ACIT Vs Vertex Projects LLP (ITAT Hyderabad)
ITAT Hyderabad held that provisions of section 56(2)(viia) of the Income Tax Act are attracted on shares received by the assessee company on account of amalgamation.
Facts- The case was selected for scrutiny by issuing notice u/s. 143(2) dated 28.02.2015. Subsequently, notice u/s. 142(1) and letters were issued on various dates. In response, AR appeared and furnished the details called for. After examination of the details so furnished by the assessee, the Assessing Officer made addition of Rs.5,59,249,590/- u/s. 56(2)(viia) of the Act to the income of the assessee on protective basis as the assessee received unquoted shares during the year under consideration.
The said addition was deleted by CIT(A). Being aggrieved, revenue has preferred the present appeal.
Conclusion- In the present case, the assessee received the property being the shares of the “amalgamating companies” along with the shares held by these amalgamating companies. The assessee company had received the property being the shares of amalgamating companies in which the public are not substantially interested, without consideration or consideration which is less than the fair market value of such shares. In view of the above, the conclusion drawn by the ld. CIT(A) was without any basis.
Accordingly, the findings of ld.CIT(A) are set aside and the order of Assessing Officer invoking the provision of section 56(2)(viia) of the Act is restored.
