Trimex Fiscal Services Pvt. Ltd., , Kolkata V. Pr.CIT - 2, Kolkata , Kolkata

ITA 892/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 8780 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 04-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: MANISH TIWARI
• Keywords: Fair market value; Assessment record; TDS
• Section: 143(3); 142(1); 56(2); 56; 263; 10

Judgement Text

1 ITA NO. 892/KOL/2018 TRIMEX FISCAL SERVICES PVT. LT D, AY- 2013-14 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 892/KOL/2018 ASSESSMENT YEAR: 2013-14 TRIMEX FISCAL SERVICES PVT. LTD. (PAN: AABCT2031N) VS. PRINCIPAL COMMISSIONER OF INCOME-TAX- 2, KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 25.09.2019 DATE OF PRONOUNCEMENT 20 .11.2019 FOR THE APPELLANT SHRI MANISH TIWARI, FCA FOR THE RESPONDENT DR. P. K. SRIHARI, CIT, DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E REVISION ORDER OF THE LD. PR. CIT- 2, KOLKATA PASSED U/S. 263 OF THE INCOME-TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 19.03.2018 FOR AY 2013-14. 2. THE GRIEVANCE OF THE ASSESSEE IS AGAINST THE ACT ION OF THE LD. PR. CIT INVOKING HIS REVISIONAL JURISDICTION U/S. 263 OF THE ACT WITHOUT SATISFYING THE CONDITION PRECEDENT FOR EXERCISING THE JURISDICTION. 3. FOR ADJUDICATING THIS ISSUE WE HAVE TO LOOK INTO THE SHOW CAUSE NOTICE ISSUED BY THE LD. PR. CIT DATED 23.02.2018 WHICH IS PLACED AT PAG ES 31 TO 32 OF THE PAPER BOOK WHICH READS AS UNDER: 2. YOUR RETURN OF INCOME OF THE ABOVE MENTIONED W AS FILED ON 17.09.2013 DECLARING TAXABLE INCOME OF RS.56,76,233/- AND THE SAME WAS ASSESSED U/S. 143(3) ON 28.03.2016 DETERMINING TOTAL INCOME AT RS.63,93,230/-. 3. THE PERUSAL OF THE ASSESSMENT RECORDS REVEALS T HAT YOU ISSUED 8,00,000 SHARES DURING THE PREVIOUS YEAR CORRESPONDING TO THE ASSESSMENT YEAR 2013-14 WITH A SHARE PREMIUM OF RS.140 AND FACE VALUE OF RS.10 TOTALING TO RS.150 PER UNIT OF SHARE. HOWEVER, AS PER THE PROVISIONS OF THE INCOME TAX ACT, 1961, (TO BE REFERRED AS ACT HE REINAFTER) FACE VALUE OF THE SHARES ISSUED BY ANY PRIVATE COMPANY SHOULD NOT EXCEED THE FAIR M ARKET VALUE OF SHARES ISSUED DURING THE YEAR. AS PER RULE 11U AND 11UA OF INCOME TAX RULES , 1962 THE FAIR MARKET VALUE OF THE SHARES ISSUED BY YOU CAN BE RE-CALCULATED AT RS.23. 00 (APPROX.). SO, THE VALUE OF SHARE ISSUED BY YOU AT RS.150/- PER SHARE EXCEEDS THE FAIR MARKE T VALUE OF SHARE DETERMINED AS PER SECTION 56(VIIB) READ WITH RULE 11U AND 11UA BY RS.127 (150 -23). THEREFORE, IN VIEW OF ABOVE THE 2 ITA NO. 892/KOL/2018 TRIMEX FISCAL SERVICES PVT. LT D, AY- 2013-14 EXCESS OF THE FAIR MARKET VALUE OF SHARE PREMIUM A LONG WITH SHARE CAPITAL RECEIVED BY YOU I.E. RS.127 ON 8,00,000 SHARES ISSUED DURING THE PREVIOU S YEAR OF THE AY 2013-14 AMOUNTING TO RS.10,16,00,000/- WAS NEEDED TO BE ADDED BACK TO YO UR TOTAL INCOME. 