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TMI Blog2023 (6) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of 513978 shares @ Rs 1284.10 per share, failure of the ld AO to examine the genuineness of the transactions, creditworthiness of the persons from which share premium was received and identity, rendered the assessment erroneous and prejudicial to the interest of revenue and further erred in exercising the powers u/s. 263 of the Act: (i) Because the entire share application money was received during the F.Y. 2012-13 corresponding to A.Y. 2013-14 and the entire issue including share premium was examined by the ld AO twice, first during the course of proceedings for A.Y. 2013-14 concluded by order dated 16.03.2016 passed us 143(3) of the Act and then again during the course of assessment proceedings for AY 2014-2015. (ii) Because provisions of section 68 of the Income Tax Act, 1961 can be applied only in the year in which share application money or share premium is received and not in any subsequent year." 3. As per the grounds of appeal, the assessee has sought to challenge the jurisdiction assumed by the Pr.CIT under Section 263 of the Act and as a corollary sought to impugn the revisional order passed by the Pr.CIT under Section 263 of the Act. 4. Briefly stated, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered the assessment erroneous and prejudicial to the interest of the revenue. 4. You are, therefore, provided an opportunity to show cause as to why the assessment order passed by the ITO, Ward 1(3)Gurgaon, dated 15.12.2016 for the A.Y. 2014-15 in your case should not be revised u/s. 263 of the Act. You are requested to attended my office on 18.12.2018 at 10:30 AM either in person or by representative duly authorized in writing on your behalf or produce or cause to be produced at the said time, any documents or any other evidence on which your rely in your support. In case of no reply/non-attendance as per above, it shall be assumed that your do not wish to say anything in the matter and the matter would be decided as per material available on record without any further notice/intimation to you. Yours faithfully, Pr. Commissioner of Income Tax Gurugram 5. As per the show cause notice, on the basis of perusal of case records the Pr.CIT observed that the assessee has issued 513978 shares @ Rs.1284.10 per share against the face value of Rs.10/- each and received a premium to the tune of Rs.65.48 crore. The case was selected for scrutiny for verification of large share premiu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid amount of investment aggregating to Rs.66 crore was received by the assessee company in the preceeding Financial Year, i.e., F.Y. 2012-13 (A.Y. 201314) in the form of share application money and the shares have been issued against such receipts in the subsequent year to the holding company resulting in securities premium amount of Rs.65,48,60,220/- being accounted for its books of account. The ld. counsel next submitted that while the share application money was received in preceding Assessment Year 2013-14 which was also subjected to scrutiny assessment under Section 143(3) of the Act, the compliance of Section 56(2)(viib) of the Act was also verified in the Assessment Year 2014-15 in question. Specific queries have been raised with regard to the aspects of the share premium and the concern expressed in the show cause notice of the Pr.CIT is thus totally unfounded. The ld. counsel thus submitted that the share application money was received in the preceding Assessment Year 2013-14 for which the allotment was carried out in the Assessment Year 2014-15 in question and most importantly, the shares were allotted to its 100% holding company and none else and therefore, there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an undisputed fact that the shares have been allotted at a premium to its 100% holding company. Thus, applicability of Section on 56(2)(viib) has to be seen in this perspective. The Co-ordinate Bench of Tribunal in DCIT vs. Ozone India Ltd. in ITA No.2081/Ahd/2018 order dated 13.04.2021 in the context of Section 56(2)(viib) has analyzed the deeming provisions of Section 56(2)(viib) of the Act threadbare and inter alia observed that the deeming clause requires to be given a schematic interpretation. The transaction of allotment of shares at a premium in the instant case is between holding company and it is subsidiary company and thus when seen holistically, there is no benefit derived by the assessee by issue of shares at certain premium notwithstanding that the share premium exceeds a fair market value in a given case. Instinctively, it is a transaction between the self, if so to say. The true purport of Section 56(2)(viib) was analyzed in Ozone case and it was observed that the objective behind the provisions of Section 56(2)(viib) is to prevent unlawful gains by issuing company in the garb of capital receipts. In the instant case, not only that the fair market value is support ..... X X X X Extracts X X X X X X X X Extracts X X X X
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