M/s. Kolet Resort Club Pvt. Ltd. vs. ITO

Parties Involved

Facts Summary

The assessee company filed its Return of Income for assessment year 2015-16 claiming total loss of Rs.23,02,232/-. The return was taken for limited scrutiny assessment and after calling for various details by the Assessing Officer (AO) by issuing Notices u/s.143[2] of the Act. After considering replies filed by the assessee, the returned loss was accepted by the AO. On examination of the assessment records, the Principal Commissioner of Income Tax (PCIT) noticed that the assessee company had issued 4,15,00,200 shares at a face value of Rs.10/- each of M/s. Country Club Hospitality and Holidays Ltd. (formerly known as Country Club India Ltd.) which in turn paid consideration in the form of immovable land being its work in progress worth Rs.42,65,55,955/-. The consideration received by the assessee company against the aggregate value of shares so issued, exceeded the total face value of such shares namely Rs.41.5 Crores. Thus, the provisions of 56(2)(viib) of the Act comes into play. The Assessing Officer failed to examine the fair market value of the shares in accordance with Rule 11U and Rule 11 UA of the IT Rules. The assessee company claimed to have converted the loan of Country Club Pvt. Ltd. into equity by issuing 4,15,0,200 shares to Ms Country Club Hospitability and Holidays Ltd. However on examination of the balance sheet, it appears that no such loan was appearing in the books as on 31-03-2014. This fact was not examined by the Assessing Officer while passing the asse…

Legal Issues

• 1. The Ld. Pr. CIT. Ahmedabad-1, erred in setting aside the order passed u/s 143(3) of the Act dated 27.12.2017.
• 2. The Ld. Pr. CIT. Ahmedabad-1, ought to have appreciated that the order passed u/s 263 of the Act dated 08.03 2021 is invalid ab initio.
• 3. The Ld. Pr. CIT. Ahmedabad-1, ought to have appreciated that the order passed u/s 263 of the Act dated 08.03.2021 is in violation of the provisions of sub-section (2) of section 263 of the Income Tax Act, 1961.
• 4. The Ld. Pr. CIT. Ahmedabad-1, ought to have appreciated that the time limit for passing the order u/s 263 of the Act in the appellant's case for the assessment year under consideration has expired on 31.03.2020 itself.
• 5. The Ld. Pr. CIT. Ahmedabad-1, ought to have appreciated that the Assessing Officer had failed to examine the aspect of applicability of section 56(2)(viib) of the Act.
• 6. The Ld. Pr. CIT. Ahmedabad-1, ought to have appreciated the fact of furnishing of all details relating to the issue in question by the appellant before the Assessing Officer, as observed by the Assessing Officer vide para no.2 of the assessment order.

Judgment Outcome

Decided in favour of Assessee.

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