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2018 (9) TMI 2020 - AT - Income TaxRevision u/s 263 - PCIT was not convinced with the above explanation of the assessee and referring to Computation of FMV as per the assessee, FMV as on 31.03.2012 of Omega Properties Pvt. Ltd. and Dakshina Properties Pvt. Ltd. and computation of FMV of shares as done by the DCIT-4(1)(1), Mumbai, found that there was considerable variation in valuation of shares as done by the AO as per the proposal and as submitted by the assessee in the course of proceedings before him. The assessment order passed does not reveal that a detailed examination of acquisition of assets and applicability of section 56(viia) and Rule 11UA was undertaken in acquisition of shares of Suprasad Investments & Trading Co. Pvt. Ltd. - HELD THAT:- We find that the assessee had not acquired any shares in Geetanjali Trading & Investment Pvt. Ltd. during the impugned assessment year and therefore, the question of furnishing details of the said shares does not arise. It is stated in Note No. 8(3) of the Balance Sheet that “during the period following investments of Asian Paints Ltd. have been transferred from the holding company at cost”. The assessee had received 52,86,062 equity shares of Asian Paints Ltd. from its holding company i.e. Geetanjali Trading & Investment Pvt. Ltd. and since the said holding company holds 100% shares of the assessee-company, the said transfer is exempt u/s 47(iv) of the Act. Further, section 56(2)(viia) does not apply to shares of a quoted company (Asian Paints Ltd.) received by the assessee. Therefore, the question of valuation of these shares at market price does not arise. We find that the assessee had submitted computation of value per share under Rule 11UA of M/s Suprasad Investment & Trading Co. Pvt. Ltd. along with balance sheet as on 31.03.2012 vide letter dated 28.01.2016. It is evident from the official seal dated 28.01.2016 of the office of Asstt./Dy. CIT-8(2)(1) Mumbai, indicating the receipt. Rule 11UA as in force in AY 2013-14 does not provide to replace fair value of quoted shares to book value and therefore, the value derived by the DCIT 4(1)(1) cannot be substituted to the value as derived under Rule 11UA. Rule 11UA, during the relevant period, provides for valuation of unquoted equity shares by adopting the amount as per ‘book value’. In Malabar Industrial Co. Ltd. v. CIT [2000 (2) TMI 10 - SUPREME COURT], the Hon’ble Supreme Court has held that the Commissioner has to be satisfied with the twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of the conditions is absent-if the order of the AO is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue-recourse cannot be held to section 263(1) of the Act. The factual scenario depicted hereinabove is to be examined on the anvil of the above enunciation of law. As stated earlier, Rule UA as in force in the impugned assessment year, does not provide and require to replace fair value of quoted shares to book value and therefore, the value derived by the DCIT-4(1)(1) cannot be substituted to the value as derived under Rule 11UA. Rule 11UA provides for valuation of unquoted equity shares by adopting the amount as per ‘book value’. In view of the above reasons, we set aside the order u/s 263 passed by the PCIT. - Decided in favour of assessee.
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