M/s. Uniwrap Systems Pvt. Ltd., Vadodara V. The ITO, Ward-2(1)(4)., Vadodara

ITA 2555/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1049 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 20-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P PATHAK
• Assessee Lawyers: ANIL R SHAH
• Keywords: Depreciation; Fair market value; Valuation report

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 2555/AHD/2017 / ASSESSMENT YEAR: 2013-14 M/S.UNIWRAP SYSTEMS P.LTD. PLOT NO.383, GIDC MANUSAR, TAL: SAVLI VADODARA 391 175. PAN : AABCU 0130 H VS ITO, WARD-2(1)(4) BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI ANIL R. SHAH, AR REVENUE BY : SHRI O.P. PATHAK, SR.DR / DATE OF HEARING : 18/03/2019 /DATE OF PRONOUNCEMENT : 19 / 03/2019 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A)- 2, VADODARA DATED 28.8.2017 PASSED FOR THE ASSTT.YEAR 2013-14. 2. IN GROUND NO.2, IT HAS PLEADED THAT THE LD.CIT(A ) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION AMOUNTI NG TO RS.4,190/-. THE LD.COUNSEL FOR THE ASSESSEE DID NOT PRESS THIS GROUND OF APPEAL, HENCE, IT IS DISMISSED. ITA NO.2555/AHD/2017 - 2 - 3. IN GROUND NO.1, THE ASSESSEE HAS TAKEN THREE SUB -GROUNDS. IT HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.2,42,640/- UNDER SECTION 56(2)(VIIB) OF THE INCO ME TAX ACT, 1961. 4. AT THE TIME OF HEARING, THE LD.COUNSEL FOR THE A SSESSEE HAS PLACED ON RECORD A CHART SHOWING DETAILS OF ADDITION OF SH ARE PREMIUM. THIS CHART READS AS UNDER: SUB : CHART SHOWING DETAILS OF ADDITION OF SHARES PREMIUM 1) SHARES ISSUED 6000 2) FACE VALUE RS.10 PER SHARE 3) SHARE PREMIUM RS.900 PER SHARE 4) FAIR MARKET VALUE OF PREMIUM AS PER VALUATION RE PORT 859/56 PER SHARE 5) DIFFERENCE ON ACCOUNT OF ROUNDING OFF 40/44 6) DIFFERENCE ON ROUNDING OFF IS 4.70% 7) DIFFERENCE FOR 6000 SHARES RS.2,42,640/- 8) ADDED BY ITO IN ASST. ORDER RS.2,42,640/- 9) CONFIRMED BY CIT(A) + RS.2,42,640/- 10) APPEAL TO HON. ITAT NOTE: 1) ROUNDING OFF IS A COMMON METHOD FOLLOWED IN COM MERCIAL PRACTICE. 2) EVEN INCOME TAX DEPARTMENT FOLLOWS 'ROUNDING OF F IN CALCULATION TAX PAYABLE. 3) DEFINITION OF 'ROUNDING OFF IS SUPPORTED BY MAT HEMATICS DICTIONARY. 4) JUDGEMENTS RELIED. A) MICROFIRM CAPITAL (P) LTD. VS. DY.CIT (2018) 16 8 ITD 301/89 TAXMANN.COM 23 (KOLKATA-TRIB) B) RAHUL CONSTRUCTIONS VS. DY.CIT (2010) 38 DTR (PU NE) (TRIB) 19 5. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT FAIR MARKET VALUE OF THE PREMIUM CHARGED BY THE ASS ESSEE BE TAKEN AS PER VALUATION REPORT I.E. RS.859.56 PER SHARE. THE LIMITED CONTENTION WAS THAT THIS VALUE BE ADOPTED AT RS.860/- PER SHARE, B ECAUSE THE CONCEPT OF ROUNDING DEMONSTRATED THAT SUCH ESTIMATED OPINION B E TAKEN TO NEAREST FIGURE. IF 0.44 IS BEING ADDED IN THE VALUE WORKED OUT ON THE BASIS OF VALUATION, THEN THIS VALUE BE TAKEN AT RS.860/- PER SHARE. ON THE OTHER ITA NO.2555/AHD/2017 - 3 - HAND, THE LD.DR RELIED UPON THE ORDER OF THE AO. T HE FINDING OF THE LD.AO ON THIS ISSUE READS AS UNDER: DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE ALLOTTED 6000 SHARES OF FACE VALUE OF RS.10/- PER SHARE WITH SHAR E PREMIUM OF RS.890/-. THE ASSESSEE SUBMITTED BEFORE THE A.O., A VALUATION REPORT OF THE SHARES ACCORDING TO WHICH FAIR MARKET VALUE WAS ASSESSED AT RS.859.56. AFTER INVOKING THE PROVISIONS OF SECTION 56(2)(VIIB), THE A.O ASSESSED A SUM OF RS. 2,42,640/- ( RS. 40.44 X 6000) BEING THE AMOUNT OF SNARE PREMIUM MORE THAN THE FAIR MARKET V ALUE, AS INCOME FROM OTHER SOURCES. 6. A PERUSAL OF THE ABOVE WOULD INDICATE THAT THE A O MADE THE ADDITION OF RS.2,42,640/- BY MULTIPLYING 6000 SHARE S WITH RS.40.44. THIS VALUATION FOR DETERMINING THIS FMV ON PREMIUM AT RS .859.56 IS BASED ON THE BASIS OF CHARTERED ACCOUNTANTS REPORT OBTAINED BY THE ASSESSEE ITSELF. THE LIMITED PRAYER MADE BY THE ASSESSEE AT TIME OF HEARING IS THAT THIS FIGURE SHOULD BE ADOPTED AS A ROUND FIGURE I.E . RS.860/-. IT HARDLY MAKES ANY DIFFERENCE BECAUSE RS.0.44 MULTIPLIED BY 6000 COMES TO 2640 ONLY. IF THIS AMOUNT IS REDUCED FROM RS.2,42,640/- , IT DOES NOT MAKE MUCH DIFFERENCE. THEREFORE, CONSIDERING THIS SMALL NESS OF THE AMOUNT, WE DO NOT WISH TO CHANGE WORKING MADE BY THE AO ON ACCOUNT OF ADOPTING THE FIGURE BY ROUND OFF CONCEPT. WE DO NO T SEE ANY MERIT IN THIS APPEAL OF THE ASSESSEE. IT IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH, 2019. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 19/03/2019