The Delhi bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition of Rs. 9.31 crore citing the non-applicability of Section 56(2)(vii) to non-residents.
The assessee is a private limited Company engaged in third-party logistics specialist serving the automotive sector in India. Incorporated in 2012, the company is a joint venture of two of the brands in international supply chain management and automotive logistics: APL Logistics and VASCOR. The Company serves some of the major OEMs like Maruti, Honda etc. It claims to have collaboration with key stakeholders, the Indian Railway and transporters, to build up a reliable logistic system for transportation of finished vehicles like passenger cars. Essentially it is a rail-based service provider for Automotive OEMs in India for the domestic transportation of finished vehicles. The assessee Company filed its return under section 139(1) of the Act declaring a loss of INR 15, 47, 16,019/-.
The assessee was not subject to provisions of Section 56(2) (viib) as the receipt was from a non-resident and such transactions were beyond the scope of Section 56(2) (viib) which covered only resident payers. Rather the transaction made by the assessee was in consonance with FEMA rules and RBI circular regarding overseas transactions.
Mr. Akshay Ringasia, representing the assessee contended that Section 56(2)(viib) was not applicable to non-residents for the said assessment year and was amended only through the Finance Act 2023. Additionally, the valuations were conducted as per FEMA guidelines (RBI Master Direction 11/2017-18), which mandates the allotment of shares at a value exceeding fair value. Furthermore, the number of shares considered for allotment was incorrect, being taken as 10.35 lakhs instead of 7.5 lakhs.
However, the CIT(A) failed to consider the assessee’s pleas regarding the Rs.2.15 crores and Rs.9.31 crores additions, therefore, the coram of G.S Pannu ( Vice President) and Anubhav Sharma ( Judicial member) remanding this ground back to the CIT(A) for reconsideration in light of the appellant’s arguments, and granting the appellant a fresh opportunity for a hearing.
The appeal of assessee was accordingly allowed
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
