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2022 (9) TMI 696 - AT - Income TaxAddition u/s 56 (2)(viia) - applicability of Rule 11 UA - FMV determined by the AO - assessee has received 90,000 shares of Bhawani Portfolio Limited @ rate of Rs. 1000/- per share which was found to be less than fair market value by the AO on the basis of NAV as per Audited Financial Filed - HELD THAT:- FMV of shares as worked out, applying the Rule 11UA is as per the approved method and book value is as per the cost to the appellant, both cannot be considered simultaneously, Further, the working of shares cannot to be said to the incorrect and nothing has been brought on record by appellant to justify that the working is not as per Rules, therefore, the AO has taken the FMV, correctly, as per Rules and this argument is not tenable. BPPL has gone Into winding up - Scope of Subsequent development - Subsequent development that value of such shares become nil, cannot be considered nor this was stated in assessment proceedings. Further, if there was no real value of these shares, the receiving of 90,000 shares of BPPL against allotment of shares of other companies is not justified, Therefore, this argument of the appellant has no force and deserves to be rejected. Shares have been allotted at a premium, therefore the provisions of section 56(2)(viib) will be applicable and not the provisions of section 56(2)(vila) - This argument of appellant is also not tenable due to the reason that the shares have been transferred for inadequate consideration and FMV, as worked out In accordance with Rule 11UA is higher than the consideration received. Therefore, the provisions of section 56(2)(viia) is duly applicable In the case of appellant. As contention of the appellant is not found acceptable and no interference is made in the decision by AG and addition is confirmed herewith. - Decided against assessee.
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