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If the AO finds that the said person Smt. Vijayalakshmi is a resident in India in the present year, the effect of provisions of s. 56(2)(viib) should be decided by him afresh.

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Sec. 6(1) & 56(2)(viib) of Income-tax Act, 1961— Income from other sources—Matter restored back to the file of AO for a fresh decision because there is no finding of AO or CIT(A) on the aspect as to whether the said person from whom the amount in question was received by the assessee-company was a resident in India or not in the present year so as to decide its chargeability.

Facts: This appeal is filed by the assessee and grounds raised were that CIT(A) erred in making addition under s. 56(2)(viib) to the tune of Rs. 1,99,20,618 without appreciating the explanation of the assessee and failed in giving sufficient opportunities to the assessee to submit the details called for and CIT(A) ought to have appreciated that said s. 56(2) (viib) are not made applicable to the shares issued to NRI mainly to encourage Foreign investments.

Held, that in order to invoke the provisions of s. 56(2)(viib), it is essential that the excess amount is received by the company from a resident and therefore, this should be first examined as to whether the person from whom any money is received by the company on issue of its shares is resident in India or not in the relevant year. It is noted by the AO that valuation report was questioned vide notice by invoking s. 56(2)(viib) and this was the only objection of the AO that the valuation report is incorrect. AO has reproduced the relevant provisions of s. 56(2)(viib) also in which this is noted that this clause of s. 56(2)(viib) will apply where a company not being a company in which the public are substantially interested receives in any previous year from any person being a resident any consideration for issue of shares and if such consideration is in excess of fair market value of the shares then such excess money is chargeable to tax under the head "Income from other sources" but there is no discussion in assessment order on this aspect as to whether the money received by the assessee-company from Smt. Vijayalakshmi is an amount received from a resident. As per the provisions of s. 6 , an individual will be resident in India in any previous year if he is in India in that year for a period or periods amounting in all 182 days or more or having within the 4 years preceding that year being in India for a period or periods amounting in all to 365 days or more and is in India for a period or periods amounting in all to 60 days or more in that year. Hence, it is very clear that if the person in question was not in India in the relevant previous year for 60 days or more, then such a person cannot be said to be a resident in India in that year. As per the copy of passport No. F5207571 of the assessee along with written submissions, it is seen that the name in the passport is "Vijaya" but as per the assessment order, the amount was received from Smt. Vijayalakshmi. This is also seen that passport copy was not submitted before the AO or CIT(A) and it is submitted before the Tribunal for the first time as an additional evidence. Hence, we feel it proper to restore this matter back to the file of AO for a fresh decision because there is no finding of AO or CIT(A) on this aspect as to whether the said person from whom the amount in question was received by the assessee-company was a resident in India or not in the present year. The AO is directed to examine this issue as per law and give a categorical finding as to whether the said person Smt. Vijayalakshmi from whom the amount in question was received by the assessee-company was resident in India or not in the present year and thereafter, decide this aspect first as to whether the provisions of s. 56(2)(viib) are applicable or not in respect of this amount in question received from Smt. Vijayalakshmi. If it is found that the provisions of s. 56(2)(viib) are not applicable because the said person is not a resident in India in the present year then nothing more remains to be decided because in that situation, the provisions of s. 56(2)(viib) cannot be made applicable in respect of this amount in question but if it is found that the said person i.e., Smt. Vijayalakshmi is a resident in India in the present year, then the whole issue should be examined and decided by the AO afresh. In the result, assessee's appeal stands allowed for statistical purposes in the terms indicated above. - ANTARIKSH SOFTTECH (P) LTD. V/s ITO - [2020] 27 ITCD Online 037 (ITAT-BANGALORE)

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