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10-07-2019, Mamta Bhandari, Section 132, 153A, 56(2)(vii)(c), Tribunal Delhi

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3 months 4 days ago #10026 by amit
Section - 132, 153A, 56(2)(vii)(c), 2(18), 47, 2(24), 49, 56(2)
Order Date - 10-07-2019
Favouring - Assessee
Court - Tribunal Delhi
Appellant - DCIT
Respondent - Mamta Bhandari
Justice - BHAVNESH SAINI JM & DR. B.R.R. KUMAR AM
Citation - 719Taxpundit120
Appeal No. - ITA.No.5681/0Del./2016
Asstt. Year - 2010-2011

Order

PER : BHAVNESH SAINI, J.M.

This appeal by Revenue has been directed against the Order of the Ld. CIT(A)-3, Gurgaon, Dated 31.08.2016, for the A.Y. 2010-2011, on the following ground :

“That on the facts and in the circumstances of the case and as per provisions of law, the Ld. CIT(A) has erred in deleting the addition made by the A.O. u/s 56(2)(vii)(c) without appreciating the proper interpretation of the section.”

2. Briefly the facts of the case are that search was conducted under section 132 of the I.T. Act in the case of the assessee, the residential as well as business premises of Bestech Group of Cases. Survey was also conducted simultaneously. A.O. issued notice under section 153A, in response to which, assessee filed return of income. On perusal of the seized material and submissions filed by he assessee, it was noticed that assessee had invested in the shares of M/s. Bestech India Pvt. Ltd. During the assessment year under appeal, she was allotted 10,000 equity shares @ Rs.400/- on 18.03.2010 and further 6,29,428 bonus shares were allotted to the assessee on 31.03.2010 without taking any consideration for these shares and 1,47,357 right shares were allotted to the assessee on 23.03.2010 at the face value of RS.10/- by M/s. Bestech India Pvt. Ltd. The details are notedin the assessment order. For arriving out of fair market value of
the shares of M/s. Bestech India Pvt. Ltd., as on 31.03.2012 Rule 11UA of the I.T. Rule was applied and book value of equity share was calculated which comes to Rs.22.63/-. Detailed working is noted in the order. M/s. Bestech India Pvt. Ltd., have allotted bonus shares at Nil consideration to its share holders when the book value as per Rule 11UA is Rs. 22.63/- and Rs. 31.50/- respectively as on 31.03.2010.

The A.O. therefore, noted that there is net accretion of wealth as per book value in the hands of the assessee due to receipt of bonus shares. Thus the provisions of section 56(2)(vii)(c) are attracted in the case of the assessee. The A.O. accordingly proposed to make addition of Rs.1,61,05,074/- Explanation of assessee was called for in which the assessee submitted that bonus share does not come under the ambit of Section 56(2)(vii)(c) of the I.T. Act and relied upon Explanatory Memorandum to the Finance Bill 2010 and decision of ITAT, Mumbai Bench in the case of Sudhir Menon (HUF) vs. ACIT in ITA.No.4487/Mum/2013.

The A.O. however, did not accept the contention of assessee and held that provisions of Section 56(2)(vii)(c) apply to the case and accordingly, made the addition of Rs.1,61,05,074/-.

3. The addition was challenged before the Ld. CIT(A). The assessee reiterated the submissions made before the A.O. It was contended that the above provisions are not applicable to allotment of bonus shares and relied upon the same judgment and Explanatory Memorandum to the Finance Bill 2010. It was also contended that the above provisions would apply in the case of transfer of shares which is not the case of the assessee and that no property have been transferred. The Ld. CIT(A) considering the explanation of assessee in the light of decision in the case of Sudhir Menon (HUF) vs. ACIT (supra), deleted the addition. The findings of the Ld. CIT(A) in paras 5 and 6 of the Order are reproduced as under :

“5. Decision :

I have perused the assessment order passed by the AO and submissions of the appellant.

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