4. IN VIEW OF THE FACTS STATED ABOVE, I AM OF THE O PINION THAT THE ASSESSMENT ORDER MADE U/S. 143(3) DATED 28.03.2016 FOR THE AY 2013-14 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. YOU ARE THEREFORE REQUEST ED TO APPEAR PERSONALLY OR THROUGH YOUR AUTHORISED REPRESENTATIVE BEFORE THE UNDERSIGNED AT ROOM NO. 60, 3 RD FLOOR, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 ON 07.03. 2018 AT 3.30 PM ALONG WITH YOUR WRITTEN SUBMISSIONS, BOOKS OF ACCOUNTS & DOCUMENTS, IF ANY, TO SHOW AS TO WHY THE ASSESSMENT MADE U/S. 143(3) OF THE INCOME TAX ACT, 1961 ON 28. 03.2016 SHOULD NOT BE REVISED U/S. 263 OF THE INCOME-TAX ACT, 1961. PLEASE NOTE THAT NO FURT HER ADJOURNMENT WILL BE GIVEN UNLESS THERE IS A VALID REASON AND FAILURE TO COMPLY WITH THE RE QUIREMENT OF THE NOTICE WILL LEAD TO DECISION ON MERIT. 4. ASSAILING THE DECISION OF THE LD. PR. CIT IN INV OKING THE JURISDICTION, THE LD. AR OF THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE LD. PR. CIT HAS INVOKED THE REVISIONAL JURISDICTION ON THE GROUND THAT THE AO HAS NOT MADE ENQUIRY IN RESPECT OF THE VALUATION OF SHARES WHEREIN THE ASSESSEE HAD VALUED THE SHARES A T A FACE VALUE OF RS.10/- PLUS SHARE PREMIUM OF RS.140/- TOTALING RS.150/- PER UNIT OF S HARE. ACCORDING TO LD. PR. CIT, ASSESSMENT ORDER IS ERRONEOUS INSOFAR AS IT IS PREJ UDICIAL TO THE INTEREST OF THE REVENUE, SINCE AS PER SECTION 56(VIIB) OF THE ACT THE VALUE OF THE SHARES HAS TO BE CALCULATED BASED ON THE FORMULA STIPULATED UNDER RULE 11U AND 11UA OF THE I NCOME TAX RULES, 1962 (HEREINAFTER REFERRED TO AS THE RULES) WHICH ACCORDING TO LD. PR. CIT HAS NOT BEEN CARRIED OUT BY THE AO; AND THE AO HAS SIMPLY ACCEPTED THE VALUATION MA DE BY THE ASSESSEE WHICH ACTION OF AO IS ERRONEOUS. ACCORDING TO LD. PR. CIT WHILE AP PLYING THE FORMULA UNDER RULE 11U AND 11UA OF THE RULES, THE VALUATION OF THE SHARES COME S TO ONLY RS.23/- APPROX. AND, THEREFORE, WHEN SECTION 56(VIIB) OF THE ACT IS APPLIED, AN AMO UNT OF RS.127/- (RS. 150 - RS.23) ESCAPES ASSESSMENT IN RESPECT OF 8000 SHARES AMOUNT ING TO RS.10,16,00,000/-. THUS, THE LD. PR. CIT TAKING NOTE OF THIS FACT HAD ISSUED NOTICE TO THE ASSESSEE FOR EXERCISING HIS REVISIONAL JURISDICTION U/S. 263 OF THE ACT WHICH DECISION HAS BEEN ASSAILED BEFORE US. 5. ACCORDING TO LD. AR, THE PREMISE ON WHICH THE LD . PR. CIT HAS INVOKED HIS JURISDICTION IS THAT THERE WAS A LACK OF ENQUIRY ON