“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)

DCIT, Circle-1(1), Gurgaon vs. Apca Power Private Limited, Gurgaon

In the result, the appeal of the Revenue stands allowed for statistical purposes

ITA 9303/DEL/2019[2015-16]Status: DisposedITAT Delhi18 Jul 2023AY 2015-16

Bench: Shri Shamim Yahya & Shri Yogesh Kumar Us[Assessment Year: 2015-16]

Section 143(3)Section 154Section 56(2)Section 56(2)(viib)

filed by the assessee pertains to the addition made by the AO on account of share premium received by the assessee by invoking section 56(2)(viib). The Ld. CIT(A) further noted that this addition was made by the AO vide order dated ... Vivek Chaudhri was non-resident during the year in which shares were issued, the appellant has contended that the provisions of section 56(2)(viib) do not apply in the case of non-resident and as such the penalty imposed may be deleted. I agree with this contention

Apca Power Private Limited, Gurgaon vs. DCIT, Circle-1(1), Gurgaon

In the result, the appeal of the Revenue stands allowed for statistical purposes

ITA 8184/DEL/2019[2015-16]Status: DisposedITAT Delhi18 Jul 2023AY 2015-16

Bench: Shri Shamim Yahya & Shri Yogesh Kumar Us[Assessment Year: 2015-16]

Section 143(3)Section 154Section 56(2)Section 56(2)(viib)

Dinesh Kumar Chaurasia, Tonk vs. PCIT Central, Jaipur

In the result, appeal of the assessee is dismissed

ITA 102/JPR/2023[2018-19]Status: DisposedITAT Jaipur17 Jul 2023AY 2018-19

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Sh. Mahendra Gargieya (Adv.)For Respondent: Sh. Ajey Malik (CIT)

Section 143(3)Section 263Section 5

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Jh lanhi xkslkbZ] U

Extol Wind Ltd, Bhopal vs. The ITO Ward 1 (3), Bhopal

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

ITA 30/IND/2023[2014-15]Status: DisposedITAT Indore14 Jul 2023AY 2014-15

Bench: Shri Vijay Pal Rao & Shri B.M. Biyaniextol Wind Ltd. Ito Ward 1(3) 104, Jahangirbad Barkhedi Bhopal Vs. Road, Bhopal (Appellant / Assessee) (Respondent/ Revenue) Pan: Aaace 8607 N Assessee By Shri Pawan Ved, Ar Revenue By Shri Ashish Porwal, Sr. Dr Date Of Hearing 11.07.2023 Date Of Pronouncement 14.07.2023

Section 56(2)(viib)

case the ld. CIT(A) is justified in confirming the addition of share premium made by the AO under provisions of section 56(2)(viib) of the Act. During the year under consideration the assesse has issued share @ Rs.80 per share of having face value of Rs.10 at a premium ... assesse was not given opportunity to furnish the value of the shares issued as per the prescribed method as provided in explanation to section 56(2)(viib) of the Act. Ld. AR has submitted that as per the Rule 11UA the fair market value of the shares shall be determined

