ORDER आदेश

PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-

This assessee’s appeal for A.Y. 2012-13, arises from order of the CIT(A)-1, Ahmedabad dated 30-11-2016, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.

2. The ground no. 1 to 4 of the assessee are pertained to the common issued on confirming addition of Rs. 1,82,87,906/- on account of difference in market value of unquoted shares u/s. 56 of the act.

3. The assessee has not pressed ground 5 because of smallness of the amount, therefore, the same is dismissed as not pressed.

4. Ground nos. 6 & 7 do not require any adjudication because of general nature of grounds of appeal.

5. The fact in brief are that assessee has filed return of income on 29^th Sep, 2012 of Rs. 64,99,491/-. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 23^rd Sep, 2013. On verification of the detail filed, the assessing officer noticed that asssessee has shown income from other sources amounting to Rs. 1,87,49,397/- under the head deemed income u/s. 56 of the act. On further verification, the assessing officer noticed that assessee has purchased shares of M/s Subidha Dairy Pvt. Ltd. @ Rs. 1.25 per share to the amount of Rs. 17,75,563/- and total no. of shares purchased were 1420451/-. He has also noticed that assessee has purchased shares of Osia Enterprise Pvt. Ltd. @ 1/- to the amount of Rs. 2 lac and total no. of shares purchased was 2 lacs. The assesse has worked out book value as per rule 11UA in respect to shares of Subidha Dairy Pvt. Ltd. at Rs. 11 per share and shown an amount of Rs. 1,38,49,397/- as income from other sources. It has worked out value of shares of Osia Enterprise Pvt. Ltd. as per rule 11 UA at the rate of Rs. 25.70 per share and shown an amount of Rs. 49,00000 as income from other sources. The total amount of difference in the said valuation in respect of the aforesaid companies of Rs. 1,87,49,397/- was shown u/s. 56 of the act.

The assessing officer on verification of the balance sheet of Subidha Dairy Pvt. Ltd. observed that the said company was holding the fully paid equity share (quoted shares) as mentioned at page 4 of the assessment order as investment as on 31^st march, 2011. The assessing officer has further observed that assessee company has acquired the shares of Subidha Dairy Pvt. Ltd. and M/s Osia Enterprise Pvt. Ltd. both unquoted companies, however in the balance sheet of these companies it was noticed that these companies were holding the investment in the quoted shares of other companies , therefore, it is required to value the same as per market rate of quoted shares prevailing in the stock exchange on the date of valuation on 31^st March, 2012. The assessing officer has stated that assessee has adopted a colorable device to reduce its income on account of transfer of quoted shares by way of acquiring the shares (unquoted of M/s Subidha Dairy Pvt. Ltd. and M/s Osia Enterprise Ltd.). The assessing officer was of the view that the assessee company was holding the quoted shares of limited companies and this has also be taken into account for the valuation of the shares of the assessee company as per the appropriate Rule 11 UA of the IT Rules. Consequently, the assessing officer has added the difference amount on account of prices of quoted shares to the amount for Rs. 1,82,87,906/- to the total income of the assessee as worked out at pages 8 and 13 of the assessment order.

6. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee reiterating reason mentioned by the assessing officer.

7. During the course of appellate proceedings before us, the ld. counsel has submitted paper book containing detail and submission made before the assessing officer and ld. CIT(A) during the course of assessment proceedings and appellate proceedings. The ld. counsel has also contended that assessee has correctly determined the value of unquoted equity shares