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2023 (10) TMI 1058 - AT - Income TaxAddition u/s 56(2)(viib) - determination of the FMV of the shares [unquoted equity] - excess premium of Rs. 9/- per equity share that was received by the assessee company - HELD THAT:- On a conjoint reading of Section 56(2)(viib) r.w. Rule 11UA, find that the FMV of the unquoted equity shares would be their value as of the date on which the assessee company receives property or consideration for the same. As against the aforesaid requirement of law, it transpires that on one hand, the A.O had determined the FMV of the unquoted equity shares of the assessee company as per the Net Worth Method on 31.03.2012 at Rs. 91/- per equity share, while the assessee company had determined the same as per the said method as on 29.03.2013 at Rs. 144/- per equity share. Both the A.O and the assessee company had wrongly adopted the date of valuation. I, say so, for the reason that as per the meaning of “valuation date” as contemplated under Rule 11UA(j), the FMV of the unquoted equity shares shall be the value on the valuation date, i.e., the date on which the assessee company receives property or consideration. Considering the fact that neither the A.O. nor the assessee had taken the correct date for determining the FMV of the unquoted equity 96000 shares as per the method provided in Rule UA r.w Rule 11U, i.e., the value as on the “valuation date,” therefore, neither of the same merits acceptance. As the specific date/dates on which the assessee company had received consideration are not available on record, in all fairness, restore the matter to the file of the A.O. with a direction to determine the same as per Rule 11UA r.w. Rule 11U applicable to the case of the assessee for the year under consideration. As a word of caution, it may be observed that as Rule 11UA/11U had been subjected to an amendment vide IT(Fifteenth Amendment) Rules, 2012 w.e.f. 29.11.2012, therefore, the A.O while computing the FMV of the aforesaid unquoted equity shares, shall take cognizance of the said fact while working out the valuation on the date on which consideration in lieu of such shares was received by the assessee company. As per the mandate of law, the option to determine the FMV of unquoted equity shares remains with the assessee as per either of the two methods viz. (i) as per the Net Worth Method; and (ii) as per the Discounted Free Cash Flow (DCF) method remains with the assessee company. Accordingly restore the matter to the file of the A.O. for fresh adjudication. Decided in favour of assessee for statistical purposes. Addition of the interest on FDRs to its returned income - recharacterizing the interest receipt as the income of the assessee company from other sources - We concur with the claim of the Ld. AR that as the interest income earned by the assessee company on the funds which were temporarily parked/deposited with the banks as fixed deposits prior to commencement of its business was in the nature of a capital receipt and, hence, was required to be set off against the pre-operative expenses. See Indian Oil Panipat Power Consortium Ltd. Vs. ITO [2009 (2) TMI 32 - DELHI HIGH COURT] Accordingly vacate the addition made by the A.O by recharacterizing the interest receipt as the income of the assessee company from other sources.
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