Genuineness of Valuation report of underlying real estate property in a subsidiary and sustaining additions under section 68 thereto

Facts:

Assessee owned shares of a Private Limited Company Uday Management Services Pvt. Ltd. (UMS) which was the subsidiary holding company of Knaup Management Services Private Limited (KMS). Forty six shares of UMS was bought back by the Company UMS for a  consideration amount of Rs. 2,34,48,938/- @ of Rs. 6,07,500/-. UMS had paid the buyback tax on these shares. The shares of KMS was valued upwards basing the land what was owned by them with an appropriate valuation report and in turn the shares of the subsidiary holding company UMS was also revised upwards @ Rs. 607,500/- with a valuation report. After revision of the shares then UMS had also distributed dividend and paid dividend distribution tax as well on these dividends. The dividend payouts resulted in the value of the shares dropping rapidly which was not acceptable to the revenue who read the buy back as a subterfuge. The buy back of the shares in the hands of the assessee was questioned and the buy back amount of Rs. 2.34 crore was added u/s 68. The CIT(A) on review of facts agreed on the facts of the assessee as UMS has paid the buy back tax and dividend distribution tax as well. Revenue went in higher appeal to ITAT

Case: ACIT v. Anand Swarup Gupta 2024 TaxPub(DT) 1246 (Del-Trib)