Conversion of loan amount into equity shares will not exonerate assessee from application of provisions U/S 56(2)(viib): ITAT [Read Order]

The Pune bench of the Income Tax Appellate Tribunal (ITAT) held that Conversion of loan amount into equity shares will not exonerate assessee from application of provisions under section 56(2)(viib)b of the Income Tax Act.

The assessee filed this appeal challenging the order dated 14.3.2023 passed by the learned CIT(A), National Faceless Appeal Centre, Delhi and it relates to A.Y. 2014-15. The assessee aggrieved by the decision of the learned CIT(A) in confirming the addition of Rs. 1,41,11,192/- made by the under section 56(2)(viib) of the I.T. Act.

None appeared on behalf of the assessee. It was noticed from the record that the adjournment was granted earlier on three occasions. On the last occasion, i.e., when the appeal was posted on 28.8.2013, the Bench adjourned the matter today with the direction that the assessee shou appear today. However, none appeared on behalf of the assessee nor any adjournment petition was moved. Accordingly we proceed to dispose of the appeal ex-parte, without presence of the assessee.

The undisputed fact remains in this case is that the shares premium collected by the assessee was more than the valuation arrived at by the auditor in the valuation report. The question is whether the conversion of loan taken in the past into equity shares with share premium would be hit by the provisions of sec.56(2)(viib) of the Act.

After hearing both the parties, the tribunal observed that there was no contrary decision was placed or any distinguishing fact, which would compe to interfere with the decision rendered by the tax authorities, was furnished.

The two member bench consisting of Rahul Chaudhary (Judicial memebr) and B.R. Baskaran (Accountant member) held that CIT(A) was justified in confirming the assessment of excess share premium amount as income of the assessee under section 56(2)(viib) of the Act. Accordingly the bench uphe the order passed by the learned CIT(A). Thus the order was dismissed.

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