Case Law Details
Glory Shipmanagement Private Limited Vs CIT (Appeals) (ITAT Mumbai)
Introduction: Glory Shipmanagement Private Limited contested against the order passed by the Commissioner of Income Tax (Appeals), challenging the addition made under Section 56(2)(x) of the Income Tax Act. The disagreement arose over the difference between the purchase value and the fair market value of an acquired property.
Detailed Analysis: The Assessing Officer noted a variance between the purchase value and the fair market value of the property acquired by Glory Shipmanagement Private Limited. Despite the difference being within the tolerance limit, the AO invoked Section 56(2)(x)(b) of the Act, adding the disparity amount to the company’s income.
In its appeal, Glory Shipmanagement argued that although the variance exceeded 5%, it was below 10%, warranting no addition under Section 56(2)(x)(b)(B)(ii) of the Act. However, the CIT(A) rejected this contention, stating that the 10% threshold was effective only from the assessment year 2021-22, not applicable to the assessment year in question.
The case was further escalated to the ITAT Mumbai, where it was argued that the tolerance band of 10% should be retrospectively applied. Citing previous judgments and legislative intent, the ITAT ruled in favor of Glory Shipmanagement, deleting the addition made by the Assessing Officer.
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