25 Oct 2024AY 2012-13

Bench: Shri V. Durga Rao & Shri K.M. Roy, Accountant, Member

For Appellant: Shri Abhay AgrawalFor Respondent: Shri Abhay Y. Marathe

During the course of appellate proceedings, the appellant was asked about applicability of provisions of section 56(2)(viib) of the Act. The appellant submitted that the aforesaid provision has been inserted for the first time vide Finance Act 2012 w.e.f 01/04/2013. This has been clarified vide CBDT Circular No.3/2012 ... issue of share capital including the premium is undoubtedly on capital account. Share premium have been made taxable by a legal fiction under section 56(2)(viib) and the same is enumerated as income in section 2(24)(xvi)." ii. CBDT vide its Instruction No. 2/2015 dated 29/01/2015 has accepted

Dy Commissioner of Income Tax, Circle-1, Nagpur vs. M/S Nihal Gits Pvt.Ltd, Nagpur

In the result, appeal filed by the Revenue is dismissed

ITA 95/NAG/2018[2012-2013]Status: DisposedITAT Nagpur25 Oct 2024AY 2012-2013

Bench: Shri V. Durga Rao & Shri K.M. Roy, Accountant, Member

For Appellant: Shri Abhay AgrawalFor Respondent: Shri Abhay Y. Marathe

Asstt.Commissioner of Income Tax Circle-1, Nagpur vs. Vishnu Gilts Pvt.Lt, Nagpur

In the result, appeal filed by the Revenue is dismissed

ITA 237/NAG/2018[2012-13]Status: DisposedITAT Nagpur25 Oct 2024AY 2012-13

Bench: Shri V. Durga Rao & Shri K.M. Roy, Accountant, Member

For Appellant: Shri Abhay AgrawalFor Respondent: Shri Abhay Y. Marathe

Assistant Commissioner of Income Tax, Kalayn vs. Krishna Zipa Rasal Patil, Ambernath West

In the result, appeal of the revenue is allowed

ITA 3867/MUM/2024[2015-16]Status: DisposedITAT Mumbai24 Oct 2024AY 2015-16

Bench: Shri Narendra Kumar Billaiya, Hon'Ble & Shri Sandeep Singh Karhail, Hon'Ble

For Appellant: Shri Sudhir V. Hunnargikar, AdvFor Respondent: Shri Suhas Dabade, Sr. D/R

Section 2(47)Section 43Section 56(2)(viib)

purchase shall be completed upon permissions from the competent authorities and on execution and registration of conveyance deed. Therefore, the provisions of Section 56(2)(viib) of the Act squarely apply. 3. The representatives of both the sides were heard at length. Case records carefully perused and relevant documentary evidence ... stamp duty value of the said property at Rs.2,79,45,000/-. The AO was of the opinion that the provisions of Section 56(2)(viib) of the Act, squarely apply and sought explanation from the assessee. 4.1.1. In his reply, the assessee submitted the copy of conveyance deed dated

Muzaffar Murad Sayyed, Mumbai vs. ITO, 24(2)(1), Mumbai

In the result, the appeal of the assessee bearing ITA No

ITA 4097/MUM/2024[2020-21]Status: DisposedITAT Mumbai21 Oct 2024AY 2020-21

Bench: Shri Anikesh Banerjee & Shri Omkareshwar Chidara

For Appellant: ShriS.C. Agrawal, CAFor Respondent: Shri Sunny Kachhwaha - SRDR

Section 115BSection 139(1)Section 143(2)Section 144Section 144BSection 249(3)Section 250Section 56(2)(viib)Section 69

notice under section 143(2) of the Act was issued and the assessment was completed by addition sunder section 56(2)(viib) of the Act amount to Rs.9,58,940/- and under section 69 amount to Rs.43lakh and the tax was levied by pursuing section 115BBE of the Act. Being

Dhola Infra Projects Limited (Formerly Known As Navayuga Dhola Infra Projects Limited), Mumbai vs. ACIT., Circle-16(1), Hyderabad

In the result, the appeal of the assessee is allowed

ITA 800/HYD/2024[2016-17]Status: DisposedITAT Hyderabad17 Oct 2024AY 2016-17

Bench: Shri Laliet Kumar, Hon’Bleassessment Year – 2016-17 Dhola Infra Projects Limited Vs. Asst.Commissioner Of Tax (Formerly Known As Navayuga Circle-16(1) Dhola Infra Projects Limited Hyderabad Mumbai Pan : Aadcn3696B (Appellant) (Respondent) Assessee By: Shri Paras S.Savla, Ld.Ar (Through Virtual Hearing) Revenue By: Shri U Mini Chandran, Ld.Dr Date Of Hearing: 17.10.2024 Date Of Pronouncement: 17.10.2024