THE PART OF THE AO ON THIS ISSUE AS STATED AFORE. ACCORDING TO HIM, THIS PREMISES OF LD. PR. CIT TO INTERFERE WITH THE ORDER OF AO IS PATENTLY WRONG BECAUSE THE AO HAD MADE ENQUIRIES ON THE ISSUE AND FOR SUPPORTING THIS CONTENTION, THE LD. AR POINTED OUT SEVERAL QUESTION S THAT WERE ASKED BY THE AO DURING THE 3 ITA NO. 892/KOL/2018 TRIMEX FISCAL SERVICES PVT. LT D, AY- 2013-14 ASSESSMENT PROCEEDINGS AND HE DREW OUR ATTENTION TO PAGE 68 OF THE PAPER BOOK WHEREIN COPY OF THE ORDER SHEET ENTRIES RECORDED BY AO ARE KEPT FROM PAGES 68 TO 72. DRAWING OUR ATTENTION TO PAGE 68 OF THE PAPER BOOK THE LD. AR D REW OUR ATTENTION TO THE ORDER SHEET DATED 08.07.2015 AND 22.07.2015 WHEREIN THE AO HAS RECORD ED AS UNDER: 08.07.2015 NOTICE U/S. 142(1) OF THE ACT ISSUED ON DATE. 22.07.2015 SHRI PANKAJ KUMAR GOYAL, ACA AND A.R OF THE A COMPANY TODAY APPEARED AND FURNISHED DETAIL UNDER A COVERING LETT ER DATED 22.07.2015. THE CASE IS DISCUSSED AND HE IS ASKED TO FURNISH THE FOLLOWING: 1. NAME, ADDRESS, PAN AND OTHER DETAILS TO WHOM SHA RES WERE ALLOTTED WITH EVIDENCE. 2. APPLICABILITY TO SECTION 56(2)(VII) OF THE ACT. 3. DETAILS TO SUBSTANTIATE THE SQUARED UP UNSECURED LOAN, 4. DETAILS TO SUBSTANTIATE THE RENT PAID, PROFESSIO NAL AND CONSULTANCY CHARGES PAID, SALARY PAID. ADJOURNED TO 04.08.2015. 6. FROM THE AFORESAID QUERIES RAISED IN RESPECT TO THE ISSUE, OUR ATTENTION WAS DRAWN TO THE ASSESSEES REPLY FOUND PLACED AT PAGE 33 OF PAP ER BOOK (LETTER DATED 04.08.2015) WHEREIN THE DETAILS HAVE BEEN SUBMITTED AS UNDER: SL. NO. OF YOUR LETTER PARTICULARS REPLY 1 NAMES AND ADDRESS OF THE SHARE APPLICANTS ANNEXURE A ANNEXED. COPIES OF SHARE APPLICATIONS ARE ATTACHED HEREWITH. COPY OF RETURN OF ALLOTMENT IN FORM 2 & FORM 5 ARE ALSO ENCLOSED HEREWITH. 2. APPLICABILITY OF SECTION 56 SUB CLAUSE VIIB. THE SHARE HAVE BEEN ISSUED BY THE COMPANY AT FAIR VALUE THE VALUATION CERTIFICATE OF WHICH WAS OBTAINED FROM A CHARTERED ACCOUNTANT. COPY OF VALUATION CERTIFICATE ISSUED BY THE CHARTERED ACCOUNTANT IS ENCLOSED HEREWITH. 3. DETAILS OF SQUARED OFF LOAN NO LOANS WERE SQUAR ED OFF DURING THE YEAR 4. DETAILS OF CERTAIN EXPENSES ANNEXURE B ANNEXED . COPY OF BILL FOR RENT IS ATTACHED. FURTHER, PROOF OF FILING TDS RETURNS IN FORM 24Q & 26Q ALONG WITH DETAILS IS ALSO ENCLOSED. 