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“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
80
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
69
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
56
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
49
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 2(2)(1), Mumbai vs. Max Hospitals and Allied Services Limited, Mumbai

In the result, appeals by the revenue are dismissed

ITA 3085/MUM/2025[2018-19]Status: DisposedITAT Mumbai11 Aug 2025AY 2018-19

Bench: Shri Saktijit Dey, Hon’Ble & Shri Narendra Kumar Billaiya, Hon’Ble

For Appellant: Revenue byFor Respondent: Shri Vivek Perampurna, CIT D/R
Section 143(3)Section 263Section 56(2)(viib)

amount represents income either from the source already disclosed by the assessee or from some undisclosed source.” 7. Referring to the provisions of Section 56(2)(viib) of the Act, the AO treated the premium of Rs. 10/- as assessee’s income for the year under consideration and made addition ... relied upon the valuation report of the Chartered Accountant in this regard. There is a settled law on this issue that as per Section 56(2)(viib) of the Act r.w.r. 11UA of the Rules, every assessee has an option to do valuation of shares and determine its FMV either

DCIT 2(2)(1), Mumbai vs. Max Hospitals and Allied Services Limited, Mumbai

In the result, appeals by the revenue are dismissed

ITA 3084/MUM/2025[2017-18]Status: DisposedITAT Mumbai11 Aug 2025AY 2017-18

Bench: Shri Saktijit Dey, Hon’Ble & Shri Narendra Kumar Billaiya, Hon’Ble

For Appellant: Revenue byFor Respondent: Shri Vivek Perampurna, CIT D/R
Section 143(3)Section 263Section 56(2)(viib)

amount represents income either from the source already disclosed by the assessee or from some undisclosed source.” 7. Referring to the provisions of Section 56(2)(viib) of the Act, the AO treated the premium of Rs. 10/- as assessee’s income for the year under consideration and made addition ... relied upon the valuation report of the Chartered Accountant in this regard. There is a settled law on this issue that as per Section 56(2)(viib) of the Act r.w.r. 11UA of the Rules, every assessee has an option to do valuation of shares and determine its FMV either

DCIT 2(2)(1), Mumbai vs. Max Hospitals and Allied Services Limited, Mumbai

In the result, appeals by the revenue are dismissed

ITA 3083/MUM/2025[2016-17]Status: DisposedITAT Mumbai11 Aug 2025AY 2016-17

Bench: Shri Saktijit Dey, Hon’Ble & Shri Narendra Kumar Billaiya, Hon’Ble

For Appellant: Revenue byFor Respondent: Shri Vivek Perampurna, CIT D/R
Section 143(3)Section 263Section 56(2)(viib)

amount represents income either from the source already disclosed by the assessee or from some undisclosed source.” 7. Referring to the provisions of Section 56(2)(viib) of the Act, the AO treated the premium of Rs. 10/- as assessee’s income for the year under consideration and made addition ... relied upon the valuation report of the Chartered Accountant in this regard. There is a settled law on this issue that as per Section 56(2)(viib) of the Act r.w.r. 11UA of the Rules, every assessee has an option to do valuation of shares and determine its FMV either

Blackberry Properties Pvt. Ltd., Kolkata vs. Income Tax Officer, Ward-10(2), Kolkata

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

ITA 332/KOL/2025[2017-18]Status: DisposedITAT Kolkata04 Aug 2025AY 2017-18

Bench: Shri Sonjoy Sarma & Shri Rakesh Mishra

Section 142(1)Section 143(2)Section 143(3)Section 250Section 56(2)(viib)

value had been derived considering the value of the assets (property, land etc.) of the company in accordance with Explanation (a)(ii) to section 56(2)(viib) of the Act. During the course of assessment proceeding, the assessee was asked to substantiate the fair value adopted for issuance of shares

Writemen Media Private Limited, Bengaluru vs. Income Tax Officer, Ward-7(1)(3), Bengaluru

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

ITA 1516/BANG/2024[2014-15]Status: DisposedITAT Bangalore31 Jul 2025AY 2014-15

Bench: Shri. Laxmi Prasad Sahu & Shri. Keshav Dubeyassessment Year : 2014-15

For Appellant: Shri. Ravishankar, AdvocateFor Respondent: Shri. Ashwin D Gowda, Addl. CIT(DR)(ITAT), Bangalore
Section 115JSection 143(3)Section 153Section 56(2)(viib)

justified in law in holding and calculating the excess share premium amount received under Net Worth method for the purpose of Section 56(2)(viib) of the Act on the facts and circumstances of the case. iii. The learned authorities below failed to appreciate that as per the Explanation ... Section 56(2)(viib) of the Act, the fair market value of the shares shall be as maybe determined in accordance with such method as maybe prescribed and the appellant has correctly opted the discounted cash flow method on the facts and circumstances of the case. iv. The learned authorities

