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The Tax Publishers Asstt. CIT v. Sitaram Computech Pvt. Ltd. [ITA No. 716/Lkw/2015, dt. 21-3-2016] : 2016 TaxPub(DT) 1575 (Luck-Trib) Notional fair value whether taxable under section 56(2)(viii) or in the alternative be taxed as under section 69/69B *Facts:* Assessee purchased shares from two entities Bharat Bearings Ltd./Shankar Telecom Ltd. The shares pertain to one Goel Infracon Pvt. Ltd. of 340,000 shares in total @ Re. 1 per share vis a vis par value of Rs. 10 per share on 15-4-2010. Assessing Officer made an addition under section 56(2)(viia) of the difference in value vis a vis the par value alternatively in the contrary be taxed under section 69/69A (unexplained investments/investments not fully disclosed or explained). On further appeal Commissioner (Appeals) deleted the addition on the ground that section 56(2)(viia) came into force only wef 1-6-2010. Since the date of transfer preceded the provision addition stood deleted. Aggrieved department went in appeal to ITAT: Held in favour of assessee by the ITAT that no addition is possible under section 56(2)(viia) or under section 69/69B. The presupposition that the shares cannot be traded below par value and there arose some consideration on the same has not been proved by the assessing officer. Section 69/69B will apply only when investment in not fully recorded in the books and then not explained in the books. It cannot be applied to deem a fair value as in this case. Since section 56(2) is also not applicable rule 11UA for fair value will also not apply. Note: The decision will be interesting to note had the case happened post 1-6-2010 with section 56(2)(viia) kicking in.

The Tax Publishers

Asstt. CIT v. Sitaram Computech Pvt. Ltd. [ITA No. 716/Lkw/2015, dt. 21-3-2016] : 2016 TaxPub(DT) 1575 (Luck-Trib)

Notional fair value whether taxable under section 56(2)(viii) or in the alternative be taxed as under section 69/69B

Facts:

Assessee purchased shares from two entities Bharat Bearings Ltd./Shankar Telecom Ltd. The shares pertain to one Goel Infracon Pvt. Ltd. of 340,000 shares in total @ Re. 1 per share vis a vis par value of Rs. 10 per share on 15-4-2010. Assessing Officer made an addition under section 56(2)(viia) of the difference in value vis a vis the par value alternatively in the contrary be taxed under section 69/69A (unexplained investments/investments not fully disclosed or explained). On further appeal Commissioner (Appeals) deleted the addition on the ground that section 56(2)(viia) came into force only wef 1-6-2010. Since the date of transfer preceded the provision addition stood deleted. Aggrieved department went in appeal to ITAT:

Held in favour of assessee by the ITAT that no addition is possible under section 56(2)(viia) or under section 69/69B.

The presupposition that the shares cannot be traded below par value and there arose some consideration on the same has not been proved by the assessing officer. Section 69/69B will apply only when investment in not fully recorded in the books and then not explained in the books. It cannot be applied to deem a fair value as in this case. Since section 56(2) is also not applicable rule 11UA for fair value will also not apply.

Note: The decision will be interesting to note had the case happened post 1-6-2010 with section 56(2)(viia) kicking in.