M/s. Saahas Waste Management Private Limited, Bangalore V. The Deputy Commissioner Of Income Tax, Circle- 6(1)(1), Bangalore

ITA 1881/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2261 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-11-2020
• Assessment Year: 2016-2017
• Appeal Filed On: 30-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 201; 73

Judgement Text

ITA NO.1881/BANG/2019 M/S. SAAHAS WASTE MANAGEMENT (P) LTD., BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL BBENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBERAND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.1881/BANG/2019 ASSESSMENTYEAR:2016-17 M/S. SAAHAS WASTE MANAGEMENT (P) LTD. NO.21, 5 TH C CROSS, 16 TH MAIN BTM 2 ND STAGE BANGALORE-560 076 PAN NO : AATCS5284J VS. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-6(1)(1) BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI H.V. GOUTHAM, A.R. RESPONDENT BY : SHRI PRIYADARSHI MISHRA, D.R. DATE OF HEARING : 03.11.2020 DATE OF PRONOUNCEMENT : 01.12.2020 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER PASSED BY THE LD. CIT(A) CONFIRMING THE ADDITION MA DE BY THE A.O. U/S 56(2)(VIIB) OF THE INCOME-TAX ACT,1961 ['THE AC T' FOR SHORT] AMOUNTING TO RS.85,20,036/- FOR ASSESSMENT YEAR 201 6-17. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. DU RING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD ISSUED 2 643 NOS. OF PREFERENCE SHARES HAVING A FACE VALUE OF RS.2,225/- EACH AT A PREMIUM OF RS.3,874.42 PER PREFERENCE SHARE. ACCOR DINGLY, THE ITA NO.1881/BANG/2019 M/S. SAAHAS WASTE MANAGEMENT (P) LTD., BANGALORE PAGE 2 OF 5 ASSESSEE HAD COLLECTED SHARE PREMIUM OF RS.1,02,40, 092/-. THE A.O. NOTICED THAT THE ASSESSEE HAS FOLLOWED DISCOUN TED CASH FLOW METHOD (DCF) FOR VALUING SHARES AND ACCORDINGLY, SU BSTANTIATED THE SHARE PREMIUM COLLECTED BY IT. THE A.O. HOWEVER, R EJECTED THE SAME AND COMPUTED THE VALUE OF SHARE BY ADOPTING NET ASS ET VALUE METHOD. THE A.O. NOTICED THAT THE NET ASSET VALUE WAS NEGATIVE AT (-)RS.15,520/-. ACCORDINGLY, THE A.O. TOOK THE VIE W THAT THE ENTIRE SHARE PREMIUM OF RS.3,874.42 COLLECTED BY THE ASSES SEE IS LIABLE FOR TAX U/S 56(2)(VIIB) OF THE ACT. THE A.O. NOTICED T HAT THE ASSESSEE HAS ISSUED SHARES TO BOTH RESIDENTS AND NON-RESIDEN TS. THE NUMBER OF SHARES ISSUED TO RESIDENTS WAS 2199 PREFE RENCE SHARES. ACCORDINGLY, THE SHARE PREMIUM COLLECTED FROM RESID ENT SHARE HOLDERS WAS RS.85,20,036/-, WHICH WAS LIABLE FOR TA XATION U/S 56(2)(VIIB) OF THE ACT. ACCORDINGLY, THE A.O. ASSE SSED THE ABOVE SAID AMOUNT AS INCOME OF THE ASSESSEE U/S 56(2)(VIIB) OF THE ACT. THE LD. CIT(A) ALSO CONFIRMED THE SAME AND HENCE, THE A SSESSEE HAS FILED THIS APPEAL BEFORE US. 3. THE LD. A.R. SUBMITTED THAT DCF METHOD IS ONE OF THE RECOGNIZED METHODS OF SHARE VALUATION AND THE A.O. WAS NOT JUSTIFIED IN REJECTING THE SAME WITHOUT FINDING FAU LT WITH THE WORKINGS FURNISHED BY THE ASSESSEE. HE SUBMITTED T HAT AN IDENTICAL ISSUE WAS EXAMINED BY THE COORDINATE