Income Tax Appellate Tribunal - Delhi
Sakshi Fincap Pvt. Ltd., New Delhi vs Ito Ward-22(2), New Delhi on 16 April, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'G', NEW DELHI
Before Sh. C. N. Prasad, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
ITA No. 8389/Del/2019 : Asstt. Year : 2015-16
Sakshi Fincap Pvt. Ltd., Vs Income Tax Officer,
U-7, Green Park Extension, Ward-22(2),
New Delhi-110016 New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AABCS2800G
Assessee by : Sh. Aman Garg, Adv.
Revenue by : Sh. Vivek Vardan, Sr. DR
Date of Hearing: 01.02.2024 Date of Pronouncement: 16.04.2024
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the as sessee against the order of ld. CIT(A)-XXV, New Delhi dated 23.0 8.2019.
2. Following grounds have been raised by the assessee:
" 1 On th e fa c t s a n d ci r cu mst a n c es o f th e ca se, t h e o rd e r pas s ed by t h e l ea rn ed C I T(A ) is b a d b o t h in t h e ey e o f l a w a n d on fac t s.
2 . ( i) On t h e fa ct s a n d ci r cum st a n c e s o f th e ca s e , th e l e a rn ed C I T( A) h as e r r ed b oth on fa c t s a n d i n l a w i n c on fi rmi n g th e add it i on o f R s . 5 0 , 77 , 3 34 / - ma d e b y t he A O on a c c oun t of di f f e r enc e in v a l u a ti on of s ha r e s i n v oki n g t h e p r ov i s io n o f s ec t i on 5 6 (2 ) ( v i i b) o f th e A ct r ea d wi t h ru l e 1 1 0 & 1 1 U A o f th e I n com e Ta x R ul e , 19 6 2.
( ii) T ha t t h e a dd it io n h a s b e en c o nfi rm ed r ej ect in g th e e xpl a n ati on a n d e v i den c e s b r ou g ht on r e c o rd s in s up p o rt o f its c ont en ti on s.
3 . On t h e fa c t s a n d ci r cu ms t a n c e s of th e ca s e, t h e l e a r n ed C I T( A) h as er r e d b oth o n f a c t s a n d in la w i n r ej e ct in g c ont en ti on o f t h e a s s es s e e t h a t th e a dd it io n h a s b e en ma d e by 2 ITA No. 8389/Del/2019 Sakshi Fincap Pvt. Ltd.
r ej e ct in g t h e v a lu a t ion r ep o rt of t h e s ha r e s su bm i tt ed b y t he as s e ss e e .
4 . On t h e fa c t s a n d ci r cu ms t a n c e s of th e ca s e, t h e l e a r n ed C I T( A) h as e r r ed b oth on fa c t s a n d i n l a w i n c on fi rmi n g th e ab ov e a d di ti on d e sp it e t h a t a m o u n t h a s b e en w r o n gly c a l cul at ed a s p e r th e m et h od g i v en u n de r s e ct i on 56 (2 ) ( vi ib ) o f th e A ct .
5 . On t h e fa c t s a n d ci r cu ms t a n c e s of th e ca s e, t h e l e a r n ed C I T( A) h as e r r ed b oth on fa c t s a n d i n l a w i n c on fi rmi n g th e ab ov e ad di ti on b y i nd ul gi ng i n s u rmi se s wi th ou t br in gin g on an y a d v e rs e ev i d en c e a ga i n st t h e a ss e s se e , on ly on t h e b a si s o f p r e s u mp ti on a n d a s s um pt i on ."
3. The assessee has also raised the follow ing additional grounds of appeal:
" 7 . On t h e fa c t s a n d c i r cu m st a n ces of t he c a s e a n d in v i e w of C BD T n ot i fi c a ti on 8 1 /2 0 2 3 d a t ed 25 .0 9.2 0 23 in t r od u ci ng sa f e h ar b or of 1 0 % b y c u ra ti v e a m en dm en t in R ul e 1 1UA of t he In c o m e tax R ul e s 1 96 2 , a d di ti on u /s 5 6( 2 )( vii b) is u nsu st ai n a bl e i n l a w a s t h e d i ff e r e n c e b et w e en fa i r va lu e ad opt ed b y th e A O a nd i ssu e pr i c e i s o n ly 2 .1 % i . e. l es s t ha n 10%."
