“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)

Bueno Foods Private Limited, New Delhi vs. ACIT Circle-5(1), New Delhi

In the result, the appeal of the assessee is allowed for

ITA 9241/DEL/2019[2016-17]Status: DisposedITAT Delhi30 Aug 2023AY 2016-17

Bench: SHRI M. BALAGANESH (Accountant Member), SHRI ANUBHAV SHARMA (Judicial Member)

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

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’: NEW DELHI BEFORE, SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI ANUBHAV

Girnar Software Private Limited, 6Th Floor, Jaipur Textile Market, B-2, Near Model Town, Malviya Nagar, Jaipur vs. PCIT – 2, Jaipur, New Central Revenue Building

In the result, the appeal of the assessee is allowed

ITA 330/JPR/2023[2018-19]Status: DisposedITAT Jaipur28 Aug 2023AY 2018-19

Bench: HON’BLE SHRI SANDEEP GOSAIN, JM & HON’BLE SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri PC Parwal, CAFor Respondent: Shri Arvind Kumar (CIT)

Section 142(1)Section 143(2)Section 14ASection 263

Jaipur. the Act passed an assessment order making an addition of Rs 15,86,71,424/- on account of securities premium under section 56(2)(viib) of the Act, 1961. 2.1 Thereafter, the Learned Principal Commissioner of Income Tax -2 issued notice dated 3rd March 2023 providing an opportunity

Shree Navkar Realinfra Private Limited, Bhilwara vs. PCIT, Udaipur

In the result, appeal of the assessee is allowed

ITA 133/JODH/2022[2017-18]Status: DisposedITAT Jodhpur24 Aug 2023AY 2017-18

Bench: Or At The Time Of Hearing Of This Appeal.”

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

selected for Limited Scrutiny through CASS and the issue for examination was “Large Share Premium received during the year ( Verify applicability of section 56(2)(viib) or any other relevant section). On this issue the ld. AO has called for the details and also found discussion in the order

M/S. Doit Creations (India) Pvt. Ltd, Mumbai vs. Pr. Comm of Income Tax, Central Circle-3, Mumbai

In the result, the appeal of the assessee is partly allowed and additional ground of appeal filed by the assessee is dismissed

ITA 1354/MUM/2022[2015-16]Status: DisposedITAT Mumbai23 Aug 2023AY 2015-16

Bench: Shri Amit Shukla & Shri Amarjit Singhdoit Creations (India) Vs. Principal Commissioner Private Limited Of Income Tax, Central 307 & 308, 3Rd Floor,, Circle 3, Room No. 1901, Midas, Sahar Plaza, 19Th Floor, Air India Andheri (East) Building, Nariman Point, Mumbai – 400 069 Mumbai – 400 021 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aabcd8695A Appellant .. Respondent [ Appellant By : Dharan Gandhi Respondent By : Neena Jeph Date Of Hearing 27.07.2023 Date Of Pronouncement 23.07.2023 आदेश / O R D E R Per Amarjit Singh (Am): This Appeal Filed By The Assesse Is Directed Against The Order Passed By The Ld. Pcit(Central), Mumbai -3, Dated 31.03.2022 For A.Y. 2015-16. The Assessee Has Raised The Following Grounds Before Us: “1. On The Facts & Circumstances Of The Case & In Law, The Hon'Ble Pr.Cit Central - 3 (Herein After Referred As 'Pcit) Erred In Invoking Provisions Of Section 263 Of The Income Tax Act, 1961 (Hereinafter Referred As 'The Act') By Issuing The Notice Inspite Of The Fact That Assessment U/S. 143(3) & U/S 143(3) R.Ws 147 Of The Act Has Been Completed After Due Examination & Application Of Mind While Framing The Assessment Order U/S 143(3) & U/S 143(3) Rws 147 Of The Act. Further Order U/S 263 Is Also Passed Merely Setting Aside The Assessment To The File Of The Learned Assessing Officer To Conduct Proper Inquiry Which Is Unjustified. It Is Therefore Submitted That The Order Passed U/S 263 Should Be Cancelled.

