Abir Hydro Power Private Limited Vs ITO (ITAT Delhi)
Summary: The assessee’s appeal for assessment year 2015-16 arose from the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi dated 21.02.2025, relating to proceedings under Section 143(3) of the Income Tax Act, 1961. The Tribunal first condoned a delay of 273 days in filing the appeal, relying on Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC).
The first substantive issue concerned an addition of Rs. 33,91,50,000/- under Section 56(2)(viib) of the Act, representing the alleged excessive component of premium received on issuance of shares. The Tribunal noted that the impugned amount had admittedly come from the assessee’s holding company, Abhir Infrastructure Private Limited. The Tribunal relied on BLPYO (Project-1) Private Limited vs PCIT (2023) 151 com 47(Del.), which, as quoted in the order, held that Section 56(2)(viib) did not get attracted to a transaction between a subsidiary and its holding company.
The assessee further submitted that Section 56(2)(viib) required consideration for the “issue of shares” and relied on Shree Gopal Paper Mills Ltd. v. Commissioner of Income-Tax, [1967] 64 ITR 233 (Cal). It submitted that on 13.05.2015, after closure of the relevant assessment year, it executed a debenture subscription agreement and issued compulsorily convertible debentures to the holding company, thereby converting the entire share application money of Rs. 9,60,09,12,500/- into convertible equity shares. The Tribunal found, in this factual backdrop, that the lower authorities had erred in invoking Section 56(2)(viib) both for non-issuance of shares and for want of applicability of the provision. The addition was deleted.