4. Admissio n of the additional ground has been opposed in princ iple by the ld. DR. Keeping in view , the judgment of the Hon'ble Apex Court in the case of Natio nal Ther mal Power Co. Ltd. Vs CIT (1998) 229 ITR 383, the additional ground filed by the assessee is accepted. The relevant portion of the judgment is as under:
" 5 . U n d e r S e ct i on 2 5 4 o f th e I n c om e - ta x A c t, t h e App e l la t e T ri bu n a l m a y , a ft e r gi v in g b o t h t h e p a rt i es t o t h e a p p e a l a n opp o rt u ni t y o f b ei n g h e a r d , pa ss su ch o rd e rs t h e r eo n a s it th i nk s fit . Th e po w e r o f t h e T rib un a l i n d ea l in g wi th a p pe a l s i s th u s ex p r es s ed in t h e w i d es t p o s si b l e t e rm s . Th e pu rp o s e o f th e a s s e ss m en t p r o c e e d in gs b ef o r e t h e ta xin g a ut h o rit i es is t o a s s e ss c o r r e ct ly t h e ta x li a bi li ty o f a n a s s e ss e e i n a cc o r da n c e w it h la w . I f , f o r e xa mp l e , a s a r e su l t o f a j ud ic i a l d e ci si on g iv en w hi l e t h e ap p ea l i s pen di ng b e f or e t h e T rib un a l, i t i s f ou n d t ha t a non - t ax ab l e it e m i s t a x ed o r a pe r m i s si bl e d ed u c ti on i s den ie d, w e d o n ot s e e a n y r ea s on w h y th e a s s es se e sh ou l d b e pr e v en t ed f r o m ra is i ng th a t q u es t i on b e f or e th e t ribu n a l f o r th e fi rs t ti m e , s o l ong a s th e r el e va n t fa c t s a r e on r e co rd in re s p e c t 3 ITA No. 8389/Del/2019 Sakshi Fincap Pvt. Ltd.
o f th at it e m. W e d o n ot s e e a n y r ea s on t o r e st ri ct th e p o w e r of th e T ri bu n al u nd e r Se cti on 25 4 onl y t o d e ci d e t h e g r ou n d s w h i c h a ri se f r om t h e o r de r o f th e C o mm is s i on e r o f I n c o m e- t a x ( App eal s) . B oth t h e a s s e s s e e a s w el l a s th e D e p a rt m en t h a v e a rig ht t o fil e a n a p p ea l / cr o s s - obj e ct i on s be f o r e t h e T ri bu n a l. W e fa il t o s e e wh y th e T ribu n a l s ho u l d b e p r ev en t e d f ro m c ons i d e ri ng qu es ti o n s of la w a ri sin g i n a s se ss m en t p r o c e e d in gs a lt h oug h n ot r a i s ed ea rl i e r.
