Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 130523 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
27-06-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
24-04-2023
Assessment Year
2016-2017
Appeal Filed On
22-01-2023
Judgement Text
Page 1 of 19 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’: NEW DELHI BEFORE, SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No.7467/Del/2019 (ASSESSMENT YEAR 2016-17) Dy.CIT Circle-9(1), New Delhi Vs. M/s Firki Wholesale Pvt. Ltd. Khasra No.382, Plot No.4 2 nd Floor, MG Road Sultanpur South West New Delhi-110 030 PAN-AABCF 9928J (Appellant) (Respondent) Cross Objection No.06/Del/2023 (Arising out of ITA No.7467/Del/2019) (ASSESSMENT YEAR 2016-17) M/s Firki Wholesale Pvt. Ltd. Khasra No.382, Plot No.4 2 nd Floor, MG Road Sultanpur South West New Delhi-110 030 PAN-AABCF 9928J Vs. Dy.CIT Circle-9(1), New Delhi (Cross Objector) (Respondent) Appellant by Mr. Ganesh Kanodia, CA Respondent by Ms. Maimum Alam, Sr. DR Date of Hearing 25/04/2023 Date of Pronouncement 28/06/2023 ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 2 of 19 ORDER PER M. BALAGANESH AM: This appeal of the Revenue arises out of the order of the Learned Commissioner of Income Tax (Appeals)-2, New Delhi, [hereinafter referred to as ‘Ld. CIT(A)’] in Appeal No. 10258/18-19 dated 15/01/2019 against the order passed by the Assistant Commissioner of Income Tax, Circle-9(1), Delhi, (hereinafter referred to as the ‘Ld. AO’) u/s 143(3) of the Income Tax Act (hereinafter referred to as ‘the Act’) on 22/12/2018 for the Assessment Year 2016-17. The assessee filed Cross Objection. 2. The following grounds raised by the Revenue as well as by the assessee. In ITA No.7467/Del/2019 “1. On the facts and in the circumstances of the case and in law, the Id CITA) has erred in deleting the addition of Rs 2,88,02,880/- u/s 5612vub of the IT Act made by the AO ignoring the fact that the assessee has not filed a declaration in Form No 2 to DIPP as required in Para 5 of Notification of Ministry of Commerce and Industry (Department for promotion of Industry and Internal Tradej dated 19.02.2019 either before the AD or before CITIA) and departmental circular No 22/2019 dated 30.08 2019. 2. The Ld CITIA) has erred in ignoring the fact that the certificate of recognition issued by DIPP clearly mentions that this certificate is not meant for claiming any tax benefit, while deleting the addition made to the Assessing Officer. ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 3 of 19 3. The appellant craves leave to add, amend or forego any ground(s) of appeal at any time before or during the hearing of this appeal.” In Cross Objection No.06/Del/2023 “1. Changing valuation method or adopting a different valuation method or Non-Accepting the valuation price which is under line with the Income Tax provisions is beyond the powers of revenue authorities. 2. Projected Cash Flows and Discounting factor cannot be challenged arbitrarily only by comparing to the previous period valuation if the same has been done in compliance to /s Section 56(2) (viib) read with rule 11UA(2) of IT Act, 1961.” 3. The only issue raised in the appeal of the Revenue is as to whether the Ld. CIT(A) was justified in deleting the addition made u/s 56(2)(viib) of the Act in the sum of Rs.2,88,02,880/- in the facts and circumstances of the instant case. 4. We have heard the rival submissions and perused the materials available on record. The return of income was filed by the assessee company on 17/10/2016 declaring total loss of Rs.1,36,03,795/-. The assessee company is engaged in the wholesale business of mobile cases, screen guards and other mobile phone accessories, etc. During the year under consideration, the assessee issued 4,154 equity shares and 19,524 compulsorily convertible Preference Shares having face value of Rs.10 to the following parties at a premium as under:- ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 4 of 19 S. No. Name address, PAN f the persons from whom the share premium have been received Details No. of shares allotted Value per share (Rs.) Premium per share (Rs.) Relationship of the person from whom the shares premium is received with the assessee company 1 UNILAZER ALTERNATIVE VENTURES LLP. Nishuvi, 3 rd Floor, 75, Dr. Annie Besant Road, Worli Mumbai, Maharashtra, 400018, India PAN: ADDFU9369H (Venture Capital Investing Fund) 3,928 8911.77 8901.77 The investor has invested the fund by way of Equity Shares in the Assessee Company 2. Seed Fund 2 International, Mauritius: Incorporated under Registrar of Mauritius, IFS Court, Bank Street, Twenty Eight Cybercity, Ebene, 7221 Republic of Mauritius (Venture Capital Investing Fund 18,566 260.55 250.55 The investor has invested the fund by way of Compulsory Convertible Preference Share and holds 0.55% of Equity Shares in the Assessee Company. 3. Seed Fund 2 India. The India Seed Investment Trust; 3, Turf Estate, Shakti Mills Lane, Off. Dr. E Moses Road, Mahalaxmi, Mumbai, Maharashtra 623 260.55 250.55 The investor has invested the fund by way of Compulsory Convertible Preference Shares and hold 0.15% of ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 5 of 19 400011, PAN: AAJTS7047Q (Venture Capital Investing Fund Company) Equity Shares in the Assessee Company. 