Hri Healthcare Pvt Ltd., Mumbai vs. Asst. CIT Circle-10(1)(1), Mumbai

In the result, the appeal of the assessee is allowed

ITA 2437/MUM/2019[2015-16]Status: DisposedITAT Mumbai11 Jul 2023AY 2015-16

Bench: Shri Aby T Varkey & Shri Amarjit Singhhri Healthcare Pvt. Ltd. Vs. Asst. Commissioner Of 602, 6Th Floor, Supreme Income Tax, Circle Chambers, Off Veera 10(1)(1), Aaykar Bhavan, Desai Road, Andheri (W) 2Nd Floor, Mumbai – 400053 Mumbai - 400021 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aacch7613M Appellant .. Respondent [ Appellant By : K. Gopal Respondent By : Soumendu Kumar Dash Date Of Hearing 16.06.2023 Date Of Pronouncement 11.07.2023 आदेश / O R D E R Per Amarjit Singh (Am): This Appeal Filed By The Assesse Is Directed Against The Order Passed By The Cit(A)-17, Mumbai, Dated 28.01.2019 For A.Y. 2015-16. The Assessee Has Raised The Following Grounds Before Us: “1.1 The Learned Assessing Officer Erred In Making An Addition Of Rs.4,96,08,000 Under Section 56(2)(Viib) Of The Income-Tax Act, 1961 ("The Act') Being The Difference Between The Share Premium Received By The Appellant From Its Holding Company & The Fair Market Value Of The Shares There Of As Computed Under Rule 11Ua Of The Income-Tax Rules, 1962( The Rules") & Cit(A) In Confirming The Same 1.2 The Assessing Officer Erred In Holding The Issue Price Of Right Shares To Existing Shareholder Of The Company Which Were Adopted On The Basis Of A Valuation Report Of An Independent Valuer As Exorbitant On Reasons Purely In The Realm Of Conjectures/Surmises Without Appreciating That The Same Is In Accordance With Provisions Of The Act & Cit(A) In Confirming The Same. 1.3 It Is Submitted That Valuation Is An Art & Not A Science. The Valuation Are Based On Certain Assumptions & Estimations Especially In Case Of New Company. The Valuation Has Been Done Based On The Dcf Method

For Appellant: K. GopalFor Respondent: Soumendu Kumar Dash

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

raised the following grounds before us: “1.1 The learned assessing officer erred in making an addition of Rs.4,96,08,000 under section 56(2)(viib) of the Income-tax Act, 1961 ("the Act') being the difference between the share premium received by the appellant from its Holding Company ... submitted during the assessment proceedings. 3. The learned assessing officer and CIT(A) failed to appreciate that the objective behind the introduction of section 56(2)(viib) of the Act was to prevent the introduction of black money in the system by way of acceptance of share subscriptions from unaccounted

Rajasthan Transmat Private Limited, Jaipur vs. Income Tax Officer, Ward 7(2), Jaipur

In the result, the appeal of the assessee partly allowed

ITA 165/JPR/2023[2012-13]Status: DisposedITAT Jaipur11 Jul 2023AY 2012-13

Bench: SHRI SANDEEP GOSAIN (Judicial Member), DR MEETHA LAL MEENA (Accountant Member)

For Appellant: Mrs. Prabha Rana, AR and Shri Vinod Kumar, AdvocateFor Respondent: Mrs. Runi Pal, Addl. CIT-DR

Section 133(6)Section 142(1)Section 143(2)

11UA was prescribed and thus the provision of Section 56(2)(vii)(b) cannot be made applicable. He further submitted that provisions of Section 56(2)(viib) have been brought in the statute book w.e.f. 01-04-2013 and even the Rules specified 11U and 11UA [for determining value

Joint Commissioner of Income Tax (OSD) Circle-3, Ferozepur vs. Measage Om Sons Marketing Private Limited, Faridkot

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

ITA 407/ASR/2019[2015-16]Status: DisposedITAT Amritsar07 Jul 2023AY 2015-16

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 143(3)Section 250(6)Section 37(1)Section 56(2)(viib)

prescribed. The prescribed methods of valuations are given under Rule 11 UA of the Rule. 4.3. The relevant extract of Section 56(2)(viib) of the Act is as under: “56(2)(viib) where a company, not being a company in which the public are substantially interested, receives74a ... match projections and failed to provide any alternate fait value of shares; Tribunal was therefore justified in deleting the addition made under section 56(2)(viib).” I.T.A. No.407/Asr/2019 10 Assessment Year: 2015-16 b) Rameshwaram Strong Glass P Ltd. Vs ITO in ITA No. 172 ITD 571 (Jaipur Bench) dated

Pingash Home Appliances Private Limited, Faridabad vs. ITO Ward-2(1), Faridabad

In the result, appeal of the assessee is allowed

ITA 106/DEL/2021[2016-17]Status: DisposedITAT Delhi07 Jul 2023AY 2016-17

Bench: Shri Saktijit Dey, Vice- & Shri Girish Agrawal

For Appellant: Shri Rajiv Saxena and Shyam Sunder, AdvsFor Respondent: Shri Ram Dhan Meena, Sr. DR

