I. Direct & International Taxation
A. Corporate Tax
1. Hon'ble Himachal Pradesh High
Court1: Addition under Section 56(2)(viib) of the Act is
not maintainable where no consideration is received on issue of
shares and mere loan is converted to share
capital
Background
During the AY 2018-19, I. A. Hydro Energy (P) Ltd ('the
Assessee') was converted from partnership firm in to a Company.
The Assessee also converted outstanding unsecured loan received
from erstwhile partners into equity shares having face value of INR
10 per share at a share premium of INR 90 per share based on
Discounted Cash Flow ('DCF') Method as prescribed in Rule
11UA of the Rules.
However, the AO made an addition under Section 56(2)(viib) of
the Act of INR 202.50 crore based on fair market value of unquoted
shares as per the NAV method and rejected DCF method used by the
Assessee on the ground that the valuation was done with fictitious
figures having no correlation with actual affairs
