Mount Spring Beverages Pvt. Ltd. Vs ITO (ITAT Delhi)
ITAT Delhi: Share Premium Addition u/s 56(2)(viib) Remanded for Fresh Valuation Review-Selective Acceptance of Evidence Set Aside
Assessee, engaged in manufacturing, bottling & packaging of mineral water at Paonta Sahib (HP), filed return declaring loss of ₹27.73 lakh. During A.Y. 2013-14, it issued 1.5 lakh equity shares of ₹10 each at ₹200 per share, raising ₹3 crore to strengthen working capital. The valuation was done through the DCF method certified by a Chartered Accountant.
AO, however, invoked Section 56(2)(viib), holding that shares were issued at an unjustified premium given the book value of ‘nil’ due to accumulated losses, and treated ₹2.85 crore as deemed income. An additional ₹7.5 lakh was added u/s 68.
CIT(A) deleted the addition u/s 68 but sustained the addition u/s 56(2)(viib), rejecting the additional valuation evidence furnished by the Assessee on the ground that it was not produced before AO. The same valuation report—obtained independently by new investors—had, however, been accepted in the remand proceedings for the u/s 68 issue.
Before Tribunal, Assessee argued that the CIT(A) arbitrarily accepted the same evidence for one issue but rejected it for another, and that the valuation represented fair market value based on intrinsic potential.