Income Tax Officer, New Delhi vs. Ninecube Technologies Pvt. Ltd., New Delhi

ITA 3186/DEL/2024[2016-17]Status: DisposedITAT Delhi31 Jul 2025AY 2016-17

Bench: Ms. Madhumita Roy & Shri Amitabh Shuklaassessment Year: 2016-17

Section 11USection 143(2)Section 143(3)Section 56(2)Section 56(2)(viib)

each share. The valuation of FMV of shares for issue of the shares were done by the assessee as per provisions of Section 56(2)(viib) Explanation a(ii) of the Income tax Act. The Income tax Act gives option to the assessee to arrive at FMV of its shares ... issue of fresh capital as per 3 options given as per provision of Section 56(2)(viib). As per this section two options are prescribed as per provisions of Explanation a(i) read with Section 11UA(2) which are a. As per Book Value arrived at as per formula given

Deputy Commissioner of Income Tax, Central Circle 2(2), Chennai vs. Aathmika Holdings Pvt Ltd, Chennai

In the result, the appeal of the Revenue stand dismissed and the

ITA 836/CHNY/2025[2021-22]Status: DisposedITAT Chennai29 Jul 2025AY 2021-22

Bench: Shri Aby T. Varkey & Shri Jagadish

For Appellant: Mr.Vikram VijayaraghavanFor Respondent: Mr.Shiva Srinivas, CIT
Section 132Section 139(1)Section 142(1)Section 143(2)Section 56(2)(x)Section 92C

present case. The valuation method set out in Rule 11UA(2) is noted to be applicable only for transactions covered by Section 56(2)(viib) viz., issuance of shares by a domestic company, which is not the issue involved in the present case, and therefore the said Rule 11UA(2 ... issuance and it was accordingly contended that, since the FMV of shares was more than the price at which the shares were issued, Section 56(2)(viib) could not be invoked. The AO inter alia rejected the valuation report by observing that the said report was not available

Madhya Bharat International Pvt Ltd, Indore vs. NFAC New Delhi, New Delhi

In the result the appeal of assessee is allowed for statistical purpose

ITA 642/IND/2024[2016-17]Status: DisposedITAT Indore28 Jul 2025AY 2016-17

Bench: Shri B.M. Biyani

Section 147Section 271(1)(c)Section 56(2)(viib)

aisha ster, sak ahs, saz IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER

Bigstar Hotels Resorts Pvt. Ltd., New Delhi vs. ITO Ward 5(1), New Delhi

ITA 3351/DEL/2024[2020-21]Status: DisposedITAT Delhi25 Jul 2025AY 2020-21

Bench: Shri Yogesh Kumar U.S & Shri Manish Agarwal

Section 143(3)Section 250

ITA No.3351/Del/2024 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI "A" BENCH: NEW DELHI BEFORE SHRI YOGESH KUMAR U.S, JUDICIAL MEMBER

Ipsaa Holdings Private Limited, Gurgaon vs. ACIT Circle 4(1), Gurgaon

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

ITA 2720/DEL/2023[2017-18]Status: DisposedITAT Delhi23 Jul 2025AY 2017-18

Bench: SHRI S. RIFAUR RAHMAN (Accountant Member), SHRI VIMAL KUMAR (Judicial Member)

For Appellant: Dr. Rakesh Gupta, AdvocateFor Respondent: Shri Om Prakash, Sr. DR
Section 56

share whereas assessee has allotted share at premium of Rs.30/- to Rs.100/- to share applicants. Therefore, according to him, the provisions of section 56(2)(viib) of the Act is attracted, he determined the share premium issued in both tranches to the extent of Rs.6.82 crores. Accordingly, he calculated ... cannot substitute his NAV in place of DCF used by independent valuers as per the option given by Rule 11UA. (3) Object of section 56(2)(viib) is to curb, prevent use & generation of unaccounted money & AO verifies the share premium on the touchstone of section 68. 8. Further

Aavishkar Oral Strips Private Limited, Hyderabad vs. ITO., Ward-1(3), Hyderabad

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

ITA 369/HYD/2025[2016-17]Status: DisposedITAT Hyderabad11 Jul 2025AY 2016-17

Bench: Shri Ravish Sood & Shri Madhusudan Sawdia

For Appellant: Shri Bhupal Goud, C.A
Section 115JSection 56(2)(vii)Section 56(2)(viib)