Section 143(2)Section 143(3)Section 250(2)Section 251(1)Section 271Section 56Section 56(2)Section 68

Rs.62,00,000/- under the head income from other sources by /X, ITANo.l06/De 1/2021 Pingash Home Appliances Pvt. Ltd. A.Y. 2016-17 applying section 56(!2)(viib) of the Act on protective basis and rejecting the valuation report furnished under Rule llUA(2)(b) of the Income Tax Rules ... addition of Rs.62,00,000 for which he held that share premium received in excess of face value is treated as income under Section 56(2)(viib) of the Act. Accordingly, appeal of the assessee was dismissed and total income was enhanced under Section

ITO Ward - 25(4), New Delhi vs. Triumph Reality Pvt Ltd, New Delhi

In the result, appeal is dismissed

ITA 1412/DEL/2020[2014-15]Status: DisposedITAT Delhi06 Jul 2023AY 2014-15

Bench: Shri Saktijit Dey, Vice- & Shri Girish Agrawalassessment Year: 2014-15 Income-Tax Officer, Versus Triumph Reality Pvt. Ltd. Ward 25(4), New Delhi. Plot No. 2, Vasant Kunj, Phase-Ii, Nelson Mandela Road, New Delhi. Pan: Aacct8092L (Appellant) (Respondent) Assessee By : Ms. Kavita Jha, Advocate & Sh. Himanshu Agarwal, Adv. Revenue By : Ms. Sapna Bhatia, Cit- Dr

For Appellant: Ms. Kavita Jha, Advocate &For Respondent: Ms. Sapna Bhatia, CIT- DR

Section 56

applicable as the assessee has not received any shares during the year. Without prejudice, the assessee submitted that as per section 56(2)(viib), the assessee can value shares at its own option as per Rule 11UA. The assessee submitted that as per the discounted cash flow method ... Even otherwise also, the valuation of share as per DCF method has been determined by a registered valuer, which is in terms of section 56(2)(viib) of the Act read with Rule 11UA. Even, the alternative method adopted by the assessee for valuation of share was found

Thinkstations Learning Private Limited, New Delhi vs. ACIT Circle-8(1), New Delhi

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

ITA 9824/DEL/2019[2015-16]Status: DisposedITAT Delhi04 Jul 2023AY 2015-16

Bench: Shri Narendra Kumar Billaiya & Shri Challa Nagendra Prasad

For Appellant: Advocate

Section 139(1)Section 142(1)Section 143(2)Section 143(3)Section 56(2)(viib)

Appeals)] New Delhi for assessment years 2015-16 and 2016-17 in sustaining the addition made by the Assessing Officer under section 56(2)(viib) of the Income Tax Act, 1961 (the Act) in respect of share premium received by the assessee. 2. First we take up the appeal ... Discounted Cash Flow (DCF) Method for valuation of share price. The Assessing Officer 2 ITA. Nos. 9824 & 7345/Del/2019 referring to the provisions of section 56(2)(viib) and the explanation he was of the view that assessee has to consider the valuation whichever is higher between (i) the valuation according

Thinkstations Learning Private Limited, New Delhi vs. ACIT Circle-25(1), New Delhi

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

ITA 7345/DEL/2019[2016-17]Status: DisposedITAT Delhi04 Jul 2023AY 2016-17

Bench: Shri Narendra Kumar Billaiya & Shri Challa Nagendra Prasad

For Appellant: Advocate

Section 139(1)Section 142(1)Section 143(2)Section 143(3)Section 56(2)(viib)

DCIT Circle-9(1), New Delhi vs. Firki Wholesale Pvt Ltd, New Delhi

In the result, appeal of the Revenue is dismissed and Cross

ITA 7467/DEL/2019[2016-17]Status: DisposedITAT Delhi28 Jun 2023AY 2016-17

Section 143(3)Section 56(2)Section 56(2)(viib)Section 561

factor cannot be challenged arbitrarily only by comparing to the previous period valuation if the same has been done in compliance to /s Section 56(2) (viib) read with rule 11UA(2) of IT Act, 1961.” 3. The only issue raised in the appeal of the Revenue ... that one of the Investor to whom shares were allowed at premium was Seed Fund 2 International, Mauritius to whom the provisions of section 56(2)(viib) of the Act cannot be made applicable at all since, the shares were issued to non-resident. It was also pointed out that

