TMI Blog2023 (10) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... reby made addition. We have no reason to upset the addition made by AO which is in terms of section 56(2)(viib) the same is hereby upheld. The assessee fails in this appeal. - Shri Vijay Pal Rao, Judicial Member And Shri B.M. Biyani, Accountant Member For the Assessee : Shri Prakash Gupta, CA and Shri Shashank Sharma, CA For the Revenue : Shri Ashish Porwal, Sr. DR ORDER PER B.M. BIYANI, A.M.: Feeling aggrieved by appeal-order dated 20.02.2023 passed by learned Commissioner of Income-Tax (Appeals), NFAC, Delhi [ CIT(A) ], which in turn arises out of assessment-order dated 28.11.2019 passed by learned DCIT/ACIT, 2(1), Indore [ AO ] u/s 143(3) of Income-tax Act, 1961 [ the Act ] for Assessment-Year [ AY ] 2017-18, the assessee has filed this appeal on following effective grounds: 1. That the Ld. CIT(A) erred in not considering the fact that shares are issued in compliance with the provisions of Section 56(2)(viib)of the Income-tax Act, 1961, and the issue price does not vary from FMV materially. 2. That the Ld. CIT(A) erred in not considering the fact that the valuation is an estimation and provisions of section 56(2)(viib) are not violated only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particularly when the provisions of section 50C and 56(2)(vii) of Income-tax Act also recognize the concept of materiality; (iii) Section 288B of Income-tax Act prescribes for rounding off and similar benefit of rounding off, even if not prescribed in section 56(viib) should be allowed. 7. Ld. AR also referred to an old decision dated 17.11.1992 of Hon ble Supreme Court in C.B. Gauttam Vs. Union of India and Others wherein, while interpreting the provisions of Chapter XX-C of Income-tax Act, 1961 relating to pre-emptive purchase of property by Income-tax Department, the apex court held that the department should resort to purchase of property only when there is a significant undervaluation to evade tax and the apex court further accepted a difference upto 15% as insignificant. Ld. AR submitted that the spirit of this decision must be applied in present case of assessee. 8. Per contra, Ld. DR for revenue supported the orders of lower authorities. He submitted that section 56(2)(viib) is very clear and unambiguous which requires a straightforward comparison of issue price (which is Rs. 20/- per share in present case) and fair value (which is Rs. 19.23 per share) and prescribes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 56(2)(viib) of the Act. The relevant extract of the same is reproduced herein below: 56(2) In particular and without prejudice to the generality of the provisions of sub-section(1), the following incomes, shall be chargeable to income-tax under the head Income from Other Sources , Xxxxxxxxxxxx Xxxxxxxxxxxx xxxxxxxxxxxx (viib): where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares On a plain reading of the section it emanates that addition u/s. 56(2)(viib) is made where the consideration for issue of shares exceeds fair market value of the shares. There is no ambiguity in understanding the provisions on bare perusal. The ld. Representative for the assessee has referred to the provisions of section 288A, 288B and section 115VG(5) of the Act to support the action of assessee in rounding off the fair market value. We do not find favour with the arguments of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its such rounding off of the valuation to the next rupee. This makes it clear that the valuation taken by the AO at Rs. 98/-instead of Rs. 98.61 while computing the amount to be added u/s 56(2)(viib) is also not correct. I, therefore, direct the AO to recompute the addition u/s 56(2)(viib) by taking the of valuation at Rs. 98.61 after necessary verification. 12. The Hon ble Apex Court has time and again held that, in a taxing statute one has to look merely at what is clearly said in the section . There is no room for any intendment. There is no concept of equity in tax law. Nothing is to be read in, nothing is to be implied. One has to look at plain language of the provisions of the section. For the purpose of construction of a taxing statute, the context, scheme of the relevant provision as a whole and its purpose is relevant. Where the statute is absolutely clear and unambiguous, recourse to beneficial/purposive interpretation cannot be taken. The Rule of literal interpretation would apply. Departure from literal rule while interpreting section is an exception, that too where literal rule would result in absurd construction of provision. In the instant case the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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