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Tribunal upholds deletion of addition to share capital under section 68 The Tribunal dismissed the Revenue's appeal, upholding the deletion of the addition made by the AO on the share capital under section 68 of the Act. The ...
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Tribunal upholds deletion of addition to share capital under section 68
The Tribunal dismissed the Revenue's appeal, upholding the deletion of the addition made by the AO on the share capital under section 68 of the Act. The decision was based on the explanation of the source of share capital in the hands of the investor company, M/s. SNR Trading Co. (P) Ltd.
Issues: - Delay in filing appeal by Revenue - Justification of deleting addition made by AO on account of share capital u/s 68 of the Act
Delay in filing appeal by Revenue: The Revenue filed an appeal with a delay of 25 days, which was condoned after the ld. DR submitted reasons for the delay. The Tribunal, after perusing the petition and hearing both parties, allowed the appeal to proceed despite the delay.
Justification of deleting addition made by AO on account of share capital u/s 68 of the Act: The AO added the share capital and premium of the Assessee company under unexplained cash credit u/s 68 of the Act, as the company failed to produce directors of the subscribing company during scrutiny proceedings. However, the Ld. CIT(A) deleted the addition, citing a similar transaction involving M/s. SNR Trading Co. (P) Ltd., an existing shareholder in the Assessee company. The Tribunal noted that M/s. SNR Trading Co. (P) Ltd. is an RBI registered NBFC Company with investments in group companies. The Ld. CIT(A) held that since the same transaction was assessed in the hands of M/s. SNR Trading Co. (P) Ltd., no addition in the Assessee company is maintainable. The Tribunal found that the source of share capital was explained in the hands of the investor company, proving identity, genuineness of transaction, and creditworthiness. Therefore, the addition made by the AO in the Assessee's hands was deemed unjustified, and the order of the CIT(A) was upheld.
Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the deletion of the addition made by the AO on the share capital under section 68 of the Act. The decision was based on the explanation of the source of share capital in the hands of the investor company, M/s. SNR Trading Co. (P) Ltd. The judgment was pronounced on 06.02.2020 in an open court session.
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