Ai-Yaseen Trading Co.P.Ltd, Meerut vs. ITO, Ward-1(1), Meerut

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

ITA 6244/DEL/2017[2013-14]Status: DisposedITAT Delhi28 Jun 2023AY 2013-14

Section 56(2)(vii)Section 56(2)(viib)

treated as amount received in excess of fair market value and consequentially brought to tax as income from other sources in terms of section 56(2)(viib) of the Act. 6. This action of the Ld. AO is upheld by the Ld. CIT(A). 7. It is not in dispute ... case of Cinestaan Entertainment (P.) Ltd. vs. ITO reported in 106 taxmann.com 300 (Delhi-Trib.) wherein it was held as per section 56(2)(viib) of the Act read with Rule 11U and 11UA of the Rules, the assessee has an option to do valuation of shares and determine fair

Broom Publications Pvt. Ltd., Faridabad vs. ITO Ward 1(2), Faridabad

In the result, the appeal of the assessee on this ground is allowed

ITA 6177/DEL/2019[2015-16]Status: DisposedITAT Delhi27 Jun 2023AY 2015-16

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Rajeev Saxena, AdvFor Respondent: Sh. Kanv Bali, Sr. DR

Section 14Section 2Section 56Section 56(2)(viib)Section 68

held that an amount of Rs.70,50,000/- be treated u/s 56(2)(viib). Arguments of the ld. AR against the issue of Section 56(2)(viib): 8. The assessee justified the value of the shares based on the report of the valuer. It was argued that the report ... reject the valuation done without bringing on record any cogent reasoning. Arguments of the ld. DR in support of the issue of Section 56(2)(viib): 9. It was argued that no corroborative details have been furnished to substantiate the cash flow of Rs.90,00,000/- from the equity

Balgopal Cold Storages Pvt. Ltd., Faridabad vs. ITO Ward 1(2), Faridabad

In the result, the appeal of the assessee on this ground is allowed

ITA 6176/DEL/2019[2015-16]Status: DisposedITAT Delhi27 Jun 2023AY 2015-16

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Rajeev Saxena, AdvFor Respondent: Sh. Kanv Bali, Sr. DR

Section 14Section 2Section 56Section 56(2)(viib)Section 68

DCIT-CC 5(2), Central Range 5, Mumbai vs. M/S Jet Privilege Private Limited, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 652/MUM/2023[2014-15]Status: DisposedITAT Mumbai22 Jun 2023AY 2014-15

Bench: Shri Aby T. Varkey () & Ms. Padmavathy S. ()

Section 56(2)(viib)Section 68

resident shareholders, i.e. Jet Airways and Apurva Shah was already offered to tax as Income from other sources as per the provisions of section 56(2)(viib) of the Act. However, the excess premium received from Etihad was not offered to tax since the provisions of section 56(2)(viib ... shares. The Ld.AR further submitted that the assessee has not disallowed any amount of the excess share premium received from Etihad Airways under section 56(2)(viib) for the reason that the provisions of section are very clear that the receipts from residents attract the provisions of this section

Manhar Yarns Private Limited, Ballabgarh vs. ITO Ward-1(5), Faridabad

In the result, the Appeal of the Assessee is partly allowed

ITA 97/DEL/2021[2016-17]Status: DisposedITAT Delhi20 Jun 2023AY 2016-17

Bench: Dr. B. R. R. Kumar & Shri Yogesh Kumar U.S.