4 ITA NO. 892/KOL/2018 TRIMEX FISCAL SERVICES PVT. LT D, AY- 2013-14 7. THEREAFTER, THE LD. AR DREW OUR ATTENTION TO PAG ES 3 AND 4 OF THE PAPER BOOK WHICH IS THE CERTIFICATE OF VALUATION OF SHARES. THE LD. AR ALSO DREW OUR ATTENTION TO PAGE 4 OF THE PAPER BOOK WHEREIN IT HAS BEEN SHOWN HOW THE CALCUL ATION OF THE FAIR MARKET VALUE PER EQUITY SHARE HAS BEEN MADE AS ON 31.03.2012, WHICH IS AS UNDER: 5 ITA NO. 892/KOL/2018 TRIMEX FISCAL SERVICES PVT. LT D, AY- 2013-14 8. DRAWING OUR ATTENTION AS TO HOW THE CALCULATION WAS DONE THE LD. AR EXPLAINED THAT THE ASSESSEE COMPANY WAS HOLDING INVESTMENTS IN M/S . SHIV AGREVO LTD. (REFER PAGES 5-17 OF PAPER BOOK) AND M/S. SHIV EDIBLES LTD. (REFER PA GES 18-30 OF PAPER BOOK) WHICH HAD VALUATION OF RS 8,61,00,000 + RS 14,31,90,000 = RS 22,92,90,000/-. SO, ACCORDING TO LD. AR, THE PREMISE ON WHICH THE LD. PR. CIT INVOKED HI S JURISDICTION IS ERRONEOUS SINCE THE AO HAD INFACT ENQUIRED INTO THE VALUATION OF THE S HARES IN QUESTION WHICH FACT IS EVIDENT FROM THE AFORESAID CORRESPONDENCE. SO, IT CANNOT B E HELD THAT ON THIS ISSUE THE AO HAD NOT MADE ANY ENQUIRY. WHEN THE AO HAD MADE AN ENQUIRY O N AN ISSUE, WHICH THE LD. PR. CIT FINDS FAULT, THEN HE HIMSELF IS DUTY BOUND TO CARRY OUT NECESSARY ENQUIRIES ON THE ISSUE AND HAS TO RECORD A FINDING THAT DESPITE AO CONDUCTED T HE INQUIRY ON THE ISSUE, HIS (AO) CONCLUSION IS UNSUSTAINABLE IN LAW. IT HAS TO BE KE PT IN MIND THAT IF THE LD. PR. CIT CARRIES OUT ENQUIRY ON THE ISSUE AND FINDS THAT TWO VIEWS ARE POSSIBLE, THEN HE (CIT) CANNOT IMPOSE HIS VIEW ON THE ISSUE, IF THE AOS VIEW IS A PLAUSI BLE VIEW. HOWEVER, IF THE LD. PR. CIT AFTER CONDUCTING ENQUIRY IS ABLE TO RECORD A FINDIN G THAT THE AOS VIEW ON THE ISSUE IS UNSUSTAINABLE IN LAW, THEN HE CAN HOLD THE ORDER OF AO TO BE ERRONEOUS AND VERY WELL INTERFERE EXERCISING JURISDICTION U/S. 263 OF THE A CT, PROVIDED IT IS PREJUDICIAL TO REVENUE. SO FOR EXAMINING WHETHER THE VIEW OF AO AFTER HE CONDU CTED THE ENQUIRY AS DISCUSSED, IS LEGALLY A PLAUSIBLE VIEW, LET US LOOK AT SEC. 56(2) (VIIB) OF THE ACT WHICH READS AS UNDER: (VIIB) WHERE A COMPANY, NOT BEING A COMPANY IN WHI CH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, RECEIVES, IN ANY PREVIOUS YEAR, FROM AN Y PERSON BEING A RESIDENT, ANY CONSIDERATION FOR ISSUE OF SHARES THAT EXCEEDS THE FACE VALUE OF SUCH SHARES, THE AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES: PROVIDED THAT THIS CLAUSE SHALL NOT APPLY WHERE THE CONSIDER ATION FOR ISSUE OF SHARES IS RECEIVED (I) BY A VENTURE CAPITAL UNDERTAKING FROM A VENTU RE CAPITAL COMPANY OR A VENTURE CAPITAL FUND 67 [ OR A SPECIFIED FUND ] ; OR (II) BY A COMPANY FROM A CLASS OR CLASSES OF PERSO NS AS MAY BE NOTIFIED BY THE CENTRAL GOVERNMENT IN THIS BEHALF. . EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, (A) THE FAIR MARKET VALUE OF THE SHARES SHALL BE T HE VALUE (I) AS MAY BE DETERMINED IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED; OR (II) AS MAY BE SUBSTANTIATED BY THE COMPANY TO THE SATISFACTION OF THE ASSESSING OFFICER, BASED ON THE VALUE, ON THE DATE OF ISSUE OF SHARES, OF ITS 6 ITA NO. 892/KOL/2018 TRIMEX FISCAL SERVICES PVT. LT D, AY- 2013-14 ASSETS, INCLUDING INTANGIBLE ASSETS BEING GOODWILL, KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE, WHICHEVER IS HIGHER ;[EMPHASIS GIVEN BY US ] (B) 'VENTURE CAPITAL COMPANY', 'VENTURE CAPITAL F UND' AND 'VENTURE CAPITAL UNDERTAKING' SHALL HAVE THE MEANINGS RESPECTIVELY A SSIGNED TO THEM IN CLAUSE (A), CLAUSE (B) AND CLAUSE (C) OF EXPLANATION TO CL AUSE (23FB) OF SECTION 10 9. FROM THE READING OF THE AFORESAID PROVISION THE LD. AR DREW OUR ATTENTION TO EXPLANATION 1 TO CLAUSE (VIIB) OF SEC. 56(2) OF THE ACT, THE FAIR MARKET VALUE SHALL BE THE VALUE (I) AS MAY BE DETERMINED IN ACCORDANCE WITH SUCH M ETHOD AS MAY BE PRESCRIBED; OR (II) AS MAY BE SUBSTANTIATED BY THE COMPANY TO THE SATISFACTION OF THE ASSESSING OFFICER, BASED ON THE VALUE, ON THE DATE OF ISSUE OF SHARES, OF ITS ASSETS, INCLUDING INTANGIBLE ASSETS BEING GOODWILL, KNOW-HOW, PATENTS, COPYRIGHTS, TRAD EMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATU RE, WHICHEVER IS HIGHER. THUS IT IS NOTED THAT THERE ARE TWO METHODS ENVISAGED IN THE DEFINIT ION FOR CALCULATING THE FAIR VALUE OF SHARES (I) AS PER THE RULE PRESCRIBED UNDER 11U AND 11UA , (II) THE FAIR MARKET VALUE AS SUBSTANTIATED BY THE ASSESSEE TO THE SATISFACTION O F THE AO. THUS, ACCORDINGLY, ONCE THE AFORESAID EXERCISE IS DONE THEN THE PROVISIONS SAYS THAT OUT OF THE TWO VALUES THUS COMPUTED THE VALUE WHICHEVER IS HIGHER SHOULD BE ADOPTED. AN D IN THIS CASE THE ASSESSEE WHEN ENQUIRED BY THE AO ON THIS ISSUE, HAS BEEN ABLE TO SUBSTANTIATE THE VALUATION MADE TO AOS SATISFACTION. AND SINCE THE AO WAS SATISFIED WITH T HE COMPUTATION OF FAIR VALUE OF SHARES HAS ACCEPTED THE VALUE OF RS.150/- PER SHARE WHICH IS H IGHER THAN RS.27/- WHICH HAS BEEN CALCULATED BY THE LD. PR. CIT APPLYING RULE 11U AND 11UA OF THE RULES. 10. THUS, WE FIND THAT AO HAD CALLED UPON THE ASSES SEE ON 22.07.2015 TO FURNISH THE (I) NAME, ADDRESS, PAN AND OTHER DETAILS TO WHOM SHARES WERE ALLOTTED WITH EVIDENCE (II) AND APPLICABILITY OF SECTION 56(2)(VIIB) OF THE ACT AFT ER THE AO HAS TAKEN NOTE THAT ASSESSEE HAD ISSUED SHARES AT FACE VALUE OF RS. 10/- WITH PREMIU M OF RS.140/- TO SHARE SUBSCRIBERS. WE NOTE THAT ASSESSEE HAD FURNISHED THE DETAILS TO AO IN ORDER TO SUBSTANTIATE THE FAIR MARKET VALUE OF SHARES BY FILING THE FOLLOWING DOCUMENTS ( REFER PAGE 33 OF PAPER BOOK SUPRA). (I) COPY OF CHARTERED ACCOUNTANTS CERTIFICATE REG ARDING VALUATION OF SHARES (PAGE 3-4 OF PAPER BOOK) 7 ITA NO. 892/KOL/2018 TRIMEX FISCAL SERVICES PVT. LT D, AY- 2013-14 (II) CALCULATION OF FAIR VALUE OF EQUITY SHARES OF M/S. SHIV AGREVO LTD. (PAGE 5-17 OF PAPER BOOK), (III) CALCULATION OF FAIR VALUE OF EQUITY SHARE OF M/S. SHIV EDIBLE LTD. (PAGE 18-30 OF PAPER BOOK). 