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TMI Blog2023 (2) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... before CIT(A) who vide order dated 19.09.2019 in Appeal No.3/10224/2018-19 granted substantial relief to the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before the Tribunal and has raised the following grounds: "1. On the facts and circumstances of the case Ld. CIT(A) erred in deleting the addition of Rs.21,57,85,188/- on account of share premium valuation. 2. On the facts and circumstances of the case Ld. CIT(A) erred in deleting the addition of Rs.1,36,000/- being expense for valuation certification u/s 37(1) of the Act. 3. The appellant craves leave to add, amend or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 5. Ground No.1 is with respect to the deleting the addition of Rs.21,57,85,188/- on account of share premium valuation. 6. During the course of assessment proceedings and on perusing the Balance Sheet, AO noticed that during the year under consideration, assessee had issued 2,01,402 shares having face value at Rs.1/- each at a premium of Rs.1240.29/- per share and had thus issued shares at Rs.1241.29/- per share and the total share capital including premium collected by the assessee was Rs.24, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as qualified as Venture Capital Fund as per the definition of Section 10(23FB) of the Act. It was further submitted that since the company was not engaged in any of the activities or sectors which was specified in the negative list, therefore, the activities of the assessee did not fall in the negative list provided in the Act and, therefore, it qualified as a Capital Venture Undertaking as per the definition under section 10(23FB) of the Act. It was further submitted that the AO had erred in rejecting the valuation report obtained by the assessee from an independent valuer without considering the fact that no powers has been provided to Learned AO to examine the basis or reject the valuation report. Before CIT(A), assessee also relied on the various decisions which are reproduced by CIT(A) in his order. CIT(A) after considering the submissions of the assessee deleted the addition made by AO by observing as under: "4.3 I have considered the facts of the case and the submissions made by the AR. It has been reiterated that the investor M/s. Forum Synergies India Trust (FSIT) is a venture capital fund (VCF) and the appellant is a venture capital undertaking. The AR has furnished the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (23FB) of setion 10;" 4.3.1 From the perusal of the above referred documents and the submissions made by the AR, it is clear that the appellant is a venture capital undertaking and it has issued shares to FSIT which is a venture capital fund (VCF) and as per the provisions of section 56(2)(viib) of the Act, no addition under the section can be made in such a case by the AO as discussed above. In view of this, the addition made by the AO is deleted and the grounds of appeal are allowed." 8. Aggrieved by the order of CIT(A), Revenue is now before us. 9. Before us, Learned DR took us through the order of AO and strongly supported the order of AO. 10. Learned AR on the other hand reiterated the submissions made before lower authorities and further took us through the submissions made by the assessee before CIT(A), which are reproduced by CIT(A) in his order. He also placed reliance on the decisions cited before the CIT(A) and submitted that in view of those facts, CIT(A) has rightly held that no addition could be made and therefore, no interference to the order of CIT(A) is called for. 11. We have heard the rival submissions and perused the material available on record. The i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The aforesaid finding of CIT(A) has not been demonstrated by Revenue to incorrect or not in accordance with the provisions of the Act. Further, before us, assessee has also demonstrated that the business of the assessee does not fall under the negative business list as specified by the Central Government. Before us, Revenue has not pointed to any fallacy in the findings of CIT(A) nor has demonstrated that the assessee's case does not fall under proviso to Section 56(2)(viib) of the Act. Considering the totality of the aforesaid facts, we find no reason to interfere with the order of CIT(A) on this issue and thus the ground of Revenue is dismissed. 12. Ground No.2 is with respect to the deleting the addition of Rs.1,36,000/- u/s 37(1) of the Act. 13. During the course of assessment proceedings and on perusing the professional fees paid by the assessee, AO noted that assessee had paid Rs.1,36,000/- to Vineet K. Gupta & Co. on account of Professional fee for share valuation certificate. The AO asked the assessee to justify the expense so as to justify its allowability u/s 37(1) of I.T. Act to which assessee inter alia submitted that the amount represented professional fees paid towa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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