TMI Blog2023 (8) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... alia, the value of assets such as immovable property, which was adopted by any authority of the government for the purposes of payment of stamp duty. If immovable property, such as land, had to be taken into account in arriving at the Fair Market Value of unquoted shares by adopting the formula prescribed in Rule 11UA of 1962 Rules w.e.f. 01.04.2018, i.e., AY 2018-19, AO would have to factor in the value of such land, by taking into account the circle rate prevailing in the area. It is this error which the AO committed, i.e., applying the formula contained in Rule 11UA of 1962 Rules, which was not applicable to the AY in issue, i.e., 2014-15. This error continued upto the stage of CIT(A). The error was corrected by the Tribunal via ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Minda Capital Ltd. 1301150 6. It is not in dispute that the respondent/assessee had purchased the aforementioned shares of TEPL from the aforementioned entities at a price of Rs. 5/- per share. 6.1 It is also not in dispute that the respondent/assessee had submitted the valuation report of a Chartered Accountant (CA), which had pegged the value of the subject shares at Rs. 4.96 per share. 7. Concededly, the CA, in arriving at the value of the subject shares, which, as indicated above was pegged at Rs. 5/- per share by the respondent/assessee, had taken recourse to Rule 11UA of the Income Tax Rules, 1962 [in short, 1962 Rules ] as applicable in the period in issue, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted equity shares = (A-L) x (PV), (PE) Where, A = book value of the assets in the balance-sheet as reduced by any amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Income-tax Act and any amount shown in the balance-sheet as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset; L = book value of liabilities shown in the balance-sheet, but not including the following amounts, namely: (i) the paid-up capital in respect of equity shares; (ii) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovable property, shall be determined in the following manner, namely, (a) X X X (b) X X X (c) valuation of shares and securities, (a) X X X [(b) the fair market value of unquoted equity shares shall be the value, on the valuation date, of such unquoted equity shares as determined in the following manner, namely: the fair market value of unquoted equity shares =(A+B+C+D - L) (PV)/(PE), where, A= book value of all the assets (other than jewellery, artistic work, shares, securities and immovable property) in the balance-sheet as reduced by, (i) any amount of income-tax paid, if any, less the amount of income-tax refund claimed, if any; and (ii) any amount shown as asset including th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares; [Emphasis is ours] 13. In other words, if immovable property, such as land, had to be taken into account in arriving at the Fair Market Value of unquoted shares by adopting the formula prescribed in Rule 11UA of 1962 Rules w.e.f. 01.04.2018, i.e., AY 2018-19, the AO would have to factor in the value of such land, by taking into account the circle rate prevailing in the area. 14. It is this error which the AO committed, i.e., applying the formula contained in Rule 11UA of 1962 Rules, which was not applicable to the AY in issue, i.e., 2014-15. 15. This error continued upto the stage of CIT(A). The error was correc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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