IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.4304/MUM/2024 (Assessment Year: 2017-18)

Deputy Commissioner of Income Tax, Central Circle - 7(1)

Room No.653, Aaykar Bhawan, Churchgate, ............... Appellant Mumbai - 400020 v/s Spectra Realities Private Limited, 9, Floor-I, Plot – 51, Kapadia Chamber, Devji Ratansi Marg, ……………… Respondent Chinchbunder, Mumbai – 400009 PAN: AALCS7233B ITA No.4306/MUM/2024 (Assessment Year: 2017-18)

Deputy Commissioner of Income Tax, Central Circle - 7(1)

Room No.653, Aaykar Bhawan, Churchgate, ............... Appellant Mumbai - 400020 v/s Soyumm Marketing Private Limited, 9, Floor-I, Plot – 51, Kapadia Chamber, ……………… Respondent Devji Ratansi Marg, Chinchbunder, Mumbai – 400009 PAN: AAICS7297Q Assessee by : Shri Bhupendra Shah Revenue by : Shri Swapnil Choudhary, Sr.AR Date of Hearing – 20/11/2025 Date of Order - 04 /12/2025

O R D E R

PER SANDEEP SINGH KARHAIL, J.M.

The present appeals by the Revenue arises from the separate impugned orders dated 27.06.2024 and 28.06.2024, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals) - 49, Mumbai, [“learned CIT(A)”], for the assessment year 2017-

18.

2. During the hearing, the learned Representatives for both sides fairly agreed that the issue involved in these appeals are similar and arise out of similar factual matrix. Accordingly, with consent of the parties, these appeals were heard together as a matter of convenience and are being decided by way of this consolidated order. The Revenue’s Appeal in ITA No.4304/Mum/2024 is treated as a lead case and the facts and circumstances giving rise to the appeal are discussed elaborately in the present order.

3. As the Revenue has raised similar grounds in both the appeals, the grounds raised in Revenue’s Appeal being ITA No.4304/Mum/2024 are reproduced as follows for ready reference: -

"1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by AO of Rs. 8,70,41,565/- under section 56(2)(viib) of the Act disregarding the fact that the assessee has issued Cumulative Redeemable Preference shares which is not traded on the exchange.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by AO of Rs. 8,70,41,565/- under section 56(2)(viib) of the Act since the same has been done by AO by following the valuation guidelines of SEBI for Mutual Funds and the Assets Management Companies and Unit Scheme of 2002 of Unit Trust of India Act."

4. The solitary issue that arises for our consideration pertains to the applicability of illiquidity discount for the valuation of Non-Cumulative Redeemable Preference Shares of an unlisted company.

5. The brief facts of the case pertaining to this issue, as emanating from the record, are: For the year under consideration, the assessee filed its return of income on 26.10.2017, declaring a total loss of Rs.8,00,003/-. The return filed by the assessee was selected for scrutiny through CASS, and statutory notices under section 143(2) and section 142(1) were issued and served on the assessee. During the assessment proceedings, from the perusal of the financial statement submitted by the assessee, it was observed that the assessee has received an amount of Rs.36,87,25,500/- towards share premium during the year under consideration. It was further observed that the assessee has issued 22,34,700 Non-Cumulative Redeemable Preference Shares of Rs.100/- each to various parties at a premium of Rs.220/- per share. Since only 75% of the amount was called upon per share, Rs.75/- per share was received by the assessee towards face value and Rs.165/- per share was received by the assessee towards securities premium. The amount received from the various parties against issue of Non-Cumulative Redeemable Preferences Shares at