For Appellant: Shri Paras S.Savla, Ld.ARFor Respondent: Shri U Mini Chandran, Ld.DR

Section 234DSection 244ASection 56(2)(viib)

learned CIT(A) erred in upholding the action of the Learned Assessing Officer in making an addition of Rs.46,74,979 under section 56(2)(viib) of the Act. 2 2. On facts and circumstances of the case and in law, the learned CIT(A) erred in upholding the action ... rejecting the valuation of shares determined by an independent account using Discounted Cash Flows Method (“DCF Method”) which is in accordance with Section 56(2)(viib) of the Act read with Rule 11UA of the Income Tax Rules, 1962 (“the rules”) and instead applying Net Asset Value (“NAV”) method

Leading Age Developers Private Limited, Mumbai vs. ACIT CC 2(2), Mumbai

In the result, appeal of the assessee in ITA No

ITA 1114/MUM/2024[2011-12]Status: HeardITAT Mumbai17 Oct 2024AY 2011-12

Bench: Shri Pavan Kumar Gadale & Shri Girish Agrawal

For Appellant: Shri Vimal Punmiya, CAFor Respondent: Shri Manoj Kumar Sinha, Sr. DR

Section 143Section 143(3)Section 148Section 153ASection 271(1)(c)Section 68

assessee accepting share premium in excess of fair value, we note that Leading Age Developers Pvt. Ltd., AY 2011-12 provision of section 56(2)(viib) have been inserted with effect from 01.04.2013 and applies from assessment year 2013 – 14 onwards and cannot be applied retrospectively to bring to charge ... decide the share premium and it is at the wisdom of the shareholders to subscribe to the share premium and further that section 56(2)(viib) inserted with effect from 01.04.2013 cannot be applied retrospectively. 10. We also note that in the reasons recorded, in one of the paragraphs

Leading Age Developers Private Limited, Mumbai vs. Central Circle 2(2), Central Building

In the result, appeal of the assessee in ITA No

ITA 1113/MUM/2024[2011-12]Status: DisposedITAT Mumbai17 Oct 2024AY 2011-12

Bench: Shri Pavan Kumar Gadale & Shri Girish Agrawal

For Appellant: Shri Vimal Punmiya, CAFor Respondent: Shri Manoj Kumar Sinha, Sr. DR

Section 143Section 143(3)Section 148Section 153ASection 271(1)(c)Section 68

Asst. Commissioner of Income-Tax, Mumbai vs. Futura Travels Ltd., Mumbai

In the result, appeal of the Revenue is dismissed

ITA 757/MUM/2024[2011-12]Status: DisposedITAT Mumbai16 Oct 2024AY 2011-12

Section 143(3)Section 68

proviso to section 68. Hence for the year under consideration, the appellant has duly discharged it's onus. The law makers have also section 56(2) (viib) vide Finance Act 2012 where the taxability of excess premium is specifically dealt. This amendment is applicable on cases involving assessment

Ace Cabs Limited, Delhi vs. ACIT, Circle-1(2), Delhi, C R Building

In the result, appeal filed by the assessee is allowed

ITA 443/DEL/2024[2017-18]Status: DisposedITAT Delhi04 Oct 2024AY 2017-18

Bench: Shri Saktijit Dey, Hon’Ble & Shri S.Rifaur Rahmanace Cabs Limited, Vs. Acit, Circle 1 (2), 562, Silver Oak Lane, Delhi. M.G. Road, Ghitorni, Delhi – 110 030. (Pan : Aaica4494R) (Appellant) (Respondent) Assessee By : Shri Gaurav Jain, Advocate Ms. Bharti Sharma, Advocate Revenue By : Shri Kanv Bali, Sr. Dr Date Of Hearing : 23.07.2024 Date Of Order : 04.10.2024 Order Per S.Rifaur Rahman,Am: 1. This Appeal Has Been Filed By The Assessee Against The Order Of Ld. Commissioner Of Income Tax (Appeals), New Delhi [“Ld. Cit(A)”, For Short]/ National Faceless Appeal Centre (Nfac) Dated 12.12.2023 For The Assessment Year 2017-18. 2. The Assessee Submitted An Application Under Rule 29 Of The Itat Rules For Admitting The Additional Evidences & The Contents Thereof Are Reproduced Below:-