4 Seed Fund International Incorporated under Registrar of Mauritius IFS Court, bank Street, Twenty Eight Cybercity, Ebene, 72201 Republic of Mauritius (Venture Capital Investing Fund Company) 325 8911.77 8901.77 The investor has invested the fund by way of Compulsory Convertible Preference Shares and hold 0.55% of Equity Shares in the Assessee Company. 5 Seed Fund 2 India, The India Seed Trust; 3 Trurf Estate, Shakti Mills Lane, Off. Dr. E Moses Road, Mahalaxmi, Mumbai, Maharashtra- 400011, PAN: AAJTS 7047Q (Venture Capital Investing Fund Company) 10 8911.77 8901.77 The investor has invested the fund by way of Compulsory Convertible Preference Shares and hold 0.15% of Equity Shares in the Assessee Company. 6 Mr. Phanindra Sama, Plot no#3, Green View Enclave, Manovikas Post, Bowenpally. Telangana, PAN:AREPS5071L 85 8911.77 8901.77 The investor has invested the fund by way of Compulsory Convertible Preference Shares and hold 0.59% of Equity Shares in the Assessee Company. 7 Mr. Peyush Bansal, Pocket B Vatika 85 8911.77 8901.77 The investor has invested ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 6 of 19 Mindscapes, 7 th Fl, Mathura Road, Sec- 27, Faridabad, Haryana, 121003, PAN:AFPPB3259Q the fund by way of Compulsory Convertible Preference Shares and hold 0.59% of Equity Shares in the Assessee Company. 8 Mr. Amit Mittal, D- 59, 1 st Floor, Pushpanjali Enclave, Pitampura, new Delhi-110 034, PAN:AFCPM688oK 56 8911.77 8901.77 The investor has invested the fund by way of Compulsory Convertible Preference Shares and hold 0.39% of Equity Shares in the Assessee Company. 5. The Ld. Assessing Officer (“Ld. AO” for short) observed that the valuation of shares of the assessee company had increased substantially from 83.13/- in F.Y.2014-15 to Rs.8,686.76/- in F.Y.2015-16. The assessee company submitted the valuation report of Chartered Accountant who had determined the fair market value per equity share adopting Discounted Cash Flow (DCF) method in terms of Rule 11U and 11UA of the Income Tax Rules. The Ld. AO observed that the valuation report stated that the same is based on information, explanation and projected financial figures provided by ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 7 of 19 the management of the assessee company. Accordingly, he concluded that the validity of the valuation on the basis of DCF method becomes questionable. The Ld. AO also observed that the valuation reports for both the years were compared and projected cash flow discounting factor had changed arbitrarily for the year under consideration. Accordingly, show cause notice was issued to the assessee as to why the said valuation of based on DCF method should not be rejected and valuation be substituted based on Net Asset Value (NAV) method. The assessee vide letter dated 28/11/2018 replied by stating that the Daily detailed business deck was presented before the investor as well as the Chartered Accountant; Daily objects designing approach was presented before the investor as well as the Chartered Accountant; Addressable market size of the assessee company and its projections estimated by the company were presented before the Chartered Accountant; International companies operating on the same business model and generating revenues; Detailed Business Plan for future projections of the revenue as estimated by the management were presented before the Chartered Accountant. The assessee also ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 8 of 19 stated that the valuation undertaken in earlier year was for preference shares and the valuation undertaken during the year under consideration was for equity shares. The assessee further stated that the first valuation was carried out on 10/06/2014 and the second valuation was carried out after a gap of one year and seven months on 05/01/2016. The first valuation was done based on audited financials as on 31/03/2014 and second valuation was based on audited financials as on 31/03/2015 and projects estimated till 05/01/2016. It was pointed out by the assessee that it had expanded it business verticals and business scope substantially from the time of first valuation to the second valuation. The net investment of the company as on 31/03/2014 was Rs.2,11,01,050/-. The assessee company was supported by the investor to explain its business during the Financial Year 2014-15 to the extent of Rs.2,99,99,512/- by way of share investment including share premium. The assessee company also entered into a shareholder’s agreement dated 24/12/2015 with the proposed investors wherein assurance was provided by the investors for further investment. The assessee company was again funded by the ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 9 of 19 investor to the extent of Rs.4,50,04,643/- at the time of 2 nd valuation. Hence, the total fund received by the company in between these two valuation dates was to the tune of Rs.7,50,04,155/- which was substantially higher than the opening capital of the assessee company as on 31/03/2014. Further the assessee company was also assured of further substantial funding by the investor on subsequent dates in the company. It was also pointed out that the turnover of the company has been increased substantially from Rs.2.45 crores in F.Y.2013-14 to Rs.6.69 crores in F.Y.2014-15. 