6 . In t h e c a s e o f J u t e C o rp o ra t i on of I n di a Lt d. v . C . I. T . . t hi s C o u r t, w hi l e d e a li ng wi th th e p ow e r s o f th e A p p el l a t e A s s i s t a nt C o mm is si on e r ob s e r v ed t ha t a n a p p ella te a u th o ri t y h a s a ll th e po w e rs w h i c h th e o rig i n a l a u t h or it y m a y h a v e in d e cid in g th e qu e sti on b ef o r e it su bj e c t t o t h e r e st ri ct i on s o r lim it a t io n s, i f a n y , p r es c ri b e d by t h e s t a t u t o ry p r o v i si on s. In t h e a b s en c e o f a n y st at ut o ry p r o v i s i on , th e a p p ell a t e a u th o rit y i s v e st ed w i th a ll t h e p le n a ry p o w er s w h i ch th e su b o rd i na t e a ut h o rit y m a y h a v e in th e ma t t e r . Th e r e i s n o g o od r ea s on t o j us ti fy c u rt ai l m en t of t he power of the A p p ell a t e A s s i s ta n t C o mm is si on e r i n en te rt a in in g a n a d d it i on a l g ro un d ra i s ed by t h e a s s e ss e e in s e eki n g m odi fi ca t i on o f t he o rd e r o f a s s e ss men t pa s s ed b y th e I n c o m e -t a x O f fi c er . Th i s C ou rt fu rt h e r ob s e rv e d th at th e r e m a y b e s e v er a l fa ct o r s j us t if y in g th e r a i si ng o f a n e w pl e a in a n a p p ea l a n d e a c h ca se h a s t o be c on si d e r ed o n i t s o w n fa ct s. Th e A p p ell a t e A s si st a nt C om mi ss i on e r m u st b e sa t i sf i ed th at t h e g r oun d ra i s ed wa s b on a f id e a n d th a t t h e s a m e c ou ld n ot ha v e b e en ra i s ed ea rl i e r f o r g o o d r e a s on s . T h e Ap p el l a t e As s i stan t C o m mi s s i on e r sh ou l d ex e r ci s e h i s d is c r et i o n in pe r mit ti n g o r n ot p e rm it ti n g t h e a s s e s s e e t o ra i s e a n a dd i t ion a l gr oun d i n a c c o rd a n c e w ith l a w a n d r ea s on . Th e sa m e ob se rv at i on s w oul d a p pl y t o a pp ea l s b e fo r e t h e T rib un a l a l s o .
7 . T h e v i ew t h a t th e T ri bu n a l i s c on fi n ed on l y t o i s su e s a ri s in g ou t o f t h e a pp ea l be f o r e th e C om mi s si on e r o f In c o m e -t a x ( App eal s) t a k e s t o o n a r r ow a v i e w of th e po w e r s o f th e Ap p el l a t e T r ib u na l [v id e , e .g. , C. I . T , v. An a n d P ra s a d ( D elh i ) , C . I . T . v . K a ra m ch a nd P r em c h a nd P . L t d . a nd C . I. T . v. C ell ul o s e Pr o d uc t s o f I nd i a Lt d. . Un do u bt edl y , t he T r ib un a l w il l h a v e t h e di s c r et i on t o a l l ow o r n ot a ll o w a n ew g r oun d t o b e r a i s ed . Bu t w h er e t h e T rib un a l i s on l y r eq u i r ed t o c on si d e r a qu e s ti on o f la w a ri si ng f r om t h e f a c t s w h i ch a r e on r e c o rd in t h e a s s e ss m en t pr o c e ed in g s w e fa il t o s e e wh y su ch a qu es ti on sh ou ld n ot b e a ll ow ed t o b e ra i s ed w h en i t i s n e c e ss a ry t o con s id e r t ha t qu e sti on i n or d e r t o c o r re c t ly a s s e s s t he t a x l i a b i lit y o f a n a s s e ss e e .
8 . Th e r ef ra m ed qu e st i on , th e r ef o r e , i s a n sw e r ed in th e a f fi rm ati v e, i . e. , t h e T r ibu n a l ha s j u ri s di ct i on t o ex a m i n e a qu e sti on o f la w w h i ch a ri s e s f r om th e fa ct s a s f ou n d b y th e a u th o ri ti e s b el o w a n d h a v i n g a b e a rin g on th e t a x l ia b il it y o f th e a s s e ss e e . W e r em a n d th e p r o c e ed in g s t o t h e T rib un a l f o r c ons i d e rat i o n of th e n e w g r ou nd s ra i s e d b y th e a s se s s e e o n th e me r its . "
