PCIT Vs Minda SM Technocast Pvt. Ltd. (Delhi High Court)
Material Facts
The appeal related to Assessment Year (AY) 2014-15. The Revenue challenged the Income Tax Appellate Tribunal’s order dated 07.03.2018, which had set aside the order of the Commissioner of Income Tax (Appeals) dated 16.10.2017 and deleted an addition of ₹11,84,46,336 made by the Assessing Officer (AO). The addition arose from the difference in the valuation of shares purchased by the respondent-assessee.
The assessee had purchased 48% equity shares of Tuff Engineering Pvt. Ltd. (TEPL) from three entities at ₹5 per share. The assessee also furnished a Chartered Accountant’s valuation report valuing the shares at ₹4.96 per share by applying Rule 11UA of the Income-tax Rules, 1962 as applicable to AY 2014-15. The AO, however, valued the shares at ₹45.72 per share by applying the version of Rule 11UA that was in force when the assessment order was passed, resulting in a difference of ₹40.72 per share and an addition of ₹11,84,46,336 to the assessee’s income.
Procedural History
The Assessing Officer made the addition on account of the difference in the value of the shares purchased by the assessee. The Commissioner of Income Tax (Appeals) upheld the addition. The Income Tax Appellate Tribunal set aside the CIT(A)’s order and deleted the addition. The Revenue filed the present appeal before the Delhi High Court challenging the Tribunal’s order.