6. The assessee company, being a start-up company, at the time of receipt of funds, the main factor contributing to the growth in revenue, profits and cash flows, were the capital invested in the company as giving necessary financial support to the company to expand the operations via improvements in terms of infrastructures, quality, reach to customers etc. Further, the assessee company was engaged in trading of mobile covers/accessories till the F.Y.2014-15 and it had plan for expanding its business in designer leather accessories and lifestyle ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 10 of 19 fashion designer accessories, which the company was managed to start in F.Y.2016-17. Further the assessee company had also planned to start its own e-commerce portals as part of its diversification plan and has taken into consideration this expansion, while estimating the future cash flows. The company has started its e-commerce operations during the F.Y.2017-18 onwards. It was also pointed out that assessee company had planned to expand its business with big corporates by having partnership with them such as Uber, Zomato, Bira, Beercafe, etc. The Company had also associated itself with the NAMO merchandise and they are exclusive partner with them to sale merchandise products with it. All these factors collectively contributed for increased projections in cash flows and projected revenues resulting in higher valuation. Further, the assessee company under the brand of “Daily Objects” offer the best designs and quality of lifestyle products at accessible price. It has been able to create a niche & standout amongst competitors with its 5 Brand Pillars i.e. Exceptional Quality Product, Innovation, Best Designs and best customers experience. It has exclusive licensed artworks ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 11 of 19 from reputed International Artists that allows it to offer products that look unlike any other in India. It has been able to create an impact with no real marketing & brand spend in relation to competitors who have spent millions. Its five years of extensive research in printing technologies make it capable of printing on any surface/material enabling it to expand into lot of mass market categories. The assessee also submitted that the detailed business deck, designing approach, addressable market size etc. vide letter dated 28/11/2018 before the Ld. AO. The assessee also clarified that the so far as discounting factor used in the year under consideration, the discount rate is typical a firm’s Average Cost of Capital. During the F.Y.2015-16, the assessee company had arranged a short term working capital loan from Capital Float (Digital SME Finance) at an interest rate of 18.96% p.a. Accordingly, the assessee company had taken the discounting factor at a reasonably higher costs in the present valuation as compared to earlier year in the first valuation. Hence, it was pointed out that there was no arbitrary change in the method of the valuation of shares adopted by the assessee in the valuation report. ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 12 of 19 It was also pointed out further that one of the Investor to whom shares were allowed at premium was Seed Fund 2 International, Mauritius to whom the provisions of section 56(2)(viib) of the Act cannot be made applicable at all since, the shares were issued to non-resident. It was also pointed out that the assessee company had received investment from Seed Fund 2 India, which is a registered Venture Capital Fund. Accordingly, the same would also be outside the ambit of applicability of provisions of section 56(2)(viib) of the Act. 7. The Ld. AO did not heed to the aforesaid contentions of the assessee and observed that the assessee company had not filed any documentary evidences to prove that it qualifies to fall under the category of “Startup” as per the Government Notification. Further as per the notification issued by the Ministry of Commerce and Industries, Department of Industrial Policy & Promotion (DIPP) dated 17/02/2016, ‘Startup’ must be engaged in developing a new project or service or improvement of existing project or service. It also mentions that it would not be considered as ‘Startup’ if the act or process carried out by the ‘Startup’ fails to create any ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 13 of 19 undifferentiated projects. The Ld. AO observed that in the case of the assessee company, during the year under consideration, it was engaged in trading of mobile covers/ accessories/ and the same would could in no way be considered as innovation. Further, the assessee company has submitted that in subsequent years, it has expanded its business in design leather accessories and the lifestyle fashion designer accessories. The Ld. AO concluded that none of these activities is a new or unique nature which can be termed as innovation. Accordingly, he rejected the plea of the assessee company claiming to be a ‘Startup’ company. 