Value (“NAV”) method, and determined the Fair Market Value (“FMV”) of shares accordingly, resulting in an addition of Rs.1,04,89,040/- under section 56(2)(viib) of the Act. 4. | Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A), who confirmed ... assessee has filed the present appeal before the Tribunal. ITA No.369/Hyd/2025 | 5 6. The Learned Authorised Representative(“Ld. AR”) submitted that, as per section 56(2)(viib) of the Act read with Rule 11UA(2) of the Rules, the assessee has the discretion to choose either the NAV method

Tutor Investment& Finance Pvt Ltd, Mumbai vs. DCIT, Central Circle 6(4), Mumbai

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

ITA 1736/MUM/2025[2013-14]Status: DisposedITAT Mumbai10 Jul 2025AY 2013-14

Bench: the ITAT, Mumbai Bench “E”, which, vide its order in ITA No. 6752/Mum/2017 dated 15.06.2018, upheld the revisionary order passed under Section 263 of the Act.

For Appellant: Shri Snehal ShahFor Respondent: Shri Ritesh Misra, CIT DR
Section 143(3)Section 147Section 250Section 263Section 56Section 56(2)(vii)

market value of the assets of the Appellant. It is submitted that as per the categorical provision contained in explanation (a) of section 56(2)(viib), the fair market value of the shares shall be the value as determined in accordance with such method as may be prescribed (rule 11UA ... Appellant at the time when the provisions of this section were not in force. For this reason also no addition under section 56(2)(viib) is warranted in this respect it is 6 Tutor Investments and Finance Pvt Ltd submitted that the appellant substantiated the fact that the value

Income-Tax Officer - 12(1)(1), Mumbai vs. Acute Retail Infra Private Limited, Mumbai

In the result, the appeal by the Revenue is allowed for statistical purposes

ITA 4570/MUM/2024[2015-16]Status: DisposedITAT Mumbai10 Jul 2025AY 2015-16

Bench: Shri Narendra Kumar Billaiyashri Sandeep Singh Karhailito – 12(1)(1), Room No.129, 1St Floor, Aayakar Bhavan, M.K. Road, Mumbai - 400020 ............... Appellant Pan : Aabca3835H V/S Acute Retail Infra Private Limited, Knowledge House, Shyam Nagar, ……………… Respondent Jogeshwary Vikroli Link Road, Jogeshwary, Mumbai - 400060 Maharashtra Assessee By : None Revenue By : Shri Rajesh Kumar Yadav, Cit-Dr

For Appellant: NoneFor Respondent: Shri Rajesh Kumar Yadav, CIT-DR
Section 142(1)Section 143(3)Section 147Section 148Section 250Section 56(2)(viib)

r.w.s. 144B of the Act, made an addition of Rs.62,82,86,580/- being the share application money received by the assessee under section 56(2)(viib) of the Act, by observing as follows: - “4.6 Conclusion drawn:- Regarding share application money amounting to Rs. 62,82,86,580/- credited ... said amount of share application money amounting to Rs. 62,82,86,580/- is treated as income from other sources in terms of section 56(2)(viib) of the Income Tax Act, 1961 which shall be added to the Total Income of the assessee company.” 4. The learned

M/S Parvesh Construction Pvt Ltd, Mumbai vs. DCIT 8(2)(1), Mumbai

ITA 2715/MUM/2025[2009-10]Status: DisposedITAT Mumbai30 Jun 2025AY 2009-10

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan () Assessment Year: 2009-10 & Assessment Year: 2011-12

For Appellant: Mr. Nishit GandhiFor Respondent: Mr. R A Dhyani, CIT-DR
Section 147Section 148Section 14ASection 56(2)(viib)Section 68

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ

M/S. Parvesh Construction Pvt Ltd, Mumbai vs. DCIT 8(2)(1), Mumbai

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

ITA 2714/MUM/2025[2011-12]Status: DisposedITAT Mumbai30 Jun 2025AY 2011-12

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan ()

For Respondent: Mr. Nishit Gandhi
Section 147Section 148Section 14ASection 56(2)(viib)Section 68

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ

DCIT, Circle-4(2), New Delhi vs. Bits N Bytes Soft P.Ltd, New Delhi

In the result, the appeal of the revenue is dismissed

ITA 332/DEL/2023[2018-19]Status: DisposedITAT Delhi30 Jun 2025AY 2018-19

Bench: Shri C.N. Prasad, Judicialmember & Shri M. Balaganeshdcit, Vs. M/S. Bits N Bytes Pvt. Ltd, Circle-4(2), 6020, Sector B/8, Vasant New Delhi Kunj, New Delhi (Appellant) (Respondent) Pan:Aadcb1497L

