Suri Agro Fresh Private Limited Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2017-18, deleting the addition of ₹9,00,000 made under Section 56(2)(viib) of the Income-tax Act on account of alleged excess share premium.
The assessee challenged the finding that Section 56(2)(viib) applied where equity shares were allotted to existing shareholders. It also contested the addition of ₹9,00,000, representing the differential premium of ₹0.09 per share on the allotment of one crore equity shares to two existing shareholders. An additional ground was raised relying on CBDT Notification No. 81/2023 dated 25 August 2023, which introduced a safe harbour of 10% variation under Rule 11UA. The assessee contended that the difference between the issue price and the fair market value adopted by the Assessing Officer was only about 3%, which was within the prescribed safe harbour.
The assessee submitted that 50% of its shareholding was held by a non-resident corporate shareholder, whilfvse the remaining 50% was held equally by two resident shareholders. It maintained audited books of account under the Companies Act, 2013 and the Income-tax Act. The shares were issued at ₹3 per share, whereas the valuation report determined the fair market value at ₹2.91 per share. According to the assessee, the issue price represented only a rounding off of the valuation to the nearest rupee.
