TMI Blog2022 (2) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... d by a valuation report. The revenue has rejected the valuation report of the shares stating that the assessee ought to have valued the fair market value of the shares only as per the method prescribed under Rule 11UA of the Act rules of Income Tax Rules, 1961. The method adopted by the assessee for determining the FMV of shares issued during the year is held to be in accordance with law. The decisions relied upon by the CIT(A) of the ITAT Delhi in the case of Agro Portfolio(p) Ltd. [ 2018 (5) TMI 1088 - ITAT DELHI] is clearly not applicable in the present case since it related to the applicability of NAV method or DCF method for valuation of shares, which is not the issue in the present case. The decision of the ITAT Hyderabad in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter referred to as the Act ) pertaining to Assessment Year (A.Y) 2016-17. 2. Ground no. 1(a) 1(b) reads as under: 1. a) The Ld. CIT(A)-1, Vadodara has erred in law and in facts in holding that for the purpose of Sec. 56(2)(viib), the valuation of shares is to be made in accordance with Rule 11UA of the I.T. Rules on the basis of book value of the assets and that no other method can be adopted. b) The Ld. CIT(A)-1, Vadodara has erred in law and in facts in upholding the action of the Ld. A.O. in the addition of an amount of Rs. 4,50,000/- held to be represented the excess premium in the issue of shares during the year. 3. As transpires from the order of the authorities below, the issue relates to addition made as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee from other sources as per Section 56(2)(viib) of the Act. The same was upheld by the Ld. CIT(A). 4. Before us, the contention of the Ld. Counsel for the assessee was that valuation submitted by the assessee of FMV of the shares was in consonance with law as prescribed under Section 56(2)(viib) which prescribed two modes for calculating the fair market value. (i) as determined in accordance with the method prescribed and (ii) as determined on the basis of the value of the assets as on the date of issue as substantiated to the satisfaction of the A.O. He drew our attention to Explanation (a) to section 56(2)(viib),defining fair market value of shares as under: 56(2)(viib) where a company, not being a company in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other hand relied on the orders of the authorities below. 7. We have heard the contentions of both the parties. The issue before us relates to the determination of the excess consideration received by the assesse on issue of shares, which as per Section 56(2)(viib) of the Act was to be treated as income of the assessee. The facts of the case are that the assessee had issued 60,000/- shares of face value 10 at the premium of Rs. 90. To justify its valuation, the assessee had submitted valuation report by C.A. in which the land and building were valued at their market value as on the date of issue of shares. The market value of land and building was also duly substantiated by a valuation report. The revenue has rejected the valuation repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not in consonance with law. The assessee clearly has adopted the second method prescribed by law for determining the FMV of shares by valuing its land and building at their market value as on the date of issue of shares and has substantiated the market value of land and building with the valuation report of the same also. No infirmity as such has been found by the revenue authorities in the aforesatated valuation reports. Therefore, the method adopted by the assessee for determining the FMV of shares issued during the year is held to be in accordance with law. 11. The decisions relied upon by the Ld.CIT(A) of the ITAT Delhi in the case of Agro Portfolio(p) Ltd.(2018) 94 taxmann.com 112 is clearly not applicable in the present case si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (2014) 41 taxmann.com100 (Guj) . 17. In view of the above, the disallowance of Employees Provident Fund paid belatedly amounting to Rs. 38,398/ is upheld. 17.1 Ground No 2 is dismissed. 18. Ground no. 3 reads as under: 3. The Ld. CIT(A)-1, Vadodara has erred in law and in facts in confirming an addition of Rs. 4,58,992/- being the amount of interest relatable to the advances given computing @ 13.25% per annum. The addition of Rs, 4,58,992/- being bad in law and in facts is prayed to be deleted. 18.1. The same was not pressed before us by the Ld. Counsel for the assessee. 18.2. Ground no. 3 is therefore dismissed as not pressed. 19. In effect, appeal of the assessee is partly allowed. Order pronounced in the ope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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