For Appellant: Shri Gaurav Jain, AdvocateFor Respondent: Shri Kanv Bali, Sr. DR

Section 142(1)Section 143(2)

high valuation of shares done by the assessee, correctness of DCF method adopted for the valuation, and the applicability of the provisions of Section 56(2)(viib) of the Act. (v) It is also important to mention that although the AO asked the assessee to furnish the PAN details, current ... valuation of shares done by the assessee, correctness of DCF method adopted for the valuation, and the applicability of the provisions of Section 56(2)(viib) of the Act specifically for the allotment of SEED Compulsory Convertible Preference Shares (CCPS). 8. In order to verify the share allotment

Shankar Traders & Distributors Pvt. Ltd., Kolkata vs. ITO, Ward-5(1), Kolkata

In the result, the appeal of the assessee is allowed

ITA 199/KOL/2024[2012-13]Status: DisposedITAT Kolkata03 Oct 2024AY 2012-13

Bench: Shri Sanjay Garg & Dr. Manish Boradi.T.A. No. 199/Kol/2024 Assessment Year: 2012-13 Shankar Traders & Income Tax Officer, Ward-5(1), Distributors Pvt. Ltd. Vs Aaykar Bhawan, A-Block, 1St Floor, Mercantile P-7, Chowringhee Square, Building, 9, Lal Bazar Street, Kolkata-700, West Bengal Kolkata-700001, [Pan: Aadcs8907L] West Bengal अपीलार्थी/ (Appellant) प्रत्‍यर्थी/ (Respondent)

For Appellant: Shri Manish Tiwari, ARFor Respondent: Shri Susanta Saha, DR

Section 133(6)Section 143(2)Section 143(3)Section 144Section 14ASection 68

आयकर अपीलीय अधिकरण न्यायपीठ, कोलकाता । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER

M/S. Kolet Resort Club Private Limited, Hyderabad vs. Income Tax Officer, Ward-2(1)(2), Ahmedabad

In the result the appeal filed by the assessee is allowed

ITA 278/AHD/2022[2015-16]Status: DisposedITAT Ahmedabad01 Oct 2024AY 2015-16

Bench: Ms. Annapurna Gupta (Accountant Member), Shri. T.R. Senthil Kumar (Judicial Member)

For Appellant: Shri P. Murali Mohana Rao, A.RFor Respondent: Shri Prateek Sharma, Sr. D.R

Section 143Section 143(3)

erred in holding in para 2 of his order that the Assessing Officer had failed to examine the aspect of applicability of section 56(2)(viib) of the Act. 6. Without prejudice to other grounds, the Ld. Pr. CIT erred in appreciating the fact of furnishing of all details relating ... inadequate enquiry made by the AO during the assessment proceedings. 8. In our considered view the Ld PCIT misconstrued the provisions of section 56(2)(viib) of the Act, namely if a company not being a company in which public are substantially interested, received any consideration against issuance of shares

Go Fashion (India) Limited, Nungambakkam, Chennai vs. PCIT, Chennai-1, Nungambakkam Chennai

In the result, the appeal filed by the assessee is allowed statistical purposes

ITA 939/CHNY/2024[2018-19]Status: DisposedITAT Chennai27 Sept 2024AY 2018-19

Bench: Shri Aby T. Varkey & Shri Jagadishआयकर अपील सं./Ita No.939/Chny/2024 िनधा9रण वष9 /Assessment Year: 2018-19 Go Fashion (India) Ltd., The Principal Commissioner Of 4 (Old 144), Sathak Center, Vs. Income Tax, Fifth Floor, Chennai-1. Nungambakkam High Road, Nungambakkam S.O, Nungabakkam, Chennai-600034. [Pan: Aadcg 9557C] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से/ Appellant By : Shri S. Ramachandran, Fca Hiथ" की ओर से /Respondent By Shri R. Clement Ramesh Kumar, Cit : सुनवाई की तारीख/Date Of Hearing : 10.07.2024 घोषणा की तारीख /Date Of Pronouncement : 30.09.2024 आदेश / O R D E R Per Jagadish, A.M : Aforesaid Appeal Filed By The Assessee For Assessment Year (Ay) 2018-19 Arises Out Of The Order Of Learned Principal Commissioner Of Income Tax, Chennai-1 [Hereinafter “Pcit”] Dated 29.02.2024 Passed U/S. 263 Of The Income-Tax Act, 1961 (Hereinafter “The Act”). :- 2 -:

For Appellant: Shri S. Ramachandran, FCA

Section 142(1)Section 143(3)Section 263Section 56(2)Section 56(2)(viib)

value the compulsory convertible preference shares and the valuation of compulsory convertible preference shares has been brought in only w.e.f 25.09.2023 and therefore, section 56(2)(viib) has no application in such share. :- 5 -: 5. The Ld. CIT-Departmental Representative (DR), on the other hand, relied on the order passed ... question No.9 has asked for a detailed note on determination of the fair market value of the issued share as per section 56(2)(viib) and the assessee has submitted the details after which the A.O has not made any addition. It is also seen that Rule 11UA has been

