Case Law Details
Suzuki Suiting Pvt. Ltd. Vs I.T.O (ITAT Ahmedabad)
Admittedly, the difference in the price of the share issued by the assessee and its fair market value and calculated and certified by the C.A. is barely 1% of its total value. The difference being Rs. 2.81 against the share value of Rs. 200/-, it is meager and immaterial to hold that the shares were issued at unjustifiably high prices, which is the essence and purport of the section invoked. In fact, we hold, that the valuation by the C.A. justifies the value at which the shares was issued by the assessee. The method for determining the fair market value is by way of a calculating the net worth of the company based on the value of assets and liabilities, some of the assets like land and plant and machinery being valued at market price. There is no doubt that this involves some degree of estimation. Therefore variance in value of shares by 1% can justifiably be attributed to this estimation.
We therefore hold that there was no case or justification at all for making any addition u/s. 56(2)(viib) in the present case amounting to Rs.7,02,500/-and direct deletion of the same.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
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