TMI Blog2022 (8) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted valuation of fair market value of its shares, the authorities below have dismissed the same simply for the reason that it was not as per the Rule prescribed under 11UA of IT Rules or not as per any certificate furnished by the Chartered Accountant or Merchant Banker as prescribed under Rule 11U of the IT Rules. Admittedly, provision of section 56(2)(viib) of the Act do not prescribe only one method for valuation of fair market value of share which is evident from the perusal of the section itself, as reproduced above. The assessee can also justify the fair market value of the shares based on the valuation of its asset as on the date of issue of shares including both tangible and intangible assets. Therefore the finding of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the assessee on account of share premium received on issue of shares which were not justified to be at fair market value as per the provisions of section 56(2)(viib) of the Act, and the addition made in this regard amounted to Rs.45,48,583/- ,which after adjusting brought-forward business loss and unabsorbed depreciation resulted in NIL assessed income. The assessee was accordingly subjected to tax on its book profits as per the provision of section 115JB of the Act and adjustment to the book profit was also made on account of addition made as above under 56(2)(viib) of the Act. It was contended that this was solitary issue arising in the present appeal and the grounds raised in this regard by the assessee are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es issued on both the dates as above. Our attention was drawn to the copy of the said report placed before us in paper book at page no.49 to 55 and 56 to 62 respectively for two different lots of shares issued. The ld.counsel for the assessee contended that Revenue authorities rejected this valuation by simply stating that it was not as per the Rule 11U and 11UA of the IT Rules and in this regard he drew our attention to the finding of the ld.CIT(A) at para 2.3 of his order as under: 2.3. I have carefully considered the facts of the case, assessment order and submission of the appellant. The AO has made the addition of Rs.45,48,583/- invoking the provisions of section 56(2)(viib). Appellant company has issued 25,19,393 equity share at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th him, therefore, no fault can be attributed in computing the fair market value. In view of the above, the AO was justified to make the addition u/s. 56(2)(viib) of the I. T. Act 1961. The relevant ground of appeal is accordingly dismissed. 5. The ld.counsel for the assessee contended that the AO calculated fair market value of the shares as prescribed under Rule 11UA and determined allowable share premium at Rs.5/- and Rs.8/- for two blocks of shares allotted by the assessee on 8.9.2014 and 31.3.2015 respectively as against premium of Rs.6/- and Rs.9/- respectively charged by the assessee. Accordingly, excess premium as per the AO charged by the assessee at Rs.1/- per share in the case of both set of allotments was treated as not al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thod prescribed under Rule 11U and 11UA of the Income Tax Rules, 1962; that it also allows the assessee to substantiate the consideration based on the value on the date of issue of shares of its assets including intangible asset. In this regard, he drew our attention to provision of section 56(2)(viib) of the Act as under: Section 56 .. (viib) where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares: Explanation.-For the purposes of this clause,- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities below have dismissed the same simply for the reason that it was not as per the Rule prescribed under 11UA of IT Rules or not as per any certificate furnished by the Chartered Accountant or Merchant Banker as prescribed under Rule 11U of the IT Rules. Admittedly, provision of section 56(2)(viib) of the Act do not prescribe only one method for valuation of fair market value of share which is evident from the perusal of the section itself, as reproduced above. The assessee can also justify the fair market value of the shares based on the valuation of its asset as on the date of issue of shares including both tangible and intangible assets. Therefore the finding of the Revenue authorities in the present case that valuation of FMV a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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