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BHARGAV D. KARIA, D. N. RAY
AKASH CERAMICS PRIVATE LIMITED – Appellant
Versus
INCOME TAX OFFICER, AHMEDABAD – Respondent
JUDGMENT :
BHARGAV D. KARIA, J.
1. Heard learned advocate Mr. B.S. Soparkar for the petitioner and learned Senior Standing Counsel Mr. Varun Patel for the respondent.
2. Having regard to the controversy in narrow compass, with the consent of learned advocates for the parties, the matter is taken up for final hearing.
3. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Varun Patel for the respondent waives service of notice of rule.
4. Brief facts of the care are as under:
4.2 During the Financial Year 2014-15, the petitioner had issued 3,59,500 equity shares of Rs. 10/- each, at a premium of Rs. 143/- totaling to premium collected at Rs. 5,14,08,500/-.
4.3 Notices under section 133(6) of the Income Tax Act, 1961 [for short ‘the Act’] were issued by the Income Tax Officer on 01.09.2017, 14.09.2017, 26.09.2017 and 20.05.2019 to conduct inquiry into the issuance of such share capital at such valuation. The petitioner filed replies to each of the notices issued under section 133(6) of the Act.
4.4 It appears that the retur
The Assessing Officer cannot substitute the valuation method chosen by the assessee under the Income Tax Act, and reopening of assessment based on such substitution is unjustified.
The court affirmed that once an assessee selects a valuation method for shares, the AO cannot alter it without providing an acceptable alternative valuation.
The court emphasized that share valuations must be based on reliable financial data and established methodologies, rejecting unsupported premium claims.
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