4 ITA No. 8389/Del/2019Sakshi Fincap Pvt. Ltd.
5. Brief fac ts of the case are that the assessee received an amount of Rs. 23,80,00,050 /- on account of issue of 1,58,66,670 equity shares issue d at the rate of 15/- (inc luding premium of Rs. 5/-) on 16.03.2015. The assessee company has allotted the shares to the follow ing parties:
M/s Jenson Durgs Pvt. Ltd. - 1 ,26,66,670 shares M/s Sakshi Pharmaceuticals Pvt. Ltd. - 12,00,000 shares M/s Sakshi Developers Pvt. Ltd. - 20,00,000 shares
6. The asse sse filed the copy of valuation certificate issued by Chartered Accountant to explain the calculation done under Rule 11UA of the Income Tax Rules. T he asses see submitted that as per va luation certificate issued by Chartered Accountant in ac cordance to Rule 11UA of the rules, value has been arrived at Rs.14.77 per share and suggested value was Rs. 15 per share . Accordingly, assessee allotted above shares at value of Rs. 15 per share (inclusive of premium o f Rs. 5/share).
7. Contrarily, the Assessing Officer computed the fair market value of the share at Rs. 14.68 per share and ma de the addition of Rs. 50,77,334/- u/s 56(2)(viib) on account of difference in value . {1,58,66,670 *(15- 14.68)}
8. Aggrieve d, the assessee filed appeal before the ld. CIT(A).
9. Before the ld. CIT(A), the assessee reiterated the stand taken before the Assessing Officer. However, the ld. C IT(A) ignored the s ubmissio ns made by the assessee, confirme d the addition made by the AO, while doing so ld. CIT (A) has relied upon Section 56(2)(viib) read w ith rule 11UA (1)(c)(b).5 ITA No. 8389/Del/2019
Sakshi Fincap Pvt. Ltd.
10. Aggrieve d, the assessee filed appeal before the Tribunal. The s ignificant fact is that, The value adopted by the assessee is Rs. 15/- share whereas the AO has computed the value of Rs . 14.68/- share and the difference be tween the value adopted assessee and computed by the AO is 2%.(15-14.6 8/15).
11. Hence, this fact itself makes it evident that no addition is warranted u/s 56(2)(viib) of the Act as the diffe rence between the two values is minuscule and this co ntention of assessee is supported by the order of the Co-or dinate B ench of ITAT Chennai in the case of DCIT, Non Corporate Circle-1(1), Chennai Vs. M/s Jain Housing, 2019(8) TMI 1827- ITAT C hennai, Dated- August 8, 2019, where the ITAT deleted the addition made by AO u/s 56(2)(viib) holding as under:
" 11 . G r oun d s 3 & 4 ch a l l en g e s t h e di r e c ti on o f t h e ld . C I T( A) i n d e l eti n g th e a dd i t i on m ad e u /s . 56 ( 2) ( vi i a ) o f th e A c t . Th e l d . C I T( A) g r an t ed r eli e f a ft e r c on sid e r i n g th e fa ct th a t t h e d if f e r enc e o f fa i r m a r k et va l u e a n d th e v a lu e ad op t ed by th e A s s e s s in g O ffi c e r i s l e s s t h a n 1 % . N ot hi ng w a s br oug h t t o ou r n oti c e c on tr o v e rt in g th e fi nd in gs o f t h e ld . C IT( A) . I n t h e se ci r cum s ta n c e s , we u ph ol d th e o rd e r of the ld . C I T( A ) in this i s s u e. Ac c o rd in gl y , g r ou n ds of a p p ea l 3 & 4 ra i s ed by th e R ev en u e st a n d di s mi ss e d. "
12. We find that the CBDT after having detailed consultation with various stakeholders, in order to mitigate the hardship faced from the un-intended consequence s of Section 56(2)(viib) read with rule 11UA, via notification 81/2023 dated 25.08.2023 has introduce d a safe harbor of 10% variation in value. Relevant extract of the notification are as follows:
