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TMI Blog2022 (6) TMI 1516X X X X Extracts X X X X X X X X Extracts X X X X ..... s relating to A.Y. 2013-14 and our decision rendered therein in the assessee's appeal will apply mutatis mundis to the assessee's appeal in A.Y. 2014-15 in ITA No. 950/Ahd/2018. 4 We shall first be taking up Revenue's appeal in ITA No. 542/Ahd/2018. A.Y 2013-14 5. The solitary grievance of the Revenue against the order of the Ld.CIT (A) is against deletion of disallowance of deduction u/s. 80IA of the Act made by the AO, and reads as under: 1. The ld. CIT (A) has erred in law and on facts in deleting the disallowance of Rs. 2,74,60,449/- made by the Assessing officer u/s. 80IA of the Act. 6. Brief facts, as emanate from the orders of the authorities below, is that the assessee company carries on the business of contract work in respect of construction of Water Treatment Plants (WTP), Sewage Treatment Plant (STP) etc. During the impugned year, it had claimed deduction u/s. 80IA(4) of profits amounting to Rs. 2,74,60,449/-, earned from developing and /or operating and maintaining the following infrastructure projects. Sr. No. Name of the Projects Date of Commencement 1st Asst. Year of claim Nature of work 1 MPAKVN 02-03-2006 2007-08 Developme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new projects, on which the deduction was claimed for the first time in the year under consideration, viz (i) AMC Sanand WTP and (ii) RUSDIP WTP Karauli, it is seen that nature of development work is similar to the other nine (9) projects, on which deduction u/s. 80IA was held to allowable in the preceding para hence the disallowance of deduction u/s 80IA on these two (2) new projects is also deleted. To sum up, AO is directed to allow deduction u/s. 80IA on all these 11 projects. This ground of appeal is allowed. 8. Before us, at the outset Ld. Counsel for the assessee pointed out that the order of the Ld. CIT (A) in the preceding years pertaining to A.Y. 2010-11 to A.Y. 2012-13 had been upheld by the ITAT in its order passed in ITA No. 161/Ahd/2015, 1532/Ahd/2015 and 1183/Ahd/2016 respectively dated 01.11.2018. Our attention was drawn to Para 4 of the order where with respect to each assessment year involved the projects in relation to which Section 80IA(4) had been claimed by the assessee was enlisted and it was pointed there from that the projects included those on which the assessee had claimed deduction in the impugned year also from Serial no. 1 to Serial no. 9. Our at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly allowed the assessee's claim for deduction u/s. 80IA of the Act. 12. Ld. D.R. was unable to point out any distinguishing fact with respect to the projects undertaken by the assessee at serial no. 1 to 9 which had been undertaken in the earlier years and had been held by the ITAT as being eligible for deduction u/s. 80IA of the Act nor to two new projects undertaken by the assessee during the year at serial no. 10 & 11. 13. In view of the above, we see no reason to interfere in the order of the ld. CIT (A) since admittedly the assessee's claim of deduction with respect to projects listed at serial no. 1 to 9 already stand examined and adjudicated upon by the ITAT in the preceding years wherein they were found to be eligible to grant to deduction u/s. 80IA. As for the remaining two new projects undertaken by the assessee during the year since the Ld. D.R. has been unable to distinguish the finding of the Ld. CIT (A) on facts that the scope of work relating to these two projects was identical to the other nine projects which were held to be eligible for the deduction u/s. 80IA by the ITAT, the order of the ld. CIT (A) allowing assessee's claim of deduction vis a vis the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusively for business purposes, the said income was derived from the business of the assessee and hence eligible to deduction u/s 80-IA of the Act. The decision of the jurisdictional High Court In the case of Shah Alloys was also referred to. We find that the CIT (A) noted that he found force in the arguments of the assessee but thereafter went on to follow his decision in the preceding year wherein identical interest was denied deduction u/s 80-IA. This is evident from his findings at para 2.6 of the order as under: 2.6 I have gone through the facts and submission made by the AR. I find force in the arguments raised by the AR regarding inclusion of interest income of Rs, 13,18,599/- in the profits of the projects eligible u/s. 80IA for which I follow the appellate order for AY 2010-11 in appeal no. CIT (A) VI/Wd-1(3)/7/13-14 dt 13-11- 2014 in Appellant's own case wherein it was held as under: "2.6 I have gone through the facts and submission made by the AR. f find force in the arguments raised by the AR regarding i) Excessive addition of Rs. 13,48,697/-, H) Duplicate addition of Rs. 14,99,076/-, Hi) Sundry credit balance : written off of Rs. 1,45t 955/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at Rs. 28,47,773/-, hence the addition cannot be more than that); the appellant did not claim deduction u/s. 80IA to the tune of Rs. 14,99,076/- ( as the said interest income was allocated to projects not eligible for deduction u/s. QOSA) and R$. 