11. IT HAS BEEN EXPLAINED TO THE AO AS TO HOW THE CHARTERED ACCOUNTANT OF ASSESSEE HAS WORKED OUT THE FAIR MARKET VALUE OF SHARES AT RS.15 0/-. THE VALUE OF RS.150/- PER SHARE IS THE FAIR VALUE OF SHARES OF THE COMPANY WHICH HAS BEEN WORKED OUT BY OBTAINING CERTIFICATE FROM CHARTERED ACCOUNTANTS. AND DURING THE COURSE OF PRO CEEDINGS U/S.143(3) ALSO, THE CERTIFICATE WAS FURNISHED BEFORE THE ASSESSING OFFICER JUSTIFYI NG THE VALUATION OF SHARES. 12. AND IT WAS ALSO EXPLAINED BEFORE THE LD PR CIT DURING REVISIONAL PROCEEDINGS THAT AS PER EXPLANATION 1 TO CLAUSE (VIIB) OF SECTION 56 OF THE ACT, THE FAIR MARKET VALUE OF THE SHARES SHALL BE THE VALUE- (I) AS MAY BE DETERMINED IN ACCORDANCE WITH SUCH ME THOD AS MAY BE PRESCRIBED; OR (II) AS MAY BE SUBSTANTIATED BY THE COMPANY TO THE- SATISFACTION OF THE ASSESSING OFFICER, BASED ON THE VALUE, ON THE DATE OF ISSUE OF SHARES, OF ITS ASSETS, INCLUDING INTANGIBLE ASSETS BEING GOODWILL, KNOW-HOW, PATENTS, COPYRIGHTS, TRAD EMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATU RE. ACCORDINGLY, THE FAIR MARKET VALUE OF SHARES OF THE COMPANY HAS BEEN ARRIVED AT BY SUBSTITUTING THE COST PRICE OF THE ASSETS OF THE CO MPANY WITH FAIR VALUE OF THOSE ASSETS. THE VALUATION HAD BEEN ARRIVED AT BY FOLLOWING THE BELOW MENTIONED BASIS:- A) OUR COMPANY HOLDS 1290000 EQUITY SHARES OF M/S SHIV EDIBLES WHICH IS EQUAL TO 36.35% EQUITY CAPITAL OF THE SAID COMPANY. B) SIMILARLY, THE COMPANY HOLDS 3,50,000 EQUITY SHARES OF M/S. SHIV AGREVO LTD WHICH IS EQUAL TO 19.96% EQUITY SHARES OF THAT COMPANY. 8 ITA NO. 892/KOL/2018 TRIMEX FISCAL SERVICES PVT. LT D, AY- 2013-14 C) SINCE BOTH THESE COMPANIES ARE OUR GROUP COMPANY/AS SOCIATES, IN WHICH WE HOLD SIGNIFICANT CONTROL, WHILE ARRIVING AT THE FAIR VAL UE OF OUR SHARES THE COST OF THESE INVESTMENTS HAS BEEN SUBSTITUTED WITH FAIR VALUE OF THE SAME AND ACCORDINGLY, FAIR VALUE OF OUR SHARES HAS BEEN ARRIVED AT RS.150/- PE R SHARE. 13. THE CERTIFICATE OF CHARTERED ACCOUNTANT OF ASSE SSEE IS FOUND PLACED AT PAGE 3 OF PAPER BOOK AND THE CALCULATION SHEET AS TO HOW THE VALUE OF SHARES HAS BEEN ARRIVED AT RS.150/- IS REPRODUCED AT PAGE (4) (SUPRA). SO, IT CAN BE SEEN THAT AO DURING ASSESSMENT PROCEEDINGS HAD IN FACT ENQUIRED ABOUT THE FAIR MAR KET VALUE OF SHARES ISSUED BY THE ASSESSEE AT RS.150/- PER SHARE AND ASSESSEE HAD SUBMITTED TH E AFORESAID DOCUMENTS BEFORE THE AO TO SUBSTANTIATE THE FAIR MARKET VALUE OF SHARES TO THE SATISFACTION OF AO, SO HE ACCEPTED THE SAME. 14. HOWEVER, LD. PR. CIT FINDS FAULT WITH THE ACTIO N OF AO, SINCE ACCORDING TO HIM, WHILE CALCULATING THE FAIR MARKET VALUE OF SHARES A PPLYING RULE 11U AND 11UA, THE PRICE OF SHARE IS ONLY RS. 27 AND THEREFORE, THERE IS REVENU E LOSS OF RS.123 PER SHARE, THEREFORE, THE ORDER OF THE AO IS ERRONEOUS. 15. WE DO NOT COUNTENANCE THIS ACTION OF THE LD. PR . CIT FOR THE SIMPLE REASON THAT THE VIEW TAKEN BY THE AO AFTER ENQUIRY ON THE ISSUE IS A PLAUSIBLE VIEW AND CANNOT BE HELD TO BE UNSUSTAINABLE IN LAW. AS PER SEC. 56(2)(VIIB) OF T HE ACT, FAIR MARKET VALUE CAN BE COMPUTED BY TWO WAYS. I) BY RULE 11U AND 11UA OF INCOME TAX RULES 1962. II) BY ASSESSEE COMPANY TO THE SATISFACTION OF THE AO. AND AS PER THE SAID PROVISION, THE VALUE WHICHEVER IS HIGHER CAN BE ADOPTED. SO, IN THIS CASE WHEN RULE 11U AND 11UA IS APPLIED, THE FAIR MARKET VALUE OF SHARES IS AT RS. 27 AND THE FAIR MARKET VALUE ACCORDING TO ASSESSEE COMPANY IS AT R S.150/-, SO THE HIGHER VALUE HAS BEEN ADOPTED, WHICH IS A PLAUSIBLE VIEW. HOWEVER, IF TH E LD. PR. CIT HAS TO HOLD THE VIEW OF THE AO TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO REVENU E HE HAS TO CONDUCT ENQUIRIES AND RECORD A FINDING THAT ASSESSEES CALCULATION OF FAIR MARKE T VALUE OF RS.150/- IS UNSUSTAINABLE IN LAW, WHICH THE LD. PR. CIT HAS NOT DONE IN THIS CASE, TH OUGH ALL FACTS WERE FURNISHED BEFORE HIM. SO, THE ACTION OF AO, WHO HAS CONDUCTED ENQUIRY ON THE ISSUE AND CALLED FOR DOCUMENTS AND 9 ITA NO. 892/KOL/2018 TRIMEX FISCAL SERVICES PVT. LT D, AY- 2013-14 AFTER EXAMINATION HAS NOT DRAWN ANY ADVERSE VIEW AG AINST THE ASSESSEE, CANNOT BE HELD TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE REVENUE SIN CE THE ASSESSMENT ORDER CANNOT BE FOUND TO BE ERRONEOUS AS WELL AS PREJUDICIAL ON THE FAIR MAR KET VALUE OF SHARES, THE CONDITION PRECEDENT TO INVOKE REVISIONAL JURISDICTION U/S. 26 3 IS ABSENT AND, THEREFORE, THE USURPATION OF JURISDICTION BY LD. PR. CIT IS BAD IN LAW AND SO QUASHED. 16. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20TH NOV EMBER, 2019. SD/- (DR. A. L. SAINI) SD/-(ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20TH NOVEMBER, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. TRIMEX FISCAL SERVICES PVT. LTD ., 6A, CLIVE ROW, 5 TH FLOOR, ROOM NO. 6/10, KOLKATA-700001. 2 RESPONDENT PR. CIT-2, KOLKATA 3. 4. DCIT, CIRCLE-4(2), KOLKATA DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR