ACIT Vs Sanghvi Beauty And Technologies Private Limited (ITAT Pune)
The Revenue filed an appeal and the assessee filed a cross-objection against the order of the CIT(A), Pune-12 dated 09.07.2024, which arose from an assessment order passed under section 143(3) for Assessment Year 2020-21. The assessee, a private limited company engaged in beauty, wellness, and hospitality services, had filed a return declaring a loss of Rs. 33,65,16,728. During scrutiny, the Assessing Officer (AO) observed foreign and domestic investments of Rs. 169.73 crore and noted that shares were issued based on two valuation reports, one valuing shares at Rs. 50,176 per share and another at Rs. 1,61,077 per share. The AO did not accept the assessee’s explanation for the increase in valuation within eight months and made additions under sections 56(2)(viib) and 56(2)(x) totaling about Rs. 92 crore.
In the appeal before the CIT(A), the assessee succeeded on major issues. The Revenue challenged only the deletion of an addition of Rs. 10,33,59,732 relating to the premium received from Wipro Enterprises Limited (WEL). The Revenue argued that WEL was neither a venture capital undertaking nor a SEBI registered fund; therefore, the first proviso to section 56(2)(viib) did not apply.
The assessee argued that WEL is a resident company and that shares were issued at fair market value determined using the Discounted Cash Flow method by a certified authority.
