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2024 (1) TMI 1223 - ITAT AHMEDABADRevision u/s 263 by CIT - Right Issue of shares - invocation of provisions of section 52(2)(viib) by debunking the calculation of fair market value of shares done by the assessee and accepted by the AO, under Rule 11UA of IT Rules - addition on account of the shares being issued at a value less than its fair market value - CIT set aside the assessment order passed by the ld.AO u/s 143(3) holding it as erroneous and prejudicial to the interest of the Revenue as AO had failed to make proper inquiries regarding valuation of fair market value of shares issued by the assessee during the year at a premium, which valuation as per the ld. Pr. CIT was not in accordance with law as done by the assessee - assessee argued CIT held that the assessment order was erroneous without dealing with the arguments made by the assessee before him. HELD THAT:- We are not in agreement with the contention of assessee that the contentions made by the assessee before the ld. Pr. CIT were not dealt with by him while holding the assessment order to be erroneous. He has specifically referred to the contentions made regarding non-applicability of section 56(2)(viib) to the Right Issue issued, that there is no mala fide intention involved in the Right shares which is said to be brought in the ambit and scope of the deeming provision of section 56(2)(viib) of the Act. As for the decision cited in the case of Sudhir Menon HUF [2014 (3) TMI 534 - ITAT MUMBAI] we have noted from the ld. Pr. CIT order, that the issue in the said case related to the invocation of the provisions of 56(2)(vii) which relates to the receipt of any money or property without any consideration or without adequate consideration. While in the present case, the issue relates to the provisions of section 56(2)(viib) of the Act which deems the amounts received in lieu of the issue of shares in excess of their FMV as income of the assessee. CIT, therefore, has rightly found the facts of the case to be different and distinguishable from that in the present case before us. Therefore, we do not agree with the assessee that the ld. Pr. CIT has held the assessment order erroneous without dealing with averments made by the assessee before it. Now coming to the aspect of the decision of Chhatisgarh Metaliks and Alloys P.Ltd [2023 (4) TMI 74 - ITAT RAIPUR] holding the provision of the section 56(2)(viib) of the Act not applicable on Right Issue, and its impact on revisionary order passed in the present case, it is evident that in the absence of any contrary decision cited by the Revenue before us, the entire exercise of revision in the present case on identical set of facts fails considering the categorical finding of the ITAT that section 56(2)(viib) of the Act cannot be invoked on a Rights Issue. The finding of the error in the assessment order by the ld. Pr. CIT on account of an identical issue clearly does not survive. Thus the impugned order of the ld. Pr. CIT passed under section 263 of the Act is set aside, and the appeal of the assessee is allowed.
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