INCOME TAX ACT, 1961

Section 56(2)(viib) Section 263

Revision under section 263 - Erroneous and prejudicial order - Invocation of jurisdiction on the ground of non-taxation of excess premium charged to non-resident companies under section 56(2)(viib) -

Pr. CIT treated order passed by AO as erroneous and prejudicial to the interest of revenue on the ground that excess amount received from two non-resident companies on allotment of shares was to be treated as income of assessee under section 56(2)(viib). Held: Finding of Pr. CIT was factually incorrect and was not sustainable in law since provisions of section 56(2)(viib) were not applicable to the consideration received from non-residents for issuing of shares. AO made complete enquiry regarding share capital and share premium received from non- resident companies and also called for a report from TPO on the arm's length price of this international transaction. As there was a detailed enquiry by AO and after thoroughly discussing the issue in the assessment order, AO took a permissible view within the parameters of law, there remained no room for Pr. CIT to assume jurisdiction under section 263.

Supported by:CIT v. Nirav Modi (2017) 390 ITR 292 (Bom) : (2016) 71 Taxmann.com 272 (Bom-HC) : 2016 TaxPub(DT) 3506 (Bom-HC), CIT v. Gabriel India Ltd. (1993) 203 ITR 108 (Bom-HC) : 1993 TaxPub(DT) 1357 (Bom-HC) and Micro Inks Ltd. v. Pr. CIT (2018) 407 ITR 681 (Guj-HC) : 85 Taxmann.com 310 : 2017 TaxPub(DT) 4368 (Guj-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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