TMI Blog2022 (12) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany. In the present case, the assessee purchased its own shares under buyback scheme, and, as per the submissions made by the ld. Counsel at the bar, the same has been extinguished by reducing the paid up capital of the assessee company. The fact remains that the factum of extinguishment of the purchased shares by reducing the paid up capital of the assessee company has not been examined and verified at the level of the AO. Therefore, the issue is restored to the file of the AO for a limited purpose of examining and verifying the fact of extinguishment of shares by reducing the paid-up capital of the assessee in the accounts of the assessee. AO is directed to delete the addition in case the said fact is found to be correct - Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any time before or during the hearing of this appeal. 3. The ld. Sr. DR submitted that the ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.5,62,93,450/- made by the AO by applying the provisions of Section 56(2) (viia) of the Income Tax Act, 1961 (for short, the Act ), without appreciating the detailed reasons given in the assessment order which clearly shows the buy back of its own shares by the assessee company as property in hand within the meaning of Section 56(2)(viia) of the Income Tax Act, 1961. The ld. Sr. DR also pointed out that the Ld. First appellate authority has also erred in granting relief to the assessee ignoring the fact that the buy back of its own shares by the assessee company and subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of any other company fails in the present case. Therefore, the facts and circumstances of the present case are quite identical and similar to the case of M/s Vohra Financial Services Pvt. Ltd. (supra) 5. Placing a rejoinder to the above, the ld. Sr. DR submitted that the onus was on the assessee to show that the shares purchased by the assessee has been extinguished by reducing the paid-up capital of the assssee and this fact has not been examined at the level of the AO, therefore, for limited purpose, the said facts required to be examined and verified by the AO. 6. On careful consideration of the rival arguments, first of all, we note that undisputedly, the assessee company, during the relevant financial period had purchased its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration or for inadequate consideration (in excess of the prescribed limit of Rs. 50,000) by an individual or an HUF is chargeable to income-tax in the hands of recipient under the head income from other sources . However, receipts from relatives or on the occasion of marriage or under a will are outside the scope of this provision. The existing definition of property for the purposes of section 56(2)( vii) includes immovable property being land or building or both, shares and securities, jewellery, archeological collection, drawings, paintings, sculpture or any work of art. A. These are anti-abuse provisions which are currently applicable only if an individual or an HUF is the recipient. Therefore, transfer of shares of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty of the recipient only if it is shares of any other company . In the instant case, the assessee herein has purchased its own shares under buyback scheme and the same has been extinguished by reducing the capital and hence the tests of becoming property and also shares of any other company fail in this case. Accordingly we are of the view that the tax authorities are not justified in invoking the provisions of sec. 56(2)(viia) for buyback of own shares. 7. Therefore, respectfully following the order of the coordinate Bench of the ITAT, Mumbai in the case of M/s Vohra Financial Services Pvt. Ltd. (supra), we hold that the provisions of section 56(2)(viia) of the Act are applicable only in the cases where the purchased share bec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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