The CIT (A) has upheld that order of the AO wherein the AO held that the share premium received from the shareholders on issue of equity shares and preference shares as income for the year under consideration is taxable u/s. 56(2)(viib) of the Income-tax Act. The issue before the Appellate Tribunal was whether the the premium of Rs. 3,96,54,531/- received from shareholders via-a-vis issue of equity shares and preference shares as income u/s. 56(2)(viib) of the Income-tax Act, 1961. Allowing the appeal of the assessee the Tribunal held that , the assessee has the choice to choose a prescribed method for ascertaining the market value of the shares transferred. If the assessee has chosen one method of valuation provided under Rule 11UA (i.e. DCF method), the AO has no power or jurisdiction to change that method to another method. Addition is deleted .(ITA No.3955/Mum/2018 dt .28 -07 -2020) (AY. 2014-15)
Karmic Labs Pvt. Ltd v. ITO (2020) 81 ITR 78 (SN)( Mum) (Trib) www.itatonline .org
S. 56: Income from other sources -Consideration for issue of shares- Excess of the face value of shares- Market value – Method of valuation- The Assessee has the choice to choose a prescribed method for ascertaining the market value of the shares transferred- If the assessee has chosen one method of valuation provided under Rule 11UA (i.e. DCF method), the AO has no power or jurisdiction to change that method to another method- Addition is deleted . [ S.56(2) (viib) , R.11UA ]