For Appellant: Dharan GandhiFor Respondent: Neena Jeph

Section 143(3)Section 147Section 148Section 263Section 56(2)(viib)

assessee company on 29.03.2022. The relevant part of the show cause notice is reproduced as under: “(i) As per the provisions of the section 56(2)(viib) of the IT Act applicable with effect from Assessment year 2013-14, where a company, not being a company in which the public ... declaring total loss of Rs.5,87,23,419/- The case was selected under limited scrutiny to verify among other issues the applicability of section 56(2)(viib) on receipt of large share premium during the year. The assessment was finalized after the scrutiny

M/S Nd'S Art World Pvt Ltd., Mumbai vs. Asst. CIT 15 (2)(1), Mumbai

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

ITA 6850/MUM/2019[2016-17]Status: DisposedITAT Mumbai23 Aug 2023AY 2016-17

Bench: Shri B R Baskaran, Am & Ms. Kavitha Rajagopal, Jm M/S. Nd’S Art World Pvt. Ltd. Asst.Cit-15(2)(1) 201-A Second Level Ventura Shopping Mumbai Vs. Hiranandani Business Park, Powai, Mumbai-400 076 Pan/Gir No. Aabcn 7882 R (Appellant) (Respondent) : Assessee By : Shri Shashank Mehta : Dr. Samuel Pitta Revenue By Date Of Hearing : 26.05.2023 Date Of Pronouncement : 23.08.2023

For Appellant: Shri Shashank Mehta

Section 143(3)Section 2Section 36(1)(vii)Section 56(2)(viib)

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI B R BASKARAN, AM AND MS. KAVITHA RAJAGOPAL, JM

ACIT, Circle- 7(2), New Delhi vs. Dharitrimaa Urja Pvt. Ltd., New Delhi

In the result, the Appeal filed by the Revenue is dismissed

ITA 5682/DEL/2018[2015-16]Status: DisposedITAT Delhi21 Aug 2023AY 2015-16

Bench: Or During The Hearing Of This Appeal.” Grounds Of Appeal.”

Section 14Section 234Section 56(2)Section 56(2)(viib)

whereas share application money was received in previous year relevant to assessment year 2014-15 which is against the provisions of section 56(2)(viib) of the Income Tax Act. Page 2 of 5 ACIT vs. Dharitrimaa Urja Pvt. Ltd. 8. On the facts and circumstances of the case ... assessing officer has erred in ignoring the valuation reports of valuers as per section 56(2)viib) read with rule 11UA of the Income Tax Rules.. 9. On the facts and circumstances of the case and in law, the assessing officer has wrongly considered the Net Asset Value

Movefast Automobiles Pvt Ltd, Faridabad vs. ITO Ward - 1(5), Faridabad

In the result, the appeal of the assessee is partly allowed

ITA 6183/DEL/2019[2015-16]Status: DisposedITAT Delhi18 Aug 2023AY 2015-16

Bench: Shri C.M. Garg & Shri M. Balaganeshassessment Year: 2015-16 Movefast Automobiles Pvt. Ltd., Vs Ito, Ff-9, Vishnu Place, Ward-1(5), Near Neelam Flyover, Faridabad. Sector-20, Faridabad. Pan: Aaicm2607C

For Appellant: Shri Rajiv SaxenaFor Respondent: Ms Raja Rajeshwari R., Sr. DR

Section 133(6)Section 143(3)Section 56(2)(viib)Section 68

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : DELHI BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI M. BALAGANESH

Maakhan Milk Products Pvt. Ltd., Haryana vs. ITO Ward 1(5), Faridabad

In the result, the appeal of the assessee is allowed

ITA 6180/DEL/2019[2015-16]Status: DisposedITAT Delhi18 Aug 2023AY 2015-16

Bench: Shri C.M. Garg & Shri M. Balaganeshassessment Year: 2015-16 Maakhan Milk Products Pvt. Ltd., Vs Ito, 1066, Baba Nagar, Ward-1(5), Near Janta Barat Ghar, Faridabad. Old Faridabad, Faridabad, Haryana – 121 002. Pan: Aaicm2610H

For Appellant: Shri Rajiv SaxenaFor Respondent: Ms Raja Rajeshwari R., Sr. DR

Section 133(6)Section 143(3)Section 56(2)(viib)Section 68

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : DELHI BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI M. BALAGANESH

Income Tax Officer -10(2)(3), Mumbai vs. M/S Maiden Marketing India Pvt Ltd, Mumbai

