ACIT WARD-22(1), NEW DELHI Vs. S.M. FARMS PRIVATE LIMITED

Parties Involved

Facts Summary

The assessee, S.M. Farms Private Limited, filed its return of income for the assessment year 2014-15, declaring an income of Rs.4,08,290/-. The case was selected for 'limited scrutiny' under 'CASS' for verification of large share premium and mismatch between income credited to P & L Account considered under other heads. The Assessing Officer observed that the assessee had filed various details to substantiate the fair market value of unquoted shares allotted during the year. The Assessing Officer rejected the valuation report filed by the assessee and treated the share premium received by the assessee as chargeable to tax under section 56(2)(viib) of the Act. The assessee appealed against this order before the CIT(A)-8, New Delhi, who deleted the addition made by the Assessing Officer. The revenue then filed an appeal before the Income Tax Appellate Tribunal, which was dismissed.…

Legal Issues

• 1. Whether the Ld. CIT(A) erred in deleting the addition of Rs.6,52,50,000 u/s 56(2)(viib) of the Act by ignoring the observation of the AO given in assessment order?
• 2. Whether the Ld. CIT(A) erred in not appreciating the fact that Rule 11UA(2) which governs the calculation of FMV of an unlisted equity share, specifically mentioned about 'Book value of assets' and not about any revaluation of the assets?

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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