ITAT Deletes Share Premium Addition Due to Blatantly Anomalous Valuation by AO

Maa Biddeswari Agro Products Pvt. Ltd. Vs ITO (ITAT Kolkata)

The Income Tax Appellate Tribunal (ITAT) Kolkata has made a significant ruling in the case of Maa Biddeswari Agro Products Pvt. Ltd. vs ITO. This article provides a detailed overview of the case and the ITAT’s decision.

Background: The assessee, Maa Biddeswari Agro Products Pvt. Ltd., filed its income tax return for the assessment year 2014-15, declaring a total income of Rs. 1,07,680/-. However, the Assessing Officer (AO) added Rs. 46,52,400/- to the assessee’s income on account of share premium. The AO’s decision was upheld by the Commissioner of Income Tax (Appeals) [CIT(A)], prompting the assessee to appeal to the ITAT.

AO’s Basis for Addition: The AO determined the fair market value of the shares at Rs. 23.20 per share, significantly lower than the Rs. 400/- calculated by the assessee. This valuation was based on the book value of the shares, which the ITAT deemed as erroneous.

ITAT’s Ruling: The ITAT found fault with the AO’s valuation methodology, noting that the valuation report furnished by the assessee was prepared by a registered valuer, duly empanelled with the department. The report considered both movable and immovable properties owned by the assessee, using recognized valuation methods. However, the AO failed to point out any discrepancies or defects in the valuation report.

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