2023 (1) TMI 1033 - AT - Income Tax
Addition made u/s 56(2)(viib) - excess consideration received on allotment of shares - CIT(A) issued notice for enhancement u/s 251(2) as allotment of shares to the promoter director of the assessee company on which excess share consideration of Rs. 59 per share was also charged by the assessee was not considered while invoking the provisions of section 56(2)(viib) - fair market value of the shares arrived on the basis of the valuation report by using the DCF method was Rs.341 per share - HELD THAT:- Out of the 5 individuals to whom the shares were allotted by the assessee, one person viz. Mr. Mark Anthony De Boer, was a non-resident and therefore both the AO as well as CIT(A) accepted that provision of section 56(2)(viib) of the Act is not applicable in respect of shares allotted to a non-resident.
In respect of the other 4 individuals to whom shares allotted by the assessee in excess of the price determined by the valuation report were held to be covered within the ambit of section 56(2)(viib) of the Act. As per the provisions of section 56(2)(viib) in the case of a company, in which the public is not substantially interested, receipts from any person being a resident as a consideration for the issue of shares in excess of the face market value of such shares is to be considered as the income of the assessee under the head ‘income from other sources’.
Since there is no material available on record that the assessee has disputed the valuation of shares at Rs.341 per share vide valuation report dated 15/09/2012, therefore, we find no infirmity in the impugned order directing the disallowance being the excess consideration received by the assessee over and above the fair market value of the shares. As a result, grounds raised by the assessee are dismissed.