Mukand Sumi Metal Processing Limited Vs PCIT (ITAT Mumbai)
Provisions of section 56(2)(viib) invoked in the notice u/s. 263 by the ld. CIT is not applicable to the assessee company. As the assessee company was falling under section 2(18) of the Income Tax Act, 1961 being a company in which public are substantially interested. This fact has subsequently been duly accepted by the learned CIT- himself in the aforesaid order. Despite that he has held that assessing officer has not made detailed enquiry on the valuation of shares and he had set aside the matter to the file of assessing officer. We find that learned CIT is passing contradictory order when learned CIT- accepts that provisions of section 56(2)(viib) are not applicable to the assesses as this section provides for addition as income from other sources of share premium not properly explained in the hands of companies in which Public are not substantially interested. When the addition itself is not permissible what point will be served by the assessing officer’s enquiries in this regard is beyond comprehension. Further, the A.O .has dealt with the issue. He has been provided with the valuation report. In these circumstances further enquiry as directed by the learned CIT-will not only be a futile exercise, it would serve no purpose whatsoever. We also note that the proviso to section 68 in this regard is also not applicable to company in which public are substantially interested. This proviso mandates that the companies to whom inter alia shares at premium are issued should also satisfy the A.O.
