9911796707
TMI Blog2023 (8) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... e funds for share premium was received through proper banking channels and the Assessing Officer has made addition without rejecting the valuation report submitted by the assessee during the course of assessment proceedings. 3. Briefly stated, the facts of the case are that the assessee company is engaged in the business of providing riders to the e-commerce operators or other business operators. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has received security premium on allotment of shares to individuals and companies after computing the share value on the basis of Discounted Cash Flow Method at Rs. 6,512/- per share. The list of allottees is as under: Sl. No Date Name of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that the valuer had submitted the copy of Valuation certificates and all projections/ documents were provided by the management and on the basis of which fair value of share was calculated. 6. The Assessing Officer was of the opinion that the partner of the valuer firm has not provided any logical submission in respect of calculation of fair value of shares and on subsequent dates, none represented the valuer firm. The Assessing Officer issued show cause notice to the assessee, asking it to show cause why not the calculation adopted by the assessee for calculating the fair market value be disallowed as per provisions of section 56(2)(vii)b of the Act. 7. On receiving no plausible reply, the Assessing Officer took the transaction as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trictly construed and so long as the provision is free from any ambiguity, there should be no need to draw any analogy. A deeming provision on the other hand is intended to enlarge the meaning of a particular word which includes matters which otherwise may or may not fall within the normal provision, therefore, it should be extended to the consequences and incidents which has been intended by the Legislature for a definite purpose and should not be extended beyond the mandate of the statute. Thus, deeming provisions require to be construed strictly. Here in this case the assessee has followed one of the options provided under such deeming provision and when such an option has been exercised, then same cannot be discarded to impose other opt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the option should be exercised only under 11U and 11UA, which admittedly at the time of issuance of shares such method was not even prescribed in the statute. Prior to Rule 11UA, Net Asset Value method was accepted method in which no discrepancy has been pointed by the Ld. CIT (A). First of all, the valuation of the shares of Mail Today has been done under DCF method and the valuation of assessee share has been done on NAV method. The reason being, the valuation report for the valuation of the shares by the Mail Today as on 20.7.20012 was shown under DCF method, wherein Rs. 40 per share were determined. Such a valuation of the shares has been accepted by the revenue in the case of Mail Today under scrutiny proceedings, which cannot be disca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the Chartered Accountant on one of the prescribed methods under the rules adopted by the Valuer. Before us, learned counsel, Mr. Dinodia, first of all had harped upon the spirit and intention of the Legislature in introducing such a deeming provision and submitted that such a provision cannot be invoked on a normal business transaction of issuance of shares unless it has been demonstrated by the Revenue authorities that the entire motive for such issuance of shares on higher premium was for the tax abuse with the objective of tax evasion by laundering its own unaccounted money. His main contention was that, being a deeming fiction, it has to be strictly interpreted and there is no mandate to the Assessing Officer to arbitrarily rej ..... X X X X Extracts X X X X X X X X Extracts X X X X
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