For Appellant: Shri Tanmay Bhatnagar, AdvFor Respondent: Shri Ajay Kumar Arora, Sr. DR
Section 143(3)Section 68

resident investors, before the Learned AO. The assessee duly gave its explanation before the Learned AO regarding the non-applicability of provisions of section 56(2)(viib) and section 68 of the Act in respect of amounts received from aforesaid two non-resident investors. It was duly brought

Goodearth Infrastructure Development Limited, Patiala vs. Deputy Commissioner of Income Tax, CC-1, Chandigarh

In the result, the appeal is allowed for statistical purposes

ITA 1117/CHANDI/2024[2014-15]Status: DisposedITAT Chandigarh16 Jun 2025AY 2014-15

Bench: Shri Rajpal Yadav & Shri Krinwant Sahayआयकर अपील सं./ Ita No. 1117/Chd/2024 "नधा"रण वष" / Assessment Year : 2014-15 Vs. The Dcit, Goodearth Infrastructure बनाम Central Circe 1(1), Development Limited, Chandigarh 6458/1, Lahori Gate, Patiala 147001 "थायी लेखा सं./Pan No: Aaica9869Q अपीलाथ"/ Appellant ""यथ"/ Repsondent ( Physical Hearing ) "नधा"रती क" ओर से/Assessee By : Shri Parikshit Aggarwal, Ca राज"व क" ओर से/ Revenue By : Shri Vivek Vardhan, Addl. Cit, Sr. Dr सुनवाई क" तार"ख/Date Of Hearing : 04.06.2025 उदघोषणा क" तार"ख/Date Of Pronouncement : 16.06.2025 आदेश/Order Per Krinwant Sahay, A.M.:

For Appellant: Shri Parikshit Aggarwal, CAFor Respondent: Shri Vivek Vardhan, Addl. CIT, Sr. DR
Section 56(2)(viib)

account of alleged share premium in excess of the fair market value by invoking the provisions of section 56(2)(viib) of the Act. 3. That on facts, circumstances and legal position of the case, the orders passed by Ld. AO and then by Worthy CIT(A) deserve

I.P. Constructions Pvt Ltd, New Delhi vs. ITO -12(4), New Delhi

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

ITA 5531/DEL/2024[2015-16]Status: DisposedITAT Delhi11 Jun 2025AY 2015-16

Bench: Shri S Rifaur Rahman & Shri Vimal Kumarassessment Year: 2015-16 M/S. I.P. Constructions Private Vs. Acit, Limited, 210 First Floor, Phool Circle-12(2), Singh Market Main, Delhi Vikas Marg, New Delhi Pin 1100 92 Pan No. Aabci4548K (Appellant) (Respondent)

For Appellant: Shri Vishal Chandra Gupta, CAFor Respondent: Shri Om Prakash, Sr. DR
Section 131Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 250Section 271(1)(b)Section 40A(2)(b)Section 56(2)(viib)

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”: NEW DELHI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR

Triveni Knits Private Limited, Ludhiana vs. ITO Ward 1 (3), Ludhiana

ITA 246/CHANDI/2024[2013-14]Status: DisposedITAT Chandigarh09 Jun 2025AY 2013-14

Bench: SHRI. LALIET KUMAR (Judicial Member), SHRI. MANOJ KUMAR AGGARWAL (Accountant Member)

For Appellant: Shri Rajesh Mehru, CA and Shri Dev Mehru, CAFor Respondent: Dr. Ranjit Kaur, Addl. CIT, Sr. DR
Section 56(2)(vib)Section 56(2)(viib)Section 69

erred in calculating the fair market value of unquoted equity shares of the appellant company. Valuation of shares for the purpose of Section 56(2)(viib) of the Income Tax Act, 1961 has been incorrectly calculated by the Ld. AO and the addition has been made to the total income ... consideration of the capital and loan balances standing in their names in the erstwhile firm. The Ld. AO, invoking the provisions of section 56(2)(viib) of the Income Tax Act, 1961, made an addition of Rs.77,25,000/- on the grounds that the share premium received exceeded the fair

Dy. Commissioner of Income Tax, Central Circle -4(1), Mumbai vs. Wheelabrator Alloy Castings Limited, Mumbai

The appeal of the revenue is dismissed

ITA 5616/MUM/2024[2014]Status: DisposedITAT Mumbai06 Jun 2025

Bench: Justice (Retd.) C V Bhadang & Ms Padmavathy S, Am

For Appellant: Ms. Vinita Shah, ARFor Respondent: Shri Arun Kanti Datta, CIT-DR
Section 143(3)Section 224Section 263Section 56(2)(viib)Section 79

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE JUSTICE (RETD.) C V BHADANG, PRESIDENT & MS PADMAVATHY S, AM