BENCH OF THE T RIBUNAL IN THE FOLLOWING CASES: A) INNOVITI PAYMENT SOLUTIONS (P) LTD. VS. ITO, BANGAL ORE (2019) 102 TAXMANN.COM 59 (BANGALORE TRIB.) B) VALENCIA NUTRITION LTD. VS. DEPUTY COMMISSIONER OF INCOME- TAX (2020) 120 TAXMANN.COM 238 (BANGALORE TRIB.) ITA NO.1881/BANG/2019 M/S. SAAHAS WASTE MANAGEMENT (P) LTD., BANGALORE PAGE 3 OF 5 4. THE LD. A.R. SUBMITTED THAT IN BOTH THE ABOVE SA ID CASES, THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN T HE CASE OF VODAFONE M.PAISA 92 TAXMANN.COM 73 WAS FOLLOWED AND THE ISSUE WAS RESTORED TO THE FILE OF A.O. WITH THE DIRECTION TO EXAMINE THE ISSUE AFRESH UNDER DCF METHOD ONLY. 5. THE LD. A.R. ALSO SUBMITTED THAT THE ASSESSEE IS A STARTUP COMPANY. THE CBDT, VIDE NOTIFICATION NO.13/2019 D ATED 5.3.2019 AND CONSOLIDATED CIRCULAR NO.22/2019 DATED 30.8.201 9, HAS EXEMPTED STARTUP COMPANIES FROM APPLICATION OF PROV ISIONS OF SECTION 56(2)(VIIB) OF THE ACT. ACCORDINGLY, HE SU BMITTED THAT THE IMPUGNED ADDITION MADE BY THE A.O. IS AGAINST THE C IRCULAR ISSUED BY CBDT AND HENCE LIABLE TO BE DELETED. 6. ON THE CONTRARY, THE LD. D.R. SUBMITTED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE A.O. FOR EXAMINING T HE SAME AFRESH IN VIEW OF THE DECISION RENDERED BY COORDINATE BENCH I N THE CASE OF INNOVITI PAYMENT SOLUTIONS PVT. LTD. (SUPRA). WITH REGARD TO THE CLAIM OF STATUS OF THE COMPANY BEING STARTUP COMPA NY, THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENT IN SUPPORT OF THE SAID CLAIM. 7. IN THE REJOINDER, THE LD. A.R. AGREED THAT HE WI LL FURNISH RELEVANT DOCUMENTS BEFORE THE BENCH WITHIN A WEEK. 8. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE R ECORD. AS PER THE DECISION RENDERED BY THE COORDINATE BENCH I N THE CASE OF INNOVITI PAYMENT SOLUTIONS (P) LTD. VS. ITO, BANGAL ORE (SUPRA), THIS MATTER NEEDS TO BE RESTORED TO THE FILE OF THE A.O. FOR EXAMINING IT ITA NO.1881/BANG/2019 M/S. SAAHAS WASTE MANAGEMENT (P) LTD., BANGALORE PAGE 4 OF 5 AFRESH IN ACCORDANCE WITH THE DIRECTIONS GIVEN IN T HE ABOVE SAID ORDER. 9. HOWEVER, THE LD. A.R. HAS SUBMITTED THAT THE ASS ESSEE IS A STARTUP COMPANY AND HENCE IT IS EXEMPTED FROM THE A PPLICATION OF PROVISIONS OF SECTION 56(2)(VIIB) OF THE ACT. HOWE VER, TILL DATE, THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENT IN SUPPORT OF THE SAID SUBMISSIONS. HOWEVER, SINCE THE MATTER REQUIRES TO BE SET ASIDE TO THE FILE OF THE A.O., THE ASSESSEE MAY FURNISH THE REQUIRED DOCUMENTS BEFORE THE A.O. IF IT SEEKS TO CLAIM EXEM PTION FROM APPLICATION OF PROVISIONS OF SECTION 56(2)(VIIB) OF THE ACT. 10. IN VIEW OF THE FORGOING DISCUSSIONS, WE SET ASI DE THE ORDER PASSED BY LD.CIT(A) AND RESTORE THE ISSUE TO THE FI LE OF THE A.O. FOR EXAMINING IT AFRESH. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST DEC, 2020 SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 1 ST DEC, 2020. VG/SPS ITA NO.1881/BANG/2019 M/S. SAAHAS WASTE MANAGEMENT (P) LTD., BANGALORE PAGE 5 OF 5 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.