Any consideration received by an issuing company in excess of the FMV to the extent it exceeds shall be liable to tax, says ITAT

IN THE INCOME TAX APPELLATE TRIBUNAL
“A” BENCH : BANGALORE

BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT
AND SHRI B. R. BASKARAN, ACCOUNTANT MEMBER

ITA No.2170/Bang/2019
Assessment year : 2013-14

M/s. UKN Hospitality Private Limited,
10th Floor, Gamma Block, Sigma Soft tech
Park, No.7, Airport Varthur Road,
Whitefield Main Road,
Bengaluru – 560 066.
PAN : AAACU 8470 B
APPELLANT 

Vs. 

Income Tax Officer,
Ward – 7(1)(2),
Bengaluru.
RESPONDENT

Appellant by : Shri S. V. Ravishankar Advocate
Respondent by : Shri Kannan Narayanan, Jt.CIT(DR)(ITAT), Bengaluru.

Date of hearing : 24.06.2021
Date of Pronouncement : 30.06.2021

O R D E R

Per N.V. Vasudevan, Vice President

This appeal by the Assessee is against the order of the Commissioner of Income Tax (Appeals)–10, Bangalore, dated 8.3.2019 in relation to assessment year 2013-14.

2. There is a delay of about 132 days in filing this appeal by the Assessee. The reasons for the delay is owing to the fact that Mr.K.Ravindran, the group CFO and director who was handling the matter did not bring to the notice of the Group Chairman about the impugned order. Mr.K.Ravindran was made to resign as director due to various issues and he stopped attending office since April, 2019. The Chartered Account who appeared before CIT(A) in a meeting with the officials on 30.9.2019 found that no action had been taken against the impugned order and thereafter the appeal had been filed.

3. Keeping in view the circumstances stated in the affidavit for condonation of delay, we are of the view that the delay in filing appeal should be condoned and accordingly the same is condoned.

4. The only issue involved in the appeal is as to whether the revenue authorities were justified in invoking provisions of section 56(2)(viib) of the Income Tax Act, 1961 (the Act) and bringing to tax the difference between the fair market value and the issue price of shares at a premium as income of the Assessee. Section 21 clause (B) of Finance Act, 2012 introduced Sec.56(2)(viib) of the Act with effect from the 1st day of April, 2013, and the said provisions reads thus:- 

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