6 ITA No. 8389/Del/2019Sakshi Fincap Pvt. Ltd.
" (4 ) F o r th e pu rp o s e s o f c la u s e ( A) or c la u s e ( B) o f s u b- ru l e ( 2) , wh e r e th e is s u e p ri c e o f th e s ha r e s ex c e ed s t h e v a lu e o f sh a r e s a s d et e rmi n e d i n ac c o rda n c e w i th -
( i) su b- cl a u s e (a) or s ub - cl a us e (b) of cl a u s e (A ) , for c on si d e r at i o n r e c eiv e d f r o m a r e si den t , b y a n a m ou n t n ot e x c e edi ng t en pe r c ent , of t h e va lu at i on p ri c e, t h e i s su e p ri c e sha ll b e de e m ed t o b e th e fa ir m a rk et v alu e o f su c h s h a r es;
( ii) s ub - c lau s e ( a ) o r su b- c la u s e ( b) o r su b- cl a u s e ( d) of c la u s e ( A ), f o r c ons i d e rat i o n r e c ei v ed I f r om a n on- r e s id ent , b y a n a m ou nt n ot e xc e e d in g ten p e r cen t , of t h e va l u a ti on p ri c e, t h e i s su e p r ic e sh a l l b e d e em ed t o b e th e f ai r m a r k et v a lu e of s uc h sh a r e s ."
13. From per usal of above notification, it is evident that where the difference between the issue price and value adopted by the AO is 10% or less, in such cases issue price will be deemed to be the fair va lue of shares for the purpo se of Rule 11UA of the Income Tax Rules, 1962. In the present case the issue pr ice is Rs.15 per s hare and the value adopted by the AO is Rs.14 .68/per share, hence the difference between the issue price and value adopte d by AO is Rs.0.32 i.e. 2.21% (0.32/15) which is less the then the safe harbor of 10% var iation in value intro duced by CBDT no tification 81/2023 dated 25.08.2023.
14. Hence, in view of abo ve mentioned submission and curative amendment introduced by CBDT notification 81/2023 dated 25.08.2023, addition of Rs.50,77,334/- u/s 56(2)(viib) read with Rule 11UA is unsustainable.
15. With re gard to the applicability of the amendment intro duced by CBDT notification 81/2023 date d 25.08 .2023 which is a curative amendment and the same will be applicable 7 ITA No. 8389/Del/2019 Sakshi Fincap Pvt. Ltd.
retrospectively, we find that the Hon'ble Apex Co urt in the case of Allied Motors Private Limited Vs. CIT, 1997 (3 ) TMI 9 - (SC) Dated March 10, 1997, has observed that where a proviso which is inserted to remedy unintende d consequences and to make the provision workable, a proviso which supplie s an obvious omission in the sectio n and is require d to be read into the section to give the section a reasonable interpretation, re quires to be treated as retrospective in operation, so that a reasonable inter pretation can be given to the section as a w hole, re levant finding of the apex court are as under:
" A p r o vi s o wh i ch i s i ns e rt e d t o r e m ed y u ni n t en d ed c on s e qu en c e s a nd t o ma k e the " p r ov i s i on w o rk a bl e , a p r ov is o w h ic h su p p l i e s an obv i ous om is si on in t h e s e c t ion a n d i s re qu i r ed t o b e r ead i n t o t h e s ec t i on t o g iv e th e s e ct i on a r ea s on a b l e in t e rp r et a t i on , r eq ui r e s to be t r e a t ed as r et r o sp e c ti v e in op e ra t i on , so th a t a re a so n a bl e in t e rp r et a ti on c a n be gi v en t o t h e s e ct i on a s a w h ol e .
