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2023 (1) TMI 1123 - AT - Income TaxAddition u/s 56(2)(viib) - application of Rule 11UA of the Income-tax Rules, 1962 to the valuation of FMV of redeemable preference shares - valuation of unquoted shares and securities other than equity shares which is based on a report from the merchant banker or an accountant - HELD THAT:- AO had called for a valuation report in the course of assessment proceedings which the assessee could not produce, leading to adverse view by the ld. Assessing Officer. However, the same was produced before the CIT(A) who took cognizance of the same and called for a remand report from the ld. AO who did not deal with it for expression of his views on the same. Before us, assessee referred to the valuation report issued by Pallavi Prasad & Associates, Chartered Accountants, dtd. 04/04/2014, wherein, valuation of preference shares has been arrived at a value of Rs.60.21. From the perusal of documents placed on record and the applicable provisions of the Act and the relevant Rules, we note that sub-Rule (2) of Rule 11UA deals valuation in respect of unquoted equity shares only and does not refer to valuation of preference shares in any manner, whatsoever. The sub- Clause (c) of Rule 11UA(1), deals with the valuation of unquoted shares and securities other than equity shares which is based on a report from a merchant banker or an accountant. In compliance to this sub-clause, a valuation report has been furnished by the assesse which justifies the premium charged by the assessee on the issue of cumulative redeemable preference shares and accordingly, no addition is called for under Section 56(2)(viib) of the Act by treating it as income from other sources. The valuation arrived at by the ld. Assessing Officer is a negative figure of Rs. (-)5.91/- and thereby considering the FMV is at Nil, is not in accordance with the relevant provisions of the Act and the Rules stated above. Accordingly, we uphold the findings of the ld. CIT(A) and set aside the addition made by the ld. Assessing Officer. Accordingly, grounds taken by the revenue in this respect are dismissed.
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