M/s I Brands Beverages Private Limited , Bangalore V. The Deputy Commissioner of Income Tax Circle-3(1)(1), Bangalore

ITA 882/BANG/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0932 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 25-03-2021
• Assessment Year: 2015-2016
• Appeal Filed On: 24-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Fair market value; Valuation report; Set aside
• Section: 13

Judgement Text

ITA NO.882/BANG/2019 M/S. I BRANDS BEVERAGES PVT. LTD., BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.882/BANG/2019 ASSESSMENT YEAR: 2015-16 M/S. I BRANDS BEVERAGES PVT. LTD. NO.90, ABOVE BIMAL HERO SHOWROOM BYATARAYANAPURA AMRUTHAHALLI CROSS BANGALORE PAN NO : AABCI9950M VS. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-3(1)(1) BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI SURESH MUTHU KRISHNAN, A.R. RESPONDENT BY : SHRI PRADEEP KUMAR, D.R. DATE OF HEARING : 01.07.2021 DATE OF PRONOUNCEMENT : 13.07.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 21.03.2019 PASSED BY LD CIT(A)-3, BENGALURU A ND IT RELATES TO THE ASSESSMENT YEAR 2015-16. ALL THE GROUNDS URGED BY THE ASSESSEE RELATE TO THE ADDITION OF RS.16.20 CRORES MADE BY T HE AO U/S 56(2)(VIIB) OF THE INCOME-TAX ACT,1961 ['THE ACT' F OR SHORT]. 2. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE STATED IN BRIEF. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF BEVERAGES. DURING THE YEAR UNDER CONSI DERATION, THE ITA NO.882/BANG/2019 M/S. I BRANDS BEVERAGES PVT. LTD., BANGALORE PAGE 2 OF 4 ASSESSEE HAS ALLOTTED 4,80,000 SHARES HAVING NOMINA L VALUE OF RS.10/- EACH AT A PRICE OF RS.375/- PER SHARE TO M/ S RAYNAL REALTORS PVT LTD. THE PREMIUM WAS RS.365/- PER SHARE. THUS , THE ASSESSEE HAS COLLECTED RS.18.00 CRORES ON ALLOTMENT OF ABOVE SAID SHARES. HENCE THE AO EXAMINED THE TRANSACTION IN TERMS OF S EC.56(2)(VIIB) OF THE ACT. AS PER THE PROVISIONS OF SEC . 56(2)(VIIB) OF THE ACT, A COMPANY (ISSUER), NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, IS REQUIRED TO ISSUE SHAR ES AT FAIR MARKET VALUE (FMV). ACCORDINGLY, ANY CONSIDERATION RECEIVE D BY SUCH ISSUING COMPANY IN EXCESS OF THE FMV, TO THE EXTENT IT EXCE EDS THE FACE VALUE OF SUCH SHALL BE LIABLE TO TAX. 3. THE ASSESSEE FURNISHED A VALUATION REPORT DA TED 22.01.2015 ISSUED BY A CHARTERED ACCOUNTANT. THE AO NOTICED T HAT THE VALUATION HAS BEEN DONE UNDER DISCOUNTED CASH FLOW METHOD. THE AO NOTICED THAT THE VALUE OF PER SHARE, AS PER PROJECT IONS WAS RS.37.49 PER SHARE AND IT WAS MISTAKENLY ARRIVED AT RS.374.9 5. ACCORDINGLY, THE AO ASSESSED THE DIFFERENCE AMOUNT OF RS.16.20 C RORES AS INCOME OF THE ASSESSEE U/S 56(2)(VIIB) OF THE ACT. 4. BEFORE LD CIT(A), THE ASSESSEE FURNISHED A CORRIGENDUM ISSUED BY THE CHARTERED ACCOUNTANT IN RESPECT OF VALUATION REPORT EARLIER FURNISHED BY HIM. THE ASSESSEE FURNISHED THE SAME A S AN ADDITIONAL EVIDENCE. THE ASSESSEE SUBMITTED THAT THERE WAS AN ERROR IN THE SCHEDULE ATTACHED TO THE ORIGINAL VALUATION REPORT. THE ASSESSEE SUBMITTED THAT THE CORRIGENDUM ISSUED BY THE VALUER HAS TO BE READ TOGETHER ALONG WITH THE ORIGINAL REPORT AND THE SAM E WOULD SHOW THAT THE FAIR MARKET VALUE OF SHARE WAS ARRIVED AT BY TH E VALUER AT RS.374.95. ITA NO.882/BANG/2019 M/S. I BRANDS BEVERAGES PVT. LTD., BANGALORE PAGE 3 OF 4 5. THE LD CIT(A) CALLED FOR A REMAND REPORT FR OM THE AO ON THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. THE AO EXPRESSED THE VIEW THAT THE CORRIGENDUM ISSUED BY THE VALUER IS AN AFT ERTHOUGHT OF THE ASSESSEE. HE ALSO EXPRESSED THE VIEW THAT THE VALU ATION REPORT CANNOT BE CHANGED AS PER WHIMS AND FANCIES OF THE A SSESSEE. THE LD CIT(A) CONFRONTED THE REMAND REPORT OF THE AO WITH THE ASSESSEE. AFTER CONSIDERING THE REPLY FILED BY THE ASSESSEE, THE LD CIT(A) FIRST EXAMINED THE ISSUE OF ADMISSIBILITY OF ADDITIONAL E VIDENCE AND TOOK THE VIEW THAT THE SAME IS NOT ADMISSIBLE. ACCORDIN GLY, THE LD CIT(A) REFUSED TO ADMIT ADDITIONAL EVIDENCE AND ACCORDINGL Y CONFIRMED THE ADDITION MADE BY THE AO. AGGRIEVED, THE ASSESSEE I S IN APPEAL BEFORE US. 6. WE HEARD THE PARTIES AND PERUSED THE RECOR D. WE NOTICE THAT THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE B EFORE THE AO IS IN THE NATURE OF CORRIGENDUM ISSUED BY THE VALUER, WHO WAS CONSTRAINED TO ISSUE THE SAME AS THERE WAS AN ERROR IN THE ORIGINAL VALUATION REPORT. THE CORRIGENDUM ISSUED SAME SHAL L FORM PART OF ORIGINAL VALUATION REPORT. IN OUR VIEW, THE SAME S HOULD NOT BE TREATED AS ADDITIONAL EVIDENCE, AS OBSERVED BY LD CIT(A). HENCE, IN OUR VIEW, THERE IS NO REASON TO REJECT THE CORRIGENDUM. ACCO RDINGLY, WE ADMIT THE CORRIGENDUM FURNISHED BY THE ASSESSEE BEFORE TH E LD CIT(A), SINCE THE SAME HAS BEEN ISSUED TO CORRECT THE ERROR IN ARRIVING AT THE FAIR MARKET VALUE OF SHARES ISSUED BY THE ASSESSEE. ACCORDINGLY, THE ORIGINAL REPORT AND CORRIGENDUM SHALL CONSTITUTE FU LL REPORT AND THE SAME HAS TO BE EXAMINED BY THE AO. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND RESTORE THE SAME FOR EXAMINATION OF THE AO WITH THE DIRECTION TO TAKE INTO ACCOUNT FULL REPORT. ITA NO.882/BANG/2019 M/S. I BRANDS BEVERAGES PVT. LTD., BANGALORE PAGE 4 OF 4 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JUL, 2021 SD/- (BEENA PILLAI) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 13 TH JUL, 2021. VG/SPS 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.