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– November 4, 2022 at 10:17 am
56(2)(viib) adopting the circle rate of the property, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) upheld the order of the CIT(A) deleting the addition of Rs.2,95 23,400/ made by the AO.
Malibu Estate Dispensary Pvt. Ltd., the assessee company is working on construction of a dispensary/hospital at Gurgaon. The assessee introduced share capital/share premium in respect of total number of allotted shares of 152816 with face value of Rs.1428160/- and premium of Rs.69979840/-. Share premium was @ 490 per share.
The AO found that the NAV of the shares was Rs. 10 as per 11 UA of IT Rules as per book value of assets and liabilities as on 31.03.2015. The assessee filed a detailed reply and supported its claim with a valuation report from a registered valuer and a certificate from the CA in respect of valuation. The AO found that the stamp duty rate was Rs. 30,000/- per square yard and accepting the same the AO calculated the addition on account of additional share premium received at Rs.29562912/-.
On appeal, the CIT(A) held that the AO has to accept the fair market value of the property paid by the appellant and deleted the addition of Rs.2,95,23,400/ made by the AO.
Sh. A quorum of NK Billaiah, Accountant Member and Sh. Judicial Member Anubhav Sharma observed that as per the interpretation of Section 56 (2)(viib) of the Act, the fair market value of shares shall be determined on the basis of (1) Rule 11UA or (2) fair value of the underlying asset whichever is higher.
The Tribunal observed that the AO erred in accepting the circle rate of the property and upheld the finding of the CIT(A). The appeal filed by the Revenue is dismissed.
Sh. Jitendra Chand appeared for the appellant and S. Sushil Wadhwa appeared for the respondent.
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ITO v. Malibu Estate Dispensary Pvt. Ltd
Advocate for the appellant: Jitendra Chand
Advocate for Respondent: Sushil Wadhwa
Citation: 2022 TAXSCAN (ITAT) 1619
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