8. The Ld. AO rejected the DCF method valuation for determining the fair market value and substituted the same by NAV method and arrived at Rs.1978 per share to be the fair market value. Considering the fair market value at Rs.1978 per share, the Ld. AO proceeded to make the addition u/s 56(2)(viib) of the Act at Rs.2,88,02,880/- as under: ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 14 of 19 Party from whom share premium received No. of equity shares issued [1] FMV as per DCF [2] Value of share allotmen t [3] FMV as per NAV [4] Differen ce [5=3-4] Amount as per NAV [1X5=6] Unilazer Alternative Ventures LLP 3,928 8696.7 8911.7 1978 6933.77 2,77,35,848.56 Mr. Phanindra Sama 85 8696.7 8911.77 1978 6933.77 5,89,370.54 Mr. Peush Bansal 85 8696.7 8911.77 1978 6933.77 5,89,370.45 Mr. Amit Mittal 56 8696.7 8911.77 1978 6933.77 3,88,291.12 Total [A] 2,88,02,880.58/- 9. The Ld. CIT(A) deleted the addition made by the Ld. AO by observing as under: “6.1 Ground no. 1 to :- All the grounds are directed against addition of Rs. 2,88,02,80/- u/s 56(2)(viib) an account of excess premium received on issue of shares. The AO noticed a sudden increase in share value from Rs. 83.13 in F.Y. 2014-15 to Rs. 8696.76 in F.Y. 2015-16 which was not justifiable specially when the valuer's report clearly remarked that it relied on information input by the appellant and has not carried on independent verification. In this condition the provision u/s 56(2) (viib) was invoked making the impugned addition. 6.2 During appellate proceedings, the appellant has submitted that as per proviso (ii) of s. 56(2) (viib), notified persons are not covered by the section. It filed CBDT notification no. 45/2016 dt. 14.06.2016 notifying the classes of persons u/s 56(2)(viib) as being resident who make consideration exceeding face value of shares of 'a start up' company which fulfills the Appeal No.10258 18-19 following conditions in notification no. GSR 180(E) dt. 17.02.2016 issued by Ministry of Commerce & Industry: a) Up to five years from date of incorporation b) Turnover does not exceed Rs. 25 cr in any five year. c) It is working towards innovation or commercialization of a new product process or services. ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 15 of 19 6.3 Further, it relied on CBDT F. No.173/14/2018 ITA.I dt.08.02.2018 requesting CCAs not to take coercive measures in case of addition u/s 56(2Xviib) in case of a start up and expeditiously disposal of cases by CIT(A) Appellant also filed a certificate of recognition of start-up (from 07.06.2012 to 06.06.2017). All these papers were forwarded to the AO for comments. In the report dated 25.06.2019, the AO has objected that the appellant has neither innovated nor made any new product. As such, it should not be treated as a start-up. 6.4 However, in view of the certificate of Startup issued to the appellant from the prescribed authority, notification and letter of CBDT, the ratio of Agro Portfolio P. Ltd. of ITAT Delhi relied on by the AO will not apply to the present case which is a start-up. The intent of the notification of CBDT is part of the bigger intention of 'ease of doing business' and to encourage start-up companies. In view of latest provisions, the appellant's is not hit by the provisions of 56(2)(viib). The addition is, therefore, deleted. The grounds are allowed.” 10. From the remand report of the Ld. AO dated 25/06/2019 stated supra, the only grievance of the Ld. AO is that the assessee company cannot be treated as ‘Startup’. In this regard, we find that the Ld. AR had drawn our attention to page 207 of the Paper Book containing the Certificate Of Recognition vide Certificate No. DIPP31681 issued by Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Govt. of India, recognizing the assessee company as ‘Startup’ with effect from 07/06/2012. The date of issue of the Certificate is 14/01/2019 which is after the date of passing the assessment order, but before the date of passing of order by Ld. CIT(A). We find that the Ld. CIT(A) had taken ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 16 of 19 cognizance of this Certificate while granting relief to the assessee. Further, we find that the CBDT vide its Circular No.22/2019 dated 30/08/2019 which is a consolidated circular for treatment of ‘Startups’ categorically stated as under: “4. Procedure of addition made u/s 56(2)(viib) in the past assessment. The clarification issued on 9 August,2019 provided that the provisions of the section 56(2)(viib) of the Act shall also not be applicable in respect of assessment made before 19 February, 2019 if a recognised Startups has filed declaration in Form No. 2. The following procedure is laid