ITA 1624/MUM/2023[2015-2016]Status: DisposedITAT Mumbai17 Aug 2023AY 2015-2016

Bench: Shri Amit Shukla & Shri Amarjit Singhincome-Tax Officer Vs. M/S Maiden Marketing 10(2)(3), India Private Limited Room No. 212, 2 Nd Floor, 1601, Plot No. A-4, Cts Aayakar Bhavan, No. 694, Peninsula Park, Mumbai – 400020 16Th Floor, Fun Republic Lane, Andheri (West), Mumbai – 400 053 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaicm7168E Appellant .. Respondent

For Appellant: Himanshu GandhiFor Respondent: Mahita Nair

Section 115JSection 143(3)Section 147Section 148Section 56(2)(viib)

r.w.s. 1448 amount to exercise of power of review which is not available to the Assessing Officer ignoring that the provisions of section 56(2)(viib) relevant to the original assessment proceeding and 68 relevant to the present assessment proceeding are not pari materia?" 2

M/S. Bharat Cera Glass Limited, Bhilwara vs. ITO, Ward-3, Bhilwara

In the result, both the grounds of appeal raised by the assessee are dismissed

ITA 411/JODH/2017[2013-14]Status: DisposedITAT Jodhpur10 Aug 2023AY 2013-14

Bench: Shri Pavan Kumar Gadale & Dr. Dipak P. Ripoteassessment Year : 2013-14 M/S Bharat Cera Glass Limited, Income Tax Officer, 1-B-24, Shashtri Nagar, Vs Ward-3, Bhilwara Bhilwara Pan: Aaecb4366K Appellant / Assessee Respondent / Revenue

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

premium in the balance-sheet. Since the assessee is a company in which the public are not substantially interested. The Assessing Officer invoked section 56(2)(viib) of the Act. The assessee had not submitted any certified copy of valuation during the assessment proceedings and also during the proceedings before ... shares of Rs. 1,25,37,000/- as against Rs. 1,40,00,000/- received by the assessee. Therefore, AO made addition under section 56(2)(viib) of the Act of Rs. 14,63,000/-. 6. Aggrieved by the said addition, assessee filed the appeal before

Smt. Mumtajbanu A. Jivani, Amreli vs. The ITO, Ward-3 (1) (4), Amreli

The appeal of the assessee is allowed

ITA 284/RJT/2019[2014-15]Status: DisposedITAT Rajkot09 Aug 2023AY 2014-15

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

For Appellant: Shri Kalpesh Doshi, A.RFor Respondent: Shri B.D. Gupta, Sr. D.R

Section 250Section 269USection 50CSection 56(2)(vii)

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH VIRTUAL COURT] Before: Ms. Annapurna Gupta, Accountant Member And

DCIT 1(1), Bhopal vs. M/S. Decore Thermal Power (P) Ltd., Bhopal

In the result, the appeal of the revenue as well as cross objection of the

ITA 15/IND/2020[2016-17]Status: DisposedITAT Indore31 Jul 2023AY 2016-17

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 143(2)Section 143(3)Section 56(2)(vib)Section 56(2)(viib)Section 56(2)(viilb)Section 56(2)(vilb)Section 68

following grounds: 1. "Whether on the facts and circumstances of the case, the Ld. CIT(A) was justified in holding that provisions of section 56(2)(viib) would not apply in the case of the assessee as no consideration was received by the assessee, when the assessee had received consideration ... condition that such consideration has to be received in the form of share premium only is against the legislative intent, when in the section 56(2)(viib), only the word consideration is mentioned and there is no mention of the word share premium. 3. Whether on facts and circumstances

Citron Infraprojects Limited, Mumbai vs. Principle Commissioner of Income Tax, (Central)-4, Mumbai

ITA 1518/MUM/2023[2014-2015]Status: DisposedITAT Mumbai27 Jul 2023AY 2014-2015

Bench: Shri Kuldip Singh & Shri Gagan Goyalassessment Year: 2014-15

For Appellant: NoneFor Respondent: Mr. K.C. Selvamani, CIT D.R

Section 142(1)Section 144Section 153ASection 153DSection 263Section 56(2)(viib)

provided in rule- 11UA(2)(a) of the Income Tax Rules, 1962 (for short ‘the Rules’) and thereby invoked the provisions contained under section 56(2)(viib) of the Act and worked out the share value as per rule 11U at Rs.136/-. 5. The Ld. PCIT reported to have given

