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2024 (1) TMI 484 - ITAT DELHIComputation of LTCG - FMV determination - unlisted equity shares held by the Assessee in the J.V. Company - Appellant had obtained two valuation reports for determining the FMV of the equity shares - i) Valuation report as per the RBI Guidelines for FEMA purpose and ii) Valuation Report as per Rule 11UA of Income Tax Rules’ 1962, for the purpose of computing Capital Gains under Income Tax Act - AO held that FMV of the same share of the same company on the same date cannot be valued at multiple prices and proposed to tax difference between sales consideration computed using Rs 178.12 per share as sale price and cost of acquisition as Long Term Capital Gain taxable @ 10% and remaining portion of sales consideration paid to the Appellant was treated as income from other sources and taxed @ 40% - HELD THAT:- Based on a reading of Section 50CA of the Act, it is clear that where the actual sale consideration on transfer of unlisted equity shares is less than the fair market value of such shares determined as per the NAV method, the actual sales consideration shall get substituted with the deemed sales consideration as determined in accordance with NAV method. In the facts of the Assessee, the unlisted equity shares held by the Assessee in the J.V. Company were sold at a price of Rs. 233 per share, which was higher than the fair market value determined in accordance with NAV method i.e. INR 178.12 per share. Hence, we hold that the revenue authorities erred on facts and in law in not appreciating that the provisions of Section 50CA of the Act are not applicable in the case of the Assessee since the Assessee had sold shares in excess of fair market value as determined in accordance with Rule 11UAA of the Rules. The same proposition is also affirmed by the Coordinate Bench of ITAT, Mumbai in the case of Nearby Pte. Ltd. Vs ACIT [2023 (8) TMI 1410 - ITAT MUMBAI] held that since the full value of consideration received by the assessee is more than the fair market value, there is no need to tinker with the full value of consideration declared by the assessee. Appeal of the assessee is allowed.
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