Vishal Balvantrai Agarwal, Ahmedabad vs. The Pr. Commissioner of Income Tax, Ahmedabad -1, Ahmedabad

In the result, the appeal of the assessee is allowed

ITA 226/AHD/2023[2018-19]Status: DisposedITAT Ahmedabad25 Sept 2024AY 2018-19

Bench: Shri T.R. Senthil Kumar & Shri Makarand V. Mahadeokarआयकर अपील सं /Ita No.226/Ahd/2023 िनधा"रण वष" /Assessment Year : 2018-19 Vishal Balvantrai Agarwal The Pr.Cit बनाम/ 249 New Cloth Market Ahmedabad-1 V/S. O/S. Raipur Gate Ahmedabad – 380 002 (Gujarat) "थायी लेखा सं./Pan: Adbpa 4462 G (अपीलाथ%/ Appellant) (&' यथ%/ Respondent) Assessee By : Shri Divyakant Parikh, Ar Revenue By : Shri Prathvi Raj Meena, Cit-Dr सुनवाई की तारीख/Date Of Hearing : 18/09/2024 घोषणा की तारीख /Date Of Pronouncement: 25/09/2024 आदेश/O R D E R Per Shri Makarand V. Mahadeokar, Am:

For Appellant: Shri Divyakant Parikh, ARFor Respondent: Shri Prathvi Raj Meena, CIT-DR

Section 10Section 142(1)Section 143(3)Section 14ASection 263Section 57

assessee’s non-cooperation during assessment proceedings, the Assessing Officer did not verify the details regarding the applicability of provisions of Section 56(2)(viib) and Section 68 of the Act and these transactions undertaken by the assessee company during the relevant Financial Year.” 7.2. The non-consideration

Academy for Global Education Services Private Limited, Mumbai vs. ITO, Mumbai

In the result, the appeal filed by the Assessee stands allowed

ITA 3860/MUM/2023[2011-12]Status: DisposedITAT Mumbai23 Sept 2024AY 2011-12

Bench: Shri Narender Kumar Choudhry & Shri Omkareshwar Chidaraassessment Year: 2011-12

For Appellant: Shri Vimal Punmiya, CAFor Respondent: Shri Manoj Kumar Sinha, SR. D.R

Section 133(6)Section 250

premium even though Company is making losses. We further noted that that share application money is a capital receipt liable to tax under Section 56(2)(viib) of the Act as deeming receipt of consideration for issue of shares in excess of face value in certain cases is applicable only ... that of a share allotment that here the valuation for charging premium is not justified, it will make the provisions of section 56(2)(viib) of the Act redundant and nugatory. This cannot be the intention of the Legislature especially when the amendments in the two sections are brought

DCIT, Central Circle-3(1), Hyderabad vs. Varsity Education Management Pvt Ltd, Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 208/HYD/2023[2011-12]Status: DisposedITAT Hyderabad20 Sept 2024AY 2011-12

Bench: Shri Manjunatha, G. & Shri Prakash Chand Yadavआ.अपी.सं /Ita No. 208/Hyd/2023 (िनधा"रण वष"/Assessment Year: 2011-12) Deputy Commissioner Of Vs. Varsity Education Income Tax, Central Circle Management (P) Ltd 3(1) Hyderabad Hyderabad Pan:Aadcv6100E (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Advocate A.V. Raghuram राज" व "ारा/Revenue By:: Shri B. Balakrishna, Cit(Dr) सुनवाई की तारीख/Date Of Hearing: 18/09/2024 घोषणा की तारीख/Pronouncement: 20/09/2024 आदेश/Order

For Appellant: Advocate A.V. RaghuramFor Respondent: : Shri B. Balakrishna, CIT(DR)

Section 271(1)(c)Section 274Section 68

view, when the addition made by the Assessing Officer towards partial share premium u/s 68 was not in accordance with section 68 or section 56(2)(viib) of the Act, then merely for the reason that the addition has been sustained by the Tribunal is not a reason for levying

Innovior Advisory Private Limited, Bangalore vs. Income Tax Officer, Ward-3(1)(3), Bangalore

In the result, the appeal filed by the assessee is partly allowed for statistical purposes

ITA 1277/BANG/2024[2018-19]Status: DisposedITAT Bangalore18 Sept 2024AY 2018-19

Bench: Shri Waseem Ahmed & Shri Soundararajan K.Assessment Year : 2018-19

For Appellant: Shri Deepak Chopra, CA

Section 143(3)Section 234BSection 56(2)Section 56(2)(viib)

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-‘A’ BENCH : BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K