TaxTMI 
TaxTMI 
TaxTMI 
2013 (11) TMI 225
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.... was in the process of identifying the real estate ventures and no commercial activities were commenced during the period from September 04, 2006 to March 31, 2007. Pursuant to amalgamation of M/s. PVP Ventures P. Ltd with M/s SSI Limited as approved by the Hon'ble High Court of Judicature at Madras vide order dated 25.4.2008, assets and liabilities of the assessee company have been transferred to SSI Limited with effect from 1st October, 2007. The Assessing Officer issued a notice under S.143(2) on 25.9.2008, after processing the return under S.143(1). The assessee did participate in the proceedings and subsequently vide letter dated 27.10.2009 raised an objