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TMI Blog2022 (11) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case and in law the learned CIT (A) erred in Confirming the addition an account of investment in share API INDUSTRIES PVT LTD. Of Rs 5000000/- A U/S 69 of the Income tax Act without appreciating the fact that. a. The Appellant has Transfered Rs 50 lakhs in the assessment year 2012-13 from his account Ground No. 2 On the facts and circumstances of the case and in law the learned CIT (A) erred in on share investment of API Industries Pvt Ltd. Confirming the addition of Rs. 8195000/- u/s 56(2)(VII)(C)(II) as per rule 11UA of IT rules without appreciating the facts That a. Due to losses and closure of business the valuation of share @ 26.39 per share is unjustified, b. As per valuation report- The value of share is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 16.39/- per equity share between the FMV of shares at Rs. 26.39 per equity share and face value of equity share of Rs. 10/- in the hands of the assessee under section 56(2)(vii)(c)(2) of the Act. Accordingly, a sum of Rs. 81,95,000/- was added in the hands of the assessee under section 56 of the Act. 4. In appeal, Ld. CIT(Appeals) confirmed the additions made by the AO with the following: "It is seen that the AO noted that in Balance Sheet of API Industries Ltd, it was shown that the appellant had been allotted 5,00,000 equity shares of face value of Rs. 10/- each for full consideration of Rs. 50,00,000/-. The AO further noted that however, no such investment was shown by the appellant in his return of income. The appellant did not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as per market value of share as provided under Rule 11LJA of the Rules, The AO worked out the market value at Rs, 26,39 per share as per valuation method provided in Rule 11 UA of the Rules and worked out deemed gift u/s 56(2)(vii)(c )(2) of the Act at Rs. 81,95,000/- and added the same. During appeal proceedings, the appellant submitted that 'the AO has wrongly worked out share price at Rs. 26.39 and that it should be Rs. 16.40 per share. The appellant further submitted that after taking into consideration share application money of Rs. 2.5. cr., the share value works out to Rs, 11,85 per share. The appellant further submitted that as per certificate of CA M/s. Shyarn C Agarwal & Co, the value of share of API Industries is Rs. 13/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of API industries Private Ltd) and submitted that the said Ledger account clearly demonstrates that the assessee had transferred a sum of Rs. 50 lakhs as share application money towards allotment of shares in the immediately previous financial year i.e. financial year 2011-2 relevant assessment year 2012-13. The Ld. Counsel for the assessee submitted that perusal of the Ledger account of API industries Private Limited demonstrates that the sum of Rs. 50 lakhs was transferred by way of account payee cheque by the assessee to "API industries Ltd share application money account on" 31-03-2012. The counsel for the assessee further drew our attention to the Ledger account of the assessee with API industries Private Limited and submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year under consideration. Ground No.2: addition of Rs. 81,95,000/- under section 56 of the Act as per Rule 11UA of the Income Tax Rules: 8. The counsel for the assessee submitted firstly that there is an arithmetical error committed by the AO while computing the market value of shares of API industries Private Limited at Rs. 26.39 per share. The said error was brought to the notice of Ld. CIT(Appeals), who completely ignored the assessee's submission in this regard in the appellate order. The counsel for the assessee also submitted that the AO erred in facts and in law in computing FMV of API Industries Private Limited at such an excessive value. The value of Rs. 26.39 per share computed by the AO does not reflect the correct mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l error committed by the AO while computing the value of shares of API industries Private Ltd and secondly, Ld. CIT(Appeals) has erred in facts and in law in not considering the fact that the company has gone into liquidation, and accordingly, the valuation of Rs. 26.39 per share of a company which is in financial distress, is clearly excessive and unreasonable. In view of the above observations, in the interest of justice, we are restoring the matter to the file of Ld. CIT(Appeals) so that he may consider the above submissions made by the assessee and verify whether the shares were allotted to the assessee out of deposits held by the assessee in API industries Private Limited from previous financial year. Further, Ld. CIT(Appeals) may also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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