Hiranandani Healthcare P. Ltd, Navi Mumbai vs. CIT(Appeals), Mumbai

In the result, both the appeals of the assessee are allowed

ITA 3240/MUM/2022[2012-13]Status: DisposedITAT Mumbai27 Jul 2023AY 2012-13

Bench: Shri B.R. Baskaran (Am) & Shri Narender Kumar Choudhry (Jm)

Section 68Section 79Section 79(1)

response to the above said query, the assessee submitted that the share premium can be assessed as income, only under the provisions of section 56(2)(viib) of the I.T. Act, which was inserted by the Finance Act 2012 w.e.f. 1.4.2013. Hence, the provisions of section 56(2)(viib) shall

Ronit Capital Management Ltd., Mumbai vs. ITO 4 (2)(1), Mumbai

ITA 6679/MUM/2019[2012-13]Status: DisposedITAT Mumbai24 Jul 2023AY 2012-13

Bench: Shri Aby T. Varkey, Jm & Shri S. Rifaur Rahman, Am आयकर अपील सं/ I.T.A. No.6679/Mum/2019 (निर्धारण वर्ा / Assessment Year: 2012-13) M/S. Ronit Capital बिधम/ Ito-4(2)(1) Management Ltd. 644, Aayakar Bhavan, M. Vs. 233, Shreeji Industrial K. Road, Mumbai- Estate, Subhash Road, 400020. Jogeshwari (E)-400060. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaach9239D (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Dharmesh Shah/Ms. Mitali Gopani Revenue By: Smt Riddhi Mishra (Dr) सुनवाई की तारीख / Date Of Hearing: 30/05/2023 घोषणा की तारीख /Date Of Pronouncement: 24/07/2023 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Assessee Company Against The Order Of The Ld. Cit(A)-9, Mumbai Dated 23.08.2019 For Ay. 2012-13 2. The Main Grievance Of The Assessee Is Against The Action Of The Ld. Cit(A) Confirming The Addition To The Tune Of Rs.10,43,77,000/- U/S 68 Of The Income Tax Act, 1961 (Hereinafter “The Act”). 3. Brief Facts Are That The Assessee Had Filed Return Of Income On 30.09.2012 Declaring Total Income To The Tune Of Rs.70,768/-. Later, The Case Of The Assessee Was Selected For Scrutiny. The Ao Noted That The Assessee Had Only Partly Complied With The Notice Issued By Him On 30.01.2015 & Therefore In View Of The Non-Compliance, He Framed Best Judgment Assessment U/S 144 Of The Act, Making Several Additions Totalling Rs 68.83 Crores, Which Are As Under: -

For Appellant: Shri Dharmesh Shah/Ms. MitaliFor Respondent: Smt Riddhi Mishra (DR)

Section 133(6)Section 144Section 68

reasons for charging high share premium could not be questioned in the relevant AY 2012-13 as the amendment by way of Section 56(2)(viib) of the Act came into effect only from AY 2013-14 and onwards, he however showed that the book value of the shares

DCIT, Central Circle-17, New Delhi vs. Caddie Hotels Pvt Ltd., New Delhi

In the result the appeal of the assessee in ITA No

ITA 1724/DEL/2022[2017-18]Status: DisposedITAT Delhi21 Jul 2023AY 2017-18

Bench: Shri N.K. Billaiya & Shri Anubhav Sharma

For Appellant: Shri Ajay Vohra, AdvFor Respondent: Shri T. James Singson, CIT- DR

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

face value of Rs. 10/- and share premium of Rs. 89.72. The Fair Market Value of the shares for the purpose of section 56(2)(viib) of the Act r.w.r. 11UA of the Income Tax Rules, 1962 was carried out by an independent Chartered Accountant who valued the shares ... duly supported by a valuation report as per Rule 11UA of the IT Rules, the ld. CIT(A) observed as under: “(i) Section 56(2) (viib) is a deeming provision and one cannot expand the meaning of scope of any word while interpreting such deeming provision. ii. Option is with