Th i s vi ew h a s b e en a c c ep t ed b y a n u mb e r of Hi gh C ou rt s. In th e ca s e o f C I T vs . C h a n du l a l V eni ch a n d [1 9 9 4] 2 0 9 I TR 7 , t h e Guj a r a t Hi gh C ou rt ha s h el d t ha t th e fi r st p r ov i s o t o se ct io n 43 B i s r et r os p ec ti v e a n d sa l e s ta x f o r th e l a st qu a rt e r p a id be f o r e th e fil in g of th e r e t u rn f o r t he a s s es s m en t y ea r i s d edu cti bl e. Th i s d e ci si on d ea l s wi th a s s e ss m ent y e a r 1 98 4 -8 5 . Th e C a l cu tt a Hi gh C ou rt i n t h e c a s e of CI T v s. S ri J a g a n n a t h S te el C o rp o ra t i o n [ 19 91 ] 19 1 I TR 67 6 , ha s ta k en a s im i l a r vi ew h ol d in g th a t th e st a t ut o ry li a bi l i ty fo r sa l e s t a x a c tu a l ly d i s cha rg e d a f t er th e ex p i ry o f th e a c c oun ti n g y ea r in co mpl i a n ce w ith th e re l ev a n t st a tu t e i s en t i tl ed to ded u ct i on u n d e r s ect i on 4 3 B. Th e H ig h C ou rt h a s h eld t he a m en dm e n t t o be cl a ri fi ca to r y an d, th e r e f o r e, r et r o s p e c ti v e. Th e G u j a r a t Hig h C ou rt i n t he a b ov e ca s e h el d t he a m end m en t to be cu r a ti v e and exp la n a t o ry and h en c e r et r o sp e c ti v e. Th e P a tn a Hig h C ou rt h a s a l s o h el d t h e a m en dm ent in s e rti n g th e fi r st p r ov i s o to be ex pl a n a t o ry i n t h e c a s e o f J a m sh e dp u r M ot o r Ac c es so ri e s S t or e s v . Un i on o f I n di a [ 19 91 ] 18 9 I TR 7 0 . It h a s h el d th e am en d m en t i n se r t in g fi rs t p r o v i s o t o b e r et r os p ect iv e . Th e s p ec ia l l ea v e 8 ITA No. 8389/Del/2019 Sakshi Fincap Pvt. Ltd.
pet it i on fr o m t hi s d e ci si on o f th e P a t na H ig h C ou rt wa s d is mi ss e d . Th e vi ew of t h e D e l h i H ig h C ou rt , th e r ef o r e , th a t t he fi rst p r ov is o t o s e ct i on 4 3B w i ll b e a v ail a bl e onl y p r o sp e c ti v el y do e s not a pp ea r t o b e c o r r e ct . A s ob se rv e d b y G . P. S in gh in hi s Pr i nc ip le s o f S ta t ut o r y I n t e rp r et a ti on , 4 th Ed n . , p ag e 2 9 1 , " I t i s w e ll s et t l ed t ha t if a s ta t ut e i s cu r a t iv e o r m e r el y de c l ar at o ry of the p r e v i ou s law, r et r o s p e cti ve op e ra t io n is g en e ra ll y in t e nd ed ." I n f act th e a m end m ent w o u ld n o t s e r v e i t s o bj e ct i n su c h a situ at i on , u n l e s s it is c on st ru ed a s r et r o sp e c ti v e. Th e v i e w, th e r ef o r e , ta k en by th e D elh i Hig h C o u r t c a n n o t b e s u st a in ed . "
16. Further, reliance in this regards is placed upon the ITAT Mumbai judgment in the case of Shaista Irphan Mogul Vs. ACIT, CC-5 (3) , Mumbai, 2021 (8) TMI 270 - ITAT Mumbai, Dated July 1, 2021:
" 9 . U pon ca r e fu l c o n s id e r a ti on w e n ot e th a t th e d if f e r en c e b etw e en v alu e de c l ar e d an d v al u e a s p er st a m p v a l u e a u th o rit y i s l e ss t h a n 1 0 % . Thi s i s w it hi n t h e t ol e ra n c e l i m it s p eci fi e d in se ct io n 5 0C . T h e a u th o rit i e s b el ow h a v e r ej e c t e d i t on t he p r em i s e th a t t h e t ol e ra n ce l im it w a s i nt r od u ced by th e Fi na n c e Ac t , 2 0 18 ; h e n c e i t i s n ot a p pl ic a bl e f o r t h e y ea r u n d e r c ons i d e rat i o n.
W e n ot e th e pl e a t h a t t h e a m en d m en t wa s i n t en d e d t o c u r e a h a r ds h ip a n d h en c e r et r os p ec t iv e h a s b e en du l y a cc ept e d in t h e ITA T d e ci si on r ef e r r ed in th e a s s ess e e ' s su b mis s i on a b ov e . Mo r e o v e r , t h e s p e e ch of Hon ' b l e F in an c e Min i st e r wh il e in t r od u ci ng th e p r o v i si on s du l y sup p or t th i s pr e mi se. Mo r e o v e r, in su c h s itu a t io n cu ra t i v e p r o vi si on t o r em o v e h a rd sh i p sh ou ld be r et r o sp e c ti v e is du ly su pp o rt ed by H on 'b l e S up r em e C ou rt de c i si on i n t h e ca s e o f Al l i ed M o t e rs (P) Lt d . ( 91 Ta xm a n 2 05 ) b y th e f oll ow in g e xp o si t i on .
" A p r o vi s o wh i ch i s i ns e rt e d t o r e m ed y u ni n t en d ed c on s e qu en c e s a nd t o ma k e t h e p r ovi so w o rka bl e , a p r o v i s o w hi ch sup pl ie s a n o bvi ou s om i s s i o n in t he s e ct i on an d i s r eq ui r e t o b e r e a d i nt o t h e se c ti on t o g iv e t h e s e ct i on a r e a s on a bl e i nt e r p r et a t i on , re q ui r e s t o b e t r ea t ed a s r et r o s p e c ti v e i n 9 ITA No. 8389/Del/2019 Sakshi Fincap Pvt. Ltd.
op e ra ti on s o t h a t a r ea s ona b l e in t e rp r et a ti on c a n b e g i v e n t o t h e s ec t i o n as a w h o l e. "
Un d oub t ed ly t hi s a m en d m en t w a s d on e t o ob vi a t e h a r dsh ips a ri sin g out o f mi n o r v a r iat i on i n v a l u e of t r a n sa ct i on qu a 5 0 C v a l ua t i on. In th i s vi e w of th e m a t t er a ss e ss e e 's p l ea s u c ce ed s . He n c e, w e s et a s id e th e o rd e r s of th e au th o ri ti e s b el ow a n d d e c id e th e i s su e i n f a v ou r of t h e a s s e s se e . "
17. The amendment brought in Rule 11UA of the Ac t was intro duced to mitigate the hardship faced by taxpayers by the un-intended invocation of Section 56(2 )(vlib) r ead with rule 11UA and therefore the same is a curative amendment. In view of the of the above mentione d judgment of Apex cour t and judgments of multiple bench's tribunals , it is established in law that where an ame ndment which is inserte d to re medy unintended consequences and to make the proviso workable, an amendment w hich supplies an obvious omission in the section and is require d to be read into the section to give the sec tion a reasonable interpretation, requires to be treated as retrospective in opera tion so that a reasonable interpre tation can be given to the section as a whole. Hence, in view of above mentioned submissions and judicial pronouncements curative amendment in Rule 11UA of the Income Tax Rules, 1962 intro duced by CBDT notification 81/2023 dated 25.08.2023 will apply retros pectively and consequently, the additio n of Rs.50 ,77,334 u/s 56(2)(viib) read with rule 11UA is unsustainable as the difference between issue price and value adopted by AO is 2.1% i.e. less than 10%.
10 ITA No. 8389/Del/2019Sakshi Fincap Pvt. Ltd.
18. In the re sult, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 16/04/202 4.
Sd/- Sd/-
(C. N. Prasad) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: /04/2024
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR