Share premium treatment on issuance of shares ruled capital account not income, addition as unexplained credit reversed but appeal dismissed.

Share premium received on issuance of shares is a capital account receipt and does not constitute income; therefore additions under income-tax principles require justification beyond mere accounting entries. The report finds no evidence of depletion or reinvestment of the share premium account and criticises revenue for conflating creation of a share premium account with utilisation of funds; accordingly, treating the entire premium as unexplained cash credit was unwarranted on merits. The appellate challenge was dismissed by the court, with no interference on the impugned High Court order.

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The Supreme Court, through Hon'ble Justices J. B. Pardiwala and R. Mahadevan, dismissed the Special Leave Petition due to a "gross delay of 271 days" in its filing, which was "not satisfactorily explained" by the petitioner. Additionally, the Court found "no good reason to interfere with the impugned order passed by the High Court." Consequently, the petition was dismissed both on grounds of delay and merits, and all pending applications were disposed of.

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