down with regard to addition made under section 56(2)(viib) of the Act in assessment order passed before 19th February, 2019:- i. In case the appeal against the assessment is pending before the Commissioner of Income-tax (Appeal) [CIT(A)], the appellate order should be passed by CIT(A) on or before 31 December, 2019 after taking into account the fact that the Startup has filed declaration in Form No. 2 and hence the provisions of section 56(2)(viib) of the Act are not applicable for the addition made under section 56(2)(viib) of the Act before19 February, 2019. The Department shall not file further appeal on the issue of addition made under section 56(2)(viib) of the Act; ii. In case the case is pending before the ITAT, the Department shall not press the ground relating to addition under section 56(2)(viib) of the Act in these cases.” 11. We also find that this issue is no longer res-integra in view of the Co-ordinate Bench decision of Chennai Tribunal in the case of DCIT Vs. Ms. Kovali Media Pvt Ltd. in ITA No.1562/Chny/ 2019 dated 24/06/2019 wherein it was held as under: ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 17 of 19 “The proviso provided to section 56(2(viib) has excluded certain category or class of companies from application on fulfillment of certain conditions. Further, for this purpose notified class of persons has been notified by CBDT vide its circular No.173/147/2018-ITA I dated 06.02.2018, as per which any startup company as recognized by DPIIT, Ministry of Commerce & Industry, Govt. of India is outside the scope of provisions of section 56/2(vib) of the Act. In this case, the assessee has filed necessary evidences to prove that it is a recognized startup from DPIIT. Further, the Gazette Notification No GSR 127(E) dated 19.02.2019 has exempted startup companies from application of provisions of section 56(2(vib) of the Act, provided said startup companies are satisfied conditions prescribed in para 4 of said notification. The assessee has furnished a notification issued by CBDT vide reference No 230819001348 dated 28 August, 2019 u's 56(2(vib) of the Act. as per which the assessee has satisfied conditions prescribed in para 4 of said notification and further, the assessee is exempted from application of the provisions of section 56(2(viib) of the Act, on the amount received on consideration for issue of shares. The learned CIT(A), after considering relevant facts and also by taking note of circular issued by CBDT vide notification No.45/2016/F No.173/103/2016 and also Gazette Notification No GSR 127(E) dated 19.02.2019, has categorically stated that the assessee is exempt from ambit of section 56(2(vilb) of the Act and hence, consideration received for issue of share capital and share premium is outside scope of section 56(2(viib) of the Act. He further observed that since the assessee is outside ambit of section 56(2(viib) of the Act, issue of non- applicability of Rule 11UA(2)(b) of the Income Tax Rules, 1962, therefore, become infructuous and hence, the question of substantiating value of shares does not arise. Therefore, we are of the considered view that the learned CIT(A) has rightly held that share premium collected by the assessee for issue of share capital is outside scope of the provisions of section 56(2(viib) of the Act.” 12. In view of the aforesaid factual observations; Circular of the CBDT and the decision of Chennai Tribunal (supra), we do not find any infirmity in the order of the Ld. CIT(A) granting relief to the ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 18 of 19 assessee. Accordingly, grounds raised by the Revenue are dismissed. 13. Grounds raised in the Cross Objection by the assessee are only supportive of the order of the Ld. CIT(A) and hence dismissed as infructuous. 14. In the result, appeal of the Revenue is dismissed and Cross Objection of the assessee is also dismissed. Order pronounced in the open court on 28 th June, 2023. Sd/- Sd/- (CHANDRA MOHAN GARG) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 28/06/2023 Pk/sps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA No.7467/Del/2019 C.O. No.06/Del/2023 DCIT vs. Firki Wholesale Pvt. Ltd. Page 19 of 19
AI Insights
The case involves the Deputy Commissioner of Income Tax (DCIT) Circle-9(1), New Delhi as the appellant and M/s Firki Wholesale Pvt. Ltd. as the respondent. The dispute arose from the assessment year 2016-17, where the DCIT challenged the order of the Learned Commissioner of Income Tax (Appeals) which had deleted an addition made by the Assessing Officer under section 56(2)(viib) of the Income Tax Act. The addition was based on the alleged excess premium received on the issue of shares by the assessee. The assessee, a startup recognized by the Department of Industrial Policy and Promotion (DPIIT), argued that the provisions of section 56(2)(viib) did not apply to it as it met the criteria set out in the relevant notifications and circulars. The Tribunal agreed with the assessee, referencing the CBDT Circular and the DPIIT certificate, and dismissed the Revenue's appeal.
