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2023 (12) TMI 645 - AT - Income TaxAddition u/s 56(2)(viib) - excess share premium recorded by the assessee - Revenue has controverted the action of the CIT(A) on the touchstone of Section 56(2)(viib) of the Act towards allotment of equity shares to the subscriber KV Aromatics Pvt. Ltd. which is the existing shareholder, holding 51% of the equity share of the assessee-company - CIT(A) deleted addition - HELD THAT:- The effect of issues of shares to holding company at a premium has been examined by the Co-ordinate Bench of Tribunal in the case of BLP Vayu (Projects-1) Pvt. Ltd. [2023 (6) TMI 209 - ITAT DELHI] essentially observed that where the allotment has been made to existing shareholders, the deeming provisions of Section 56(2)(viib) would not ordinarily be applicable. This apart, the assessee, in the instant case, has also dislodged the observation of the AO that the net worth at the time of issuance of shares were in negative by adducing valuation report. As per the valuation report, the FMV has been determined at Rs. 14.815 per share which is at par with the FMV at which shares have been issued to the holding company. Thus the premium charged is supportable by the valuation report and the premium charged is quite negligible and charged to existing shareholder. Thus effectively, the benefit if any arising to the company in turn benefits to the subscriber having pre-existing right in the company. Thus, in our view, the conclusion drawn by the CIT(A) cannot be faulted either on facts or in law. Revenue appeal dismissed.
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