Section 68 addition on share premium from a non-resident holding company deleted after proof of identity, creditworthiness and genuineness.

Share capital and share premium received from a non-resident holding company were held not to be unexplained credits where the assessee produced shareholder details, PAN, share certificates, bank statements, Foreign Inward Remittance Certificates, confirmations, and a valuation report. The funds moved through banking channels, the shareholding pattern remained unchanged, the remittances were consistent with the FDI regime, and transfer pricing proceedings raised no adverse comment. On these facts, the assessee discharged the burden of proving identity, creditworthiness and genuineness, so the section 68 addition was deleted.

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Issues: Whether the addition made under section 68 on account of share capital and share premium received from a non-resident holding company was justified.

Analysis: The assessee produced shareholder details with address and PAN, share certificates, bank statements, Foreign Inward Remittance Certificates, confirmations from the shareholders, and a valuation report supporting the premium. The funds were received through banking channels from the existing holding company, the shareholding pattern remained unchanged, and the remittances were shown to have been made in compliance with the FDI regime. The transaction was also examined in transfer pricing proceedings without adverse comment. On these facts, the assessee discharged the burden of proving identity, creditworthiness and genuineness, and the basis for treating the receipt as unexplained credit was not sustainable.

Conclusion: The addition under section 68 was deleted and the issue was decided in favour of the assessee.

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