1,45,955/- being profits u/s. 41(1) the appellant has rightly claimed deduction u/s. 80IA on the said income, the question of disallowance of the said sums do not arise. AO is directed to verify this contention. If it is found to be so, disallowance of said sums shall be deleted. Disallowance of the balance interest of Rs. 12,02,742/- is upheld. Thus, subject to verification, this ground of appeal is partly allowed. 20. It is therefore not clear as to how the issue was adjudicated upon by the Ld.CIT(A). Be that so, we however find that there is merit in the contentions of the Ld.Counsel for the assessee. We have gone through the decision of the Hon'ble jurisdictional High Court in the case of Shah Alloys (supra), and we find that, while dealing with the claim of deduction u/s 80-IA of the Act on interest earned on Margin Money kept with Banks, it was categorically held that the same being incidental to the business activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not wish to press this ground considering the smallness of the quantum involved. 29. In view of the above, ground no. 3 is dismissed. 30. Ground no. 4 reads as under: 4. The Id. CIT (A) has grossly erred in law and on facts in confirming the disallowance of professional tax of Rs. 44,320/-, deducted from salary of the employee by treating it as covered u/s. 43B, though the Appellant Company has not claimed the professional tax as deduction in the return of income. 31. Ld. Counsel for the assessee at outset itself stated that she did not wish to press this ground considering the smallness of the quantum involved. 32. In view of the above, ground no. 4 is dismissed. 33. Ground no. 5 reads as under: 5. The Id. CIT (A) has grossly erred in law and on facts in confirming addition of Rs. 30,19,663/- u/s. 56(2)(viib) of the Act, by ignoring the working of the Fair Market Value of the shares substantiated by the Appellant Company which includes the goodwill based on super profit method, on the lame ground that goodwill does not appear in the balance sheet of 31-03-2012. 34. The facts relating to the issue are that the assessee had received share premium amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney 0 Deferred liabilities 1643663 Total 260599301 PE Total amount of paid up equity share capita as 11801000 Shown in the balance-sheet: PV the paid up value of such equity shares 1180100 The fair market value of unquoted equity shares = (A-L)/ (PE) X PV 146284417.00 Fair Market value of each shares 123.96 37. The solitary contention of the ld. Counsel for the assessee before us was that as per law, the assessee was at liberty to justify the fair market value of shares either as per the method prescribed in the Income Tax Rules, 1962 (in short "Rules") in this regard or the fair market value could be substantiated to the Assessing Officer based on the value of all assets of the assessee as on the date of issue of shares (including even the intangible assets) .And while the assessee had adopted the second method to justify the fair market value of the shares by including the value of goodwill to the assets held by it, the Revenue authorities had merely insisted on the valuation being done as per the first method i.e. Rule 11UA prescribed by the Rules in this re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Rules and (ii) FMV based on the intrinsic value of the assets both tangible and intangible on the date of issue of shares. Thus, the FMV of all the assets (tangibles, intangibles, human resources, right of management or control or other rights whatsoever in or in relation to Indian company) whether recorded in the books or not, appearing in the books at their intrinsic value or not, is a sufficient warrant to value the premium on issue of unquoted equity shares by closely held company. Thus, the Explanation (a)(ii) itself implies that book entry for recognition of intrinsic value is not necessary at all. Also, the higher of the value determined as per the first and second limb of Explanation shall be adopted for the purposes of Section 56(2)(viib) of the Act. 40. Ld. Counsel for the assessee therefore contended that the issue be restored to the A. O. to be considered afresh in view of the interpretation of provisions of Section 56(2)(viib) as above. 41. Ld. D.R. however relied on the order of the authorities below. 42. We have heard the rival contentions. The issue relates to determination of the excess consideration received by the assessee on issue of shares exceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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