I-Exceed Technology Solutions Pvt. Ltd. Vs ITO

This case involves I-Exceed Technology Solutions Pvt. Ltd. appealing an Income Tax Officer's addition related to share premium received. The company issued shares at a premium, and the Assessing Officer examined this under Section 56(2)(viib) of the Income Tax Act. The company provided a valuation certificate from a Chartered Accountant, which used the discounted cash flow method to determine a share value slightly lower than the issue price.

IN THE INCOME TAX APPELLATE TRIBUNAL
“C’’BENCH: BANGALORE
BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENTAND
SHRI B.R. BASKARAN, ACCOUTANT MEMBER

ITA No.1181/Bang/2018
Assessment Year: 2014-15

M/s. I-Exceed Technology
Solutions Pvt. Ltd.
SJR Padukone Plaza
#51, II Floor
100 Ft. Road, Koramangala
Bengaluru-569033
PAN NO :AACCI6248K

Vs.

Income Tax Officer
Ward-3(1)(1)
Bengaluru
APPELLANT RESPONDENT

Appellant by : Shri V. Srinivasan, A.R.
Respondent by : Smt. R. Premi, D.R.

Date of Hearing : 27.07.2020
Date of Pronouncement : 14.08.2020

O R D E R

PER B.R. BASKARAN, ACCOUNTANT MEMBER:

The assessee has filed this appeal challenging the order dated 7.2.2018 passed by Ld. CIT(A)-3, Bengaluru and it relates to assessment year 2014-15.

2. All the grounds urged by the assessee relate to the addition made by the A.O. u/s 56(2)(viib) of the Incometax Act,1961 ['the Act' for short] relating to share premium, which was partially confirmed by Ld CIT(A).

3. The facts relating to the case are stated in brief. The assessee company is engaged in the business of developing software products and providing consultancy services to customers in banking and financial services industry. The A.O. noticed that the assessee has issued 6,15,088 equity shares of Rs.10/- each at a premium of Rs.80/- per share to six persons. Accordingly, it has collected share premium of Rs.4,92,07,040/- Out of the above said amount, the AO noticed that the share premium received from resident shareholders was Rs.1,77,77,760/-. Accordingly, he proceeded to examine the collection of share premium in terms of sec.56(2)(viib) of the Act.

4. The assessee furnished a valuation certificate dated 15.12.2012 obtained from a Chartered Accountant in support of the price at which the shares were issued. The A.O. noticed that the C.A. has adopted discounted cash flow method (DCF Method) for valuation of shares. In the valuation report, the accountant had arrived at the value per share at Rs.87.56 per share. However, the assessee has issued shares @ Rs.90/- per share including share premium of Rs.80/- per share. Accordingly, the assessee justified the share premium collected by it.

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