SHRI CHANDRASEKARAN BHARANIKUMAR, COIMBATORE V. ITO , COIMBATORE

ITA 608/CHNY/2022

AI Insights

The case involves an appeal by Shri Chandrasekaran Bharanikumar against the order of the Commissioner of Income Tax (Appeals)-16, Chennai, which sustained an addition of Rs. 5,51,250/- made by the Income Tax Officer, International Taxation Ward, Coimbatore. The addition was based on the differential amount in the valuation of shares of M/s. Jayachandran Industries Pvt. Ltd, where the assessee was a shareholder. The primary legal issue revolved around the proper valuation method of equity shares under Section 56(2)(vii)(c) of the Income Tax Act, 1961. The Tribunal noted that similar issues were pending adjudication in the cases of other assessees and decided to remit the matter back to CIT(A) for a consolidated decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135070 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-03-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 20-07-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Fair market value; Set aside
• Section: 147; 143(3)

Judgement Text

आयकर अपीलीय अिधकरण, ‘सी /एस एम सी’’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C/SMC’ BENCH: CHENNAI ी महावीर सह, उपा य के सम BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND आयकर अपील सं./ITA No.608/Chny/2022 िनधा रण वष /Assessment Year: 2012-13 Shri Chandrasekaran Bharanikumar, Old No.24A, New No.29, AV V C Road, R.S. Puram, Coimbatore – 641 002. Vs. The Income Tax Officer, International Taxation Ward, Coimbatore. [PAN: AVDPB-7750-J] ( अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से/ Appellant by : Shri N. Arjunraj, C.A for Shri S. Sridhar, Advocate यथ क ओर से /Respondent by : Shri S. Chandrasekaran, JCIT सुनवाई क तारीख/Date of Hearing : 07.03.2023 घोषणा क तारीख /Date of Pronouncement : 07.03.2023 आदेश / O R D E R This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-16, Chennai, in ITA No.86/CIT(A)-16/2019-20 dated 26.06.2022 for the Assessment Year 2012-13. The Assessment was framed by Income Tax Officer, International Taxation Ward, Coimbatore u/s. 147 r.w.s 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide order dated 25.12.2019. ITA No.608/Chny/2022 :- 2 -: 2. The only issue in this appeal of assessee is as regards to the order of CIT(A) sustaining the addition made by A.O of Rs. 5,51,250/- u/s. 53(2)(vii)(c) of the Act. For this, the assessee has raised various grounds which need not to be reproduced. 3. I have heard the rival contentions and gone through the facts and circumstances of the case. The Ld. counsel for the assessee before me stated that the face value of the shares worked out by the A.O at Rs. 10/- and after taking the value as 4.41 per equity share, the A.O made addition of differential amount in assessee’s case at Rs. 5,51,250/-. The addition was made by the A.O by working out the shares of M/s. Jayachandran Industries Pvt. Ltd @ Rs. 14.41 per equity share by observing that the assessee is one of the shareholders of the Company M/s. Jayachandran Industries Private Limited. According to Sec. 56(2)(vii)(c) of the Act, where any individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after 1 st day of October 2009, any shares and securities for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration needs to be brought to tax under income from other sources. In the case of the company, the fair market value of Rs. ITA No.608/Chny/2022 :- 3 -: 9,90,000/- shares which were issued in the previous year relevant to A.Y 2012-13, in terms of Rule 11UA worked out to Rs. 29,97,42,300/-. 4. Now before us, the Ld. counsel for the assessee as well as Ld. Sr. D.R both stated that in the case of other three assessees i.e., Shri P.Chandrasekaran, Shri P.Anbalagan and Shri Prasath Chandrasekaran, the matter was already remitted back to the file of CIT(A) for pending adjudication and hence, for the sake of consistency this appeal also be set aside because, the proper valuation of equity shares which method is to be decided. In term of the above, I set aside the order of CIT(A) and remit the matter back to the file of CIT(A) who are adjudicated this issue along with other three assessees, where similar issue is pending. 5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 07 th of March, 2023. Sd/- (महावीर िसंह) (Mahavir Singh) उपा / Vice President चे ई/Chennai, दनांक/Dated: 07-03-2023 EDN/- आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant 2. थ /Respondent 3. आयकर आयु /CIT 4. िवभागीय ितिनिध/DR 5. गाड फाईल/GF ITA No.608/Chny/2022 :- 4 -: