Home › Tax Laws › ACIT v. Subhodh Menon ( 2019) 174 DTR 417/ 175 ITD 449/ 198 TTJ 79(Mum.)(Trib.), www.itatonline.org ACIT v. P.N. Ramaswamy( 2019) 174 DTR 417/198 TTJ 79 (Mum.)(Trib.), www.itatonline.org

ACIT v. Subhodh Menon ( 2019) 174 DTR 417/ 175 ITD 449/ 198 TTJ 79(Mum.)(Trib.), www.itatonline.org ACIT v. P.N. Ramaswamy( 2019) 174 DTR 417/198 TTJ 79 (Mum.)(Trib.), www.itatonline.org

S. 56 : Income from other sources-S. 56(2)(vii), is a counter evasion mechanism to prevent money laundering of unaccounted income & does not apply to bona fide business transaction done out of business exigency. The difference between alleged fair market value of share and the subscribed value of shares cannot be assessed as income u/s. 56(2)(vii)(c). [S. 56 (2)(vii)(c)]

Department has raised following grounds before the Tribunal

“ On the facts and in the circumstances of the case, and in law, the Learned CJT (A) erred in deleting the addition made u/s 56(2)(vii)(c) of the Act of Rs.3,01,25,58,196/- being the difference between alleged fair market value of share (Rs. 1538.64 per share) of Dorf Ketal Chemicals India Pvt. Ltd. and the subscribed value of shares (Rs.100 per share) without appreciating the fact that the valuation of shares is to be done prior to allotment of shares.”

Dismissing the appeal of the revenue the Tribunal held that ; S. 56(2)(vii),is a counter evasion mechanism to prevent money laundering of unaccounted income & does not apply to bona fide business transaction done out of business exigency. The difference between alleged fair market value of share and the subscribed value of shares cannot be assessed as income u/s 56(2)(vii)(c) .(ITA No.2776/Mum/2015 ,ITA No. ITA No.676/Mum/2015, dt. 07.12.2018) (AY. 2010-11)