For Appellant: Sumangla Saxena, Adv &For Respondent: . Arvind Kumar Bansal

Section 143(3)Section 251(1)Section 271(1)(c)Section 56(2)Section 56(2)(viib)Section 68

income of appellant as 251(1) of the Act by Rs. 62,00,000/- under the head income from other sources by applying section 56(2)(viib) of the Act on protective basis and rejecting the valuation report furnished under Rule 11UA(2)(b) of Income Tax Rules ... income of the assessee u/s 251(1) of the Act by Rs. 62,00,000/- under the head of other sources by applying Section 56(2) (viib) of the Act on protective basis and rejected the valuation report submitted as per Rule 11UA(2)(b) of the Income Tax Rules

Movefast Tour & Travels Pvt. Ltd, Faridabad vs. ITO Ward-1(5), Faridabad

In the result, the Appeal of the Assessee is partly allowed

ITA 96/DEL/2021[2016-17]Status: DisposedITAT Delhi20 Jun 2023AY 2016-17

Bench: Dr. B. R. R. Kumar & Shri Yogesh Kumar U.S.I.T.A. No. 96/Del/2021 (A.Y. 2016-17) Movefast Tour & Travels Pvt. Ltd. Vs. Ito Plot No. 1066, Baba Nagar, Near Ward-1(5) Janta Barat Ghar, Faridabad, C. R. Building, Faridabad Haryana Haryana Pan No. Aaicm2608P ( Respondent ) ( Appellant )

For Appellant: Sumangla Saxena, Adv &For Respondent: . Arvind Kumar Bansal

Section 143(3)Section 251(1)Section 271(1)(c)Section 56Section 56(2)(viib)Section 68

income of appellant as 251(1) of the Act by Rs. 70,87,500/- under the head income from other sources by applying section 56(2)(viib) of the Act on protective basis and rejecting the valuation report furnished under Rule 11UA(2)(b) of Income Tax Rules ... income of the assessee u/s 251(1) of the Act by Rs. 70,87,500/- under the head of other sources by applying Section 56 (2)(viib) of the Act on protective basis and rejected the valuation report submitted as per Rule 11UA(2)(b) of the Income Tax Rules

Nelumbo Paints Pvt. Ltd., Haryana vs. ITO Ward 2(1), Haryana

In the result, the Appeal of the Assessee is partly allowed

ITA 85/DEL/2021[2016-17]Status: DisposedITAT Delhi20 Jun 2023AY 2016-17

Bench: Dr. B. R. R. Kumar & Shri Yogesh Kumar U.S.

For Appellant: Sumangla Saxena, Adv &For Respondent: . Arvind Kumar Bansal

Section 143(3)Section 251(1)Section 271(1)(c)Section 56Section 56(2)(viib)Section 68

income of appellant as 251(1) of the Act by Rs. 62,00,400/- under the head income from other sources by applying section 56(2)(viib) of the Act on protective basis and rejecting the valuation report furnished under Rule 11UA(2)(b) of Income Tax Rules ... assessee u/s 251(1) of the Act by Rs. 62,00,000/- under the head income from other sources by applying Section 56 (2)(viib) of the Act on protective basis and rejected the valuation report submitted as per Rule 11UA(2)(b) of the Income Tax Rules, 1962. Aggrieved

Abhi Soaps Private Limited, Faridabad vs. ITO Ward - 1(1), Faridabad

In the result, the Appeal of the Assessee is partly allowed

ITA 79/DEL/2021[2016-17]Status: DisposedITAT Delhi20 Jun 2023AY 2016-17

Bench: Shri Anil Chaturvedi & Shri Yogesh Kumar U.S.

For Appellant: Sumangla Saxena, AdvFor Respondent: Sh. Kanv Bali, Sr. DR

Section 133(6)Section 143(3)Section 251(1)Section 271(1)(c)Section 56Section 56(2)(viib)Section 68

income of appellant as 251(1) of the Act by Rs. 75,00,250/- under the head income from other sources by applying section 56(2)(viib) of the Act on protective basis and rejecting the valuation report furnished under Rule 11UA(2)(b) of Income Tax Rules ... income of the assessee u/s 251(1) of the Act by Rs. 75,00,250/- under the head of other sources by applying Section 56 (2)(viib) of the Act on protective basis and rejected the valuation report submitted as per Rule 11UA(2)(b) of the Income Tax Rules