Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 2536 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 7 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
19-06-2019
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Assessment Year
2015-2016
Appeal Filed On
03-11-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./IT(SS)A NO.158/KOL/2017 ( / ASSESSMENT YEAR: 2015-16) DCIT, CENTRAL CIRCLE-1(4), KOLKATA VS. M/S JUPITER INTERNATIONAL LTD. 30, JADUNATH DEY ROAD, 4 TH FLOOR, KOLKATA-700012 ./ ./PAN/GIR NO.: AAACJ 6956 B (ASSESSEE) .. (REVENUE) ASSESSEE BY : SHRI A.K. SINGH, CIT DR RESPONDENT BY : SHRI R. P. AGARWAL, SENIOR COUNSEL & SHRI NIRAV SHETH, FCA / DATE OF HEARING : 18/04/2019 /DATE OF PRONOUNCEMENT : 19/06/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTA INING TO ASSESSMENT YEAR 2015-16, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-20, KOLKATA, WHICH IN TURN ARISES OUT OF A N ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) / 153B(B) / 153D OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 31/12/2016. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: M/S JUPITER INTERNATIONAL LTD. IT(SS)A NO.158/KOL/2017 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 2 22 2 1. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A)-20 HAS ERRED IN LAW TO HOLD THAT DISALLOWANCE UNDER SECTIO N 14A READ WITH RULE 8D WILL NOT APPLY WHERE NO EXEMPT INCOME IS RECEIVED O R RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR BY IGNORING THE-PROVISION OF RULE 8D THAT PROVIDES FOR COMPUTATION OF EXPENDITURE IN RESPECT OF NOT ON LY THOSE INVESTMENTS, INCOME FROM WHICH DOES NOT FORM PART OF TOTAL INCOM E BUT ALSO THOSE INVESTMENTS, INCOME FROM WHICH SHALL NOT FORM PART OF TOTAL INCOME AND HENCE, WRONGLY DELETED ADDITION OF RS. 4,50,37,200/ -. 2.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A)-20 HAS ERRED IN LAW IN DECIDING THAT DISALLOWANCE U/S 14A READ WITH RULE 8D CANNOT BE MADE IN A YEAR IN WHICH NO EXEMPT INCOME HAS BEEN EARNED OR RECEIVED BY THE ASSESSEE WITHOUT CONSIDERING THE CB DT'S CIRCULAR NO.5/2014 DATED 11.02.2014. 3.ON THE FACT AND CIRCUMSTANCES OF THE CASE AND UND ER THE LAW, THE LD. CIT(A)-20 ERRED IN DELETING THE ADDITION MADE ON AC COUNT OF INCOME FROM OTHER SOURCES U/S. 56(2)(VIIB) OF THE I.T. ACT OF R S. 1,01,82,550/- WITHOUT GOING TO THE FACTS OF THE CASE AND WITHOUT EXAMININ G THE CASE RECORD AND ASSESSMENT ORDER PROPERLY AND WITHOUT MAKING CORREC T INTERPRETATION OF RULE 11UA. 4.ON THE FACT AND CIRCUMSTANCES OF THE CASE AND UND ER THE LAW, THE LD. CIT(A)-20 ERRED IN DELETING THE VALUATION OF FAIR M ARKET VALUE OF UNQUOTED SHARES STATING NON INCLUSION OF INTANGIBLE ASSETS W HERE ACTUALLY THE DIFFERENCE IN VALUATION OF FAIR MARKET VALUE OF UNQ UOTED SHARES IS DUE TO TREATMENT OF REVALUATION RESERVE ONLY AND WHICH THE CIT(A) FAILED TO ADJUDICATE. 5. ON THE FACT AND CIRCUMSTANCES OF THE CASE AND UN DER THE LAW, THE LD. CIT(A)-20 ERRED IN UPHOLDING THE VALUE OF SHARES AS DETERMINED BY THE ASSESSEE AT RS. 42.40/- PER SHARE AS AGAINST RS. 25 .5 PER SHARE DETERMINED BY THE A.O, DISCUSSING ABOUT INTANGIBLE ASSETS IN F ORM OF GOODWILL, KNOWHOW, PATENTS, COPYRIGHTS, TRADEMARK, LICENSE ET C. TO BE TAKEN INTO CONSIDERATION REFERRING THE COMPANY BEING 29 YEARS OLD AND NOT EXAMINING THE FACT THAT SUCH CLAIM FOR VALUATION OF SHARE WAS NOT MADE BY THE ASSESSEE AND THUS, CIT(A) WRONGLY INTERPRETED CLAUSE (III) O F RULE 11UA AND ALLOWED REVALUATION RESERVE OF RS. 22,78,35,159/- TO BE TAK EN INTO ACCOUNT FOR DETERMINING THE VALUE OF SHARES AS PER RULE 11UA W HILE AS PER THIS CLAUSE, REVALUATION RESERVE BEING A RESERVE SET APART TOWAR DS DEPRECIATION SHOULD NOT HAVE BEEN TAKEN INTO ACCOUNT. 6. THAT THE DEPARTMENT CRAVES LEAVE TO ADD, ALTER O R MODIFY ANY GROUNDS OF APPEAL IN THE COURSE OF APPELLATE PROCEEDINGS. M/S JUPITER INTERNATIONAL LTD. IT(SS)A NO.158/KOL/2017 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 3 33 3 3. GROUND NOS. 1 AND 2 RELATE TO DELETION OF ADDITI ON OF RS. 4,50,37,200/- U/S 14A READ WITH RULE 8D. 4. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSING OFFICER MADE ADDITION U/S 14A READ WITH RULE 8D(2)(II) AT RS. 4,20,67,584/- AND U NDER RULE 8D(2)(III) AT RS. 29,69,652/-. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION MADE BY ASSESSING OFFICER. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DR FOR THE REVENUE HAS FILED WRITTEN SUB MISSION BEFORE US WHICH IS REPRODUCED BELOW: BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASS ESSEE, DURING THE YEAR, HAD INVESTMENTS IN SHARES & SECURITIES AMOUNTING TO RS. 59,39,30,426/-. HOWEVER, NO DIVIDEND WAS EARNED THEREFROM. THE ASSESSING OFFICE R, IN THE COURSE OF THE ASST PROCEEDINGS NOTED FROM THE ANNEXURE TO INDEPENDENT AUDITORS REPORT (COLUMN- XVII) THAT THE ASSESSEE USED FUNDS RAISED ON SHORT TERM BASIS FOR LONG TERM INVESTMENTS. AS SUCH, HE INVOKED THE PROVISIONS OF SEC. 14A READ WITH RULE 8D(2) AND COMPUTED DISALLOWANCE AS UNDER: THE LD. CIT(A) DELETED THE ADDITION HOLDING THAT IN ABSENCE OF EXEMPTED INCOME, EXPENDITURE IN TERMS OF SECTION 14A CANNOT BE DISAL LOWED. IN THIS REGARD, IT IS SUBMITTED THAT THE HONBLE CA LCUTTA HIGH COURT IN THE CASE OF CIT VS. RKBK FISCAL SERVICES (P) LTD. [2013] 358 IT R 228 HELD THAT THE INTEREST EXPENDITURE WHICH HAS NO NEXUS WITH THE BUSINESS AC TIVITY OF THE ASSESSEE IS LIABLE TO BE DISALLOWED IN TERMS OF SECTION 14A READ WITH RULE 8D. ADMITTEDLY, IN THIS CASE, THE ASSESSEE HAS USED FUNDS RAISED ON SHORT T ERM BASIS FOR LONG TERM INVESTMENTS. HENCE THE DISALLOWANCE OF THE INTEREST EXPENDITURE IS JUSTIFIED. IN THE CASE OF REI AGRO LTD. [2013] 144 ITD 141, TH E ISSUE BEFORE THE TRIBUNAL WAS WHETHER ANY EXPENDITURE CAN BE DISALLOWED UNDER RULE 8D(2)(III) OF THE INCOME TAX RULES, 1962 IN ABSENCE OF EXEMPT INCOME AND THE TRIBUNAL HELD THAT M/S JUPITER INTERNATIONAL LTD. IT(SS)A NO.158/KOL/2017 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 4 44 4 FOR COMPUTING DISALLOWANCE UNDER RULE 8D(2)(III) IN RESPECT OF THE INCOME WHICH IS EXEMPTED & DOES NOT FORM PART OF THE TOTAL INCOM E, THE ONLY INVESTMENT WHICH HAS GIVEN RISE TO THE EXEMPTED INCOME SHOULD BE TAK EN INTO CONSIDERATION. THUS, THE LD. CIT(A) WRONGLY HELD THAT THE DECISION IN T HE CASE OF REI AGRO LTD. (SUPRA) WAS APPLICABLE EVEN WHERE THE DISALLOWANCE OF INTER EST TO BE COMPUTED UNDER RULE 8D(2)(II). IN VIEW OF THE ABOVE, IT IS PRAYED THAT THE DISALLO WANCE U/S 14A TO THE EXTENT OF INTEREST EXPENDITURE OF RS. 4,20,67,548/- COMPUTED BY THE ASSESSING OFFICER APPLYING RULE 8D(2)(II) MAY KINDLY BE SUSTAINED. 6. AT THE OUTSET ITSELF, THE LD. COUNSEL FOR THE AS SESSEE SUBMITTED BEFORE US THAT GROUND NOS. 1 AND 2 RAISED BY THE REVENUE ARE NO L ONGER RES INTEGRA . THE LD. COUNSEL DEFENDED THE ORDER OF LD. CIT(A) WHICH IS R EPRODUCED BELOW: I HAVE CONSIDERED FINDING OF THE A.O., IN THE ASSE SSMENT ORDER AND THE WRITTEN SUBMISSION FILED BY THE ASSESSEE ON THIS ISSUE. IN THE WRITTEN SUBMISSION IT HAVE BEEN CATEGORICALLY STATED THAT THE ASSESSEE HAS NOT EARNED / RECEIVED ANY DIVIDEND OR EXEMPTED INCOME FROM ITS INVESTMENT IN ORDER TO QUALIFY U/S 14A READ WITH RULE 8D. THE AR HAS ALSO BROUGHT IT ON RECORD THAT INVES TMENTS HAVE BEEN MADE BY THE COMPANY IN PURCHASING SHARES OF ITS SUBSIDIARY COMP ANY AND OTHER GROUP COMPANIES. IN THE ASSESSMENT ORDER THE A.O. HAS DIS CUSSED ORDER OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT-III, KOLKATA VS. RKBK FISCAL SERVICES PVT. LTD. 358 ITR 288 (CAL). THE AR HAS BROUGHT IT ON RE CORD THAT IN THE CASE OF M/S RKBK FISCAL SERVICES LTD. CASE (SUPRA), THE COMPANY HAD EARNED DIVIDEND INCOME BUT IN THE PRESENT CASE THE ASSESSEE HAS NOT EARNED ANY DIVIDEND INCOME. SO, THE RATIO DECIDED IN THE CASE OF M/S RKBK FISCA L SERVICES PVT. LTD. CASE (SUPRA) IS NOT APPLICABLE IN THE PRESENT CASE. THE AR HAS ALSO BROUGHT ON RECORD THE CASE LAW OF REDINGTON (INDIA) LTD. VS. ACIT, RA NGE-V, CHANNAI [2017] 392 ITR 633 (MADRAS) (HC) WHEREIN IT WAS HELD THAT IF T HERE IS NO EXEMPT INCOME IN RELEVANT YEAR, THERE CANNOT BE A DISALLOWANCE OF EX PENDITURE U/S 14A. IN THIS CASE THE HONBLE HIGH COURT HAS CLEARLY HELD THAT IN A Y EAR WHERE THERE IS NO EXEMPT INCOME, THERE CANNOT BE A DISALLOWANCE OF EXPENDITU RE IN RELATION TO SUCH ASSUMED INCOME. THE LANGUAGE OF SECTION 14A(1) SHOU LD BE READ IN THAT CONTEXT AND SUCH THAT IT ADVANCES THE SCHEME OF THE ACT RAT HER THAN DISTORT IT. I HAVE CONSIDERED VARIOUS CASE LAWS BROUGHT ON RECO RD BY THE AR. I HAVE ALSO CONSIDERED RATIO DECIDED IN DIFFERENT JUDICIAL PRON OUNCEMENTS (BOTH BY JURISDICTIONAL KOLKATA BENCH OF ITAT AND DIFFERENT OTHER HIGH COURTS), AS DISCUSSED ABOVE AND AS THE ASSESSEE HAS NOT EARNED ANY EXEMPTED INCOME DURING THE ASSESSMENT YEAR IN QUESTION, RESPECTFULLY FOLLO WING RATIO DECIDED IN CASES MENTIONED / DISCUSSED ABOVE, APPEAL ON GROUND NO. 1 IS ALLOWED. 7. WE NOTE THAT IT IS AN ADMITTED FACT THAT THE ASS ESSEE COMPANY HAS NOT EARNED ANY DIVIDEND INCOME DURING THE YEAR IN RESPECT OF INVES TMENTS MADE AS PER THE AUDITED ACCOUNTS. SINCE NO EXEMPT INCOME EARNED BY THE ASSE SSEE, THEREFORE, THERE SHOULD M/S JUPITER INTERNATIONAL LTD. IT(SS)A NO.158/KOL/2017 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 5 55 5 NOT BE ANY DISALLOWANCE ON ACCOUNT OF SECTION 14A O F THE ACT. THE SAID ISSUE OF THE ASSESSEE IS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. HOLCIM INDIA PVT. LTD. IN IT A NO.486/2014 WHEREIN IT WAS HELD THAT IN THE ABSENCE OF ANY TAX FREE INCOME, TH E CORRESPONDING EXPENDITURE COULD NOT BE WORKED OUT FOR MAKING DISALLOWANCE U /S. 14A OF THE INCOME TAX ACT, 1961.THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMNIVEST VS. COMMISSIONER OF INCOME TAX-VL, ITA 749/2014 ORDER D ATED,02.09.2015 HELD THAT SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS R ECEIVED DURING THE RELEVANT PREVIOUS YEAR. 8. WE NOTE THAT HONBLE HIGH COURT OF MADRAS IN THE CASE OF REDINGTON INDIA PVT. LTD. VS. ACIT 392 ITR 692 (MAD) WHEREIN IT WAS HELD THAT IF THERE IS NO EXEMPT INCOME, THERE CANNOT BE ANY DISALLOWANCE OF EXPEN DITURE U/S 14A , THE HONBLE MADRAS HIGH COURT HELD AS UNDER: THE EXEMPTION EXTENDED TO DIVIDEND INCOME WOULD RE LATE ONLY TO THE PREVIOUS YEAR WHEN THE INCOME WAS EARNED AND NONE OTHER CONS EQUENTLY THE EXPENDITURE INCURRED IN CONNECTION THEREWITH SHOULD ALSO BE DEA LT WITH IN THE SAME PREVIOUS YEAR. THUS, BY APPLICATION OF THE MATCHING CONCEPT, IN A YEAR WHERE THERE IS NO EXEMPT INCOME, THERE CANNOT BE A DISALLOWANCE OF EX PENDITURE IN RELATION TO SUCH ASSUMED INCOME. THE LANGUAGE OF SECTION 14A(1) SHOU LD BE READ IN THAT CONTEXT AND SUCH THAT IT ADVANCES THE SCHEMES OF THE ACT RA THER THAN DISTORT IT. [PARA15] IN CONCLUSION, THE PROVISIONS OF SECTION 14A, READ WITH RULE 8D OF THE RULES CANNOT BE MADE APPLICABLE IN A VACUUM I.E. IN THE A BSENCE OF EXEMPT INCOME. THE QUESTION OF LAW ARE ANSWERED IN FAVOUR OF THE ASSES SEE AND AGAINST THE DEPARTMENT AND THE APPEAL ALLOWED. [PARA 16] SINCE THE ASSESSEE DOES NOT HAVE ANY EXEMPT INCOME THEREFORE NO DISALLOWANCE IS WARRANTED. THAT BEING SO, WE DECLINE TO INTERFERE I N THE ORDER PASSED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE, IS HEREBY UPHELD A ND GROUNDS RAISED BY THE REVENUE IS DISMISSED. 9. NOW WE SHALL TAKE GROUND NOS. 3,4 AND 5 RAISED B Y THE ASSESSEE WHICH RELATE TO DELETION OF ADDITION MADE ON ACCOUNT OF INCOME FROM OTHER SOURCES U/S 56(2)(VIIB) OF THE ACT OF RS. 1,01,82,550/-. M/S JUPITER INTERNATIONAL LTD. IT(SS)A NO.158/KOL/2017 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 6 66 6 10. BRIEF FACTS QUA THE ISSUE ARE THAT ASSESSING OF FICER DURING THE SCRUTINY PROCEEDINGS NOTICED THAT AS PER ASSESSEES BALANCE SHEET AS AT 31.03.2015, IT WAS APPARENT THAT M/S JUPITER INTERNATIONAL LTD. HAS MA DE ALLOTMENT OF SHARES IN FY 2013-14 AND 2014-15 AT A PRICE WHICH EXCEEDS FAIR M ARKET VALUE OF THE SHARE AND THUS VIOLATED THE PROVISIONS OF SECTION 56(2)(VIIB) OF THE I. T. ACT, 1961. THE COMPANY HAS ALLOTTED 6,19,000 EQUITY SHARES IN FY 2 014-15 AT A PRICE OF RS. 42/- PER SHARE WHILE THE BOOK VALUE OF THE COMPANYS SHA RE WAS RS. 25.55 AS AT 31.03.2013. THE ASSESSEE SUBMITTED THAT THE ASSESSI NG OFFICER HAS NOT CONSIDERED REVALUATION RESERVE AMOUNTING TO RS. 22,78,35,159/- WHILE CALCULATING THE FAIR MARKET VALUE PER SHARE OF THE ASSESSEE COMPANY AND THAT IS WHY THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE DETERMINED BY ASSESSE E AND ASSESSING OFFICER HAS ARISEN. ASSESSING OFFICER COMPUTED THE FAIR MARKET VALUE AS FOLLOWS: HOWEVER, ASSESSING OFFICER HELD THAT THIS ASSESSEE S EXPLANATION OF REVALUATION RESERVE OF RS. 22,78,35,159/- SHOULD HAVE BEEN INCL UDED WHILE COMPUTING FAIR MARKET VALUE PER SHARE IS NOT TENABLE FOR THE FOLL OWING REASONS VIZ. I) WHEN A COMPANY REVALUES ITS FIXED ASSETS, DEPRECIATION SH OULD BE PROVIDED ON THE BASIS OF REVALUE FIGURES. II) FURTHER, THE DEPRECIATION ON R EVALUE FIGURES IS BEING DEBITED TO REVALUATION RESERVE ACCOUNT. IN OTHER WORDS, THE RE VALUATION RESERVE ON DEPRECIABLE ASSETS IS SET APART FOR PROVIDING DEPRECIATION. THU S, IT NECESSARILY IMPLIES THAT M/S JUPITER INTERNATIONAL LTD. IT(SS)A NO.158/KOL/2017 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 7 77 7 REVALUATION RESERVE ON DEPRECIABLE ASSETS IS SET AP ART FOR PROVIDING DEPRECIATION ON REVALUE FIGURES. ASSESSING OFFICER FURTHER HELD TH AT AS PER CLAUSE (III) OF RULE 11UA(2), LIABILITY SHALL NOT INCLUDE ANY RESERVE OT HER THAN THOSE SET APART TOWARDS DEPRECIATION. THUS, SUCH RESERVES WHICH ARE SET APA RT TOWARDS DEPRECIATION ARE NOT TO BE DEDUCTED FROM THE BOOK VALUE OF LIABILITY SHO WN IN THE BALANCE SHEET TO ARRIVE AT THE FAIR MARKET VALUE. THEREFORE, THE PREMIUM EX CEEDING FAIR MARKET VALUE AMOUNTING TO RS. 1,01,82,550/- RECEIVED IN THE FY 2 014-15 WAS TREATED AS INCOME FROM OTHER SOURCES IN ACCORDANCE WITH THE PROVISION S OF SECTION 56(2)(VIIB) OF THE I.T. ACT, 1961. 11. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELE TED THE ADDITION OBSERVING THE FOLLOWING: I HAVE CONSIDERED FINDINGS OF THE AO IN THE ASSESS MENT ORDER AND THE WRITTEN SUBMISSION FILED BY THE AR ON THIS ISSUE. I THINK T HE MAIN REASON FOR DISAGREEMENT REGARDING VALUATION/ DETERMINATION OF FAIR MARKET V ALUE OF SHARES IS BECAUSE OF DIFFERENCE OF OPINION IN RESPECT TO INTERPRETATION OF RULE 11UA OF THE I T RULES 1962 AND SUB-CLAUSE (II) OF SECTION 56(2)(VIIB). TH IS SUB-SECTION IS REPRODUCED AS UNDER: 'AS MAY BE SUBSTANTIATED BY THE COMPANY TO THE SATI SFACTION OF THE ASSESSING OFFICER, BASED ON THE VALUE, ON THE DATE OF ISSUE O F SHARES, OF ITS ASSETS, INCLUDING INTANGIBLE ASSETS BEING GOODWILL, KNOW-HOW, PATENTS , COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMME RCIAL RIGHTS OF SIMILAR NATURE'. I THINK WHILE CALCULATING THE FAIR MARKET VALUE, TH E AO HAS NOT TAKEN INTO ACCOUNT THE INTANGIBLE ASSETS BEING GOODWILL, KNOW-HOW, PAT ENTS, COPY RIGHTS, TRADE MARKS, LICENCES ETC INTO CONSIDERATION. THE AR HAS BROUGHT IT ON RECORD THAT THIS COMPANY IS 29 YEARS OLD COMPARIY AND IT HAS ITS OWN REPUTATION IN THE MARKET THAT SHOULD HAVE BEEN TAKEN INTO ACCOUNT AS ITS INTANGIB LE ASSETS AS PER SECTION 56(2)(VIIB)(II). ACCORDINGLY, IT SHOULD ALSO HAVE B EEN TAKEN INTO CONSIDERATION WHILE CALCULATING/ DETERMINING THE FAIR MARKET VALU E OF SHARES OF THIS COMPANY. I THINK THE AO HAS NOT CONSIDERED THE MECHANISM PROVI DED UNDER RULE 11UA, SUB- CLAUSE (III) IN ITS TOTALITY. IN MY VIEW, SUB-CLAUS E (II) OF SECTION 56(2)(VIIB) HAS TO BE TAKEN INTO CONSIDERATION, WHILE DETERMINING THE FAIR MARKET VALUE OF SHARES. ACCORDINGLY, ASSESSEES APPEAL ON GROUND NO. 2 IS A LLOWED. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE US THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE NOTED IN OUR EA RLIER PARA AND THE SAME IS NOT M/S JUPITER INTERNATIONAL LTD. IT(SS)A NO.158/KOL/2017 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 8 88 8 BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE O THER HAND THE LD. COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER OF THE LD. CIT(A). 13. WE NOTE THAT THE LD. ASSESSING OFFICER HAS OB SERVED THAT THE ASSESSEE COMPANY HAS MADE ALLOTMENT OF 6,19,000 EQUITY SHARE S @ RS. 42/- PER SHARE DURING THE INSTANT YEAR AT A PRICE WHICH EXCEEDS FA IR MARKET VALUE OF THE SHARE AND THUS THE PROVISIONS OF SECTION 56(2)(VIIB) OF THE A CT WAS VIOLATED. THE FAIR MARKET VALUE ON THE BASIS OF BOOK VALUE OF COMPANY AS ON 3 1.03.2013 WAS CALCULATED BY LD. ASSESSING OFFICER AT RS. 25.55/- PER SHARE. WE NOTE THAT REVALUATION RESERVES NEED NOT BE DEDUCTED WHILE CALCULATING THE FAIR MAR KET VALUE, AS PER RULE 11UA(2) OF THE I.T. RULES. CONSIDERING THESE FACTS AND CIR CUMSTANCES OF THE CASE WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. C IT(A) HENCE WE DISMISS THE GROUND NOS. 3, 4 AND 5 RAISED BY THE REVENUE. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 19.06.2019 SD/- ( S.S.GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 19/06/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. DCIT, CC-1(4), KOLKATA 2. M/S JUPITER INTERNATIONAL LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES M/S JUPITER INTERNATIONAL LTD. IT(SS)A NO.158/KOL/2017 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 9 99 9
