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FMV of Shares Must Follow Rule 11UA — Ad-hoc Mark-Up of Assets Not Permissible u/s 56(2)(iia)
Case Law Details
- Case Name
- ITO Vs Gold Souk Finance Private Limited (ITAT Delhi)
- Appeal Number
- Only available for paid members
- Date of Judgement/Order
- Only available for paid members
- Related Assessment Year
- 2015-16
- Courts
- All ITAT, ITAT Delhi
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ITO Vs Gold Souk Finance Private Limited (ITAT Delhi)
The ITAT Delhi dismissed the Revenue’s appeal and upheld the deletion of addition made u/s 56(2)(iia), holding that fair market value of shares has to be computed strictly in accordance with Rule 11UA, and the Assessing Officer cannot substitute it with arbitrary mark-ups to underlying assets.
The Tribunal noted that the AO had enhanced the value of shares by applying 100% to 150% mark-up on the work-in-progress / inventory and immovable properties of investee companies, merely on the assumption that such assets are “ap...
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