The assessee issued 5,00,000 equity shares having face value of Rs. 10 at premium of Rs. 50 per equity share. As a consequence it had received Rs. 2,50,00,000 as premium. The assessee justified the premium received by calculating the fair market value of the shares under rule 11UA of the Income-tax Rules, 1962. The Principal Commissioner took the view that the fair market value of the shares was below the premium at which the shares were issued, as the assessee had not considered the unsecured loans in its working fair market value of shares and accordingly the provisions of section 56(2)(viib) of the Act were liable to be invoked and that the Assessing Officer failed to properly inquire into the share valuation for the purposes of section 56(2)(viib). It was contended that  the Principal Commissioner had not considered the assessee’s submission that these 5,00,000 shares issued by the assessee were rights issue, which was given to the existing shareholders in their existing shareholding ratio against unsecured loans which were given by them to the assessee-company and that section 56(2)(viib) was not attracted to issue of rights shares.  Revision order is set aside. (AY.2014-15)