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2023 (3) TMI 1136 - AT - Income TaxIncome from other sources u/s. 56(1) - gift of shares received by the assessee - AO held that receipt of shares as some kind of colorable device and therefore, taxed the market value of said shares as "income from other sources‟ - HELD THAT:- As gift of shares cannot be held to be sham transaction and the whole purpose of was correct legal rights and obligations and in accordance with the law. The receipt of gift by the assessee is neither chargeable to tax u/s. 56(1) or u/s. 28(iv) of the Act. The gift received by the assessee in present case is in the capital field and can be brought to tax under the head capital gain. Accordingly, the provision of section 56(1) cannot be resorted to. Whether the receipt of shares at nil consideration can construed as business income liable for tax u/s 28(iv)? - We agree with the findings and the observations of the CIT(A) that the benefit of perquisite as stipulated under clause (iv) of Section 28 that it should arise from business or profession, i.e., assessee must have performed some business activities or carried out business and he must have received any benefit or perquisite in the course of business or profession. The share of Dish TV as a gift does not arise out of business dealing and accordingly, rightly being held by the ld. CIT (A) that is not taxable under the said provision. Therefore, the said receipt is not taxable u/s. 28(4). Accordingly, the deletion of the addition made by the ld. CIT (A) is upheld and Ground No. 1 of the revenue's appeal is dismissed. Receipt of share premium is concerned, the same is not chargeable to tax unless the provisions of Sections 56(2)(vii a) or (vii b) are invoked that it is in excess of fair market value of shares which provision will apply from A.Y. 2013-14 and not in A.Y. 2012-13 - finding of the ld. CIT (A) in deleting the said premium is confirmed. CIT(A) has already dealt with the valuation of the shares which was done on Net Asset Value method based on the report of independent Chartered Accountant and assessee has considered the market value of asset being share of the listed company. There is categorical finding of the fact that the share of the Dish TV were purchase from the open market at Rs. 255 Crores and the fair value of the shares was taken at 260 Crores in the valuation report for the purpose of arriving of the fair value of the shares and therefore, the AO's observation in this regard has been found to be incorrect. Finding and observation of the ld. CIT (A) as incorporated in forging paragraphs are in consonance with fact and material on record as well as the provisions of law and accordingly, same is confirmed and consequently, the revenue ground is dismissed. Disallowance u/s. 14A read with Rule 8D - HELD THAT:- Admittedly there is no exempt income during the year and therefore ld. CIT(A) rightly held that no disallowance can be made under this Section. Apart from that the reasoning given by the ld. CIT(A) has incorporated above is based on correct appreciation of facts and law and therefore the same is confirmed.
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