Case Law Details
Osianama Learning Experience Pvt. Ltd. Vs DCIT (ITAT Mumbai)”
Introduction: In the case of Osianama Learning Experience Pvt. Ltd. Vs. DCIT, the Income Tax Appellate Tribunal (ITAT) in Mumbai addressed the addition made under Section 56(2)(viib) of the Income Tax Act. The crux of the matter involved an excess consideration received by the company on the allotment of shares.
Detailed Analysis: Osianama Learning Experience Pvt. Ltd. is primarily engaged in various educational and promotional activities. In the relevant assessment year, the company had issued shares to multiple individuals at a price of Rs. 400, which included a premium of Rs. 390. However, the fair market value, as determined by a valuation report dated September 15, 2012, was Rs. 341 per share. This meant that the company received an excess consideration of Rs. 59 per share.
The Income Tax Department invoked Section 56(2)(viib) of the Income Tax Act, which applies to companies not substantially interested by the public. It considers any excess consideration received for the issuance of shares, in comparison to their fair market value, as income under the “income from other sources” category.
Provisions of Section 56(2)(viib) not apply to non-resident
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