Asirvad Micro Finance Limited Vs ACIT (ITAT Chennai)
The appeal before the Income Tax Appellate Tribunal, Chennai Bench was filed against the order dated 4 February 2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, for Assessment Year 2017–18. The sole issue in dispute was the confirmation of an addition of ₹42,29,48,758 made by the Assessing Officer under Section 56(2)(viib) of the Income-tax Act, 1961, by applying Rule 11UA of the Income-tax Rules to the share premium received by the assessee.
During the course of proceedings before the Tribunal, the assessee sought admission of an additional legal ground. The additional ground contended that Section 56(2)(viib) itself was not applicable, as the assessee was a company in which the public were substantially interested within the meaning of Section 2(18) of the Act, and therefore stood excluded from the scope of the charging provision. Reliance was placed on judicial precedents to argue that a pure question of law could be raised at any stage. The Tribunal accepted this contention and admitted the additional ground.
On facts, the assessee was incorporated in 2007 as a private company engaged in microfinance activities. During the relevant period, it issued equity shares at a premium, resulting in receipt of substantial share premium. The Assessing Officer questioned the valuation adopted by the assessee, found deficiencies in the valuation report, and undertook an independent valuation under Rule 11UA. Based on this exercise, the Assessing Officer determined a lower fair market value per share and treated the excess premium as income under Section 56(2)(viib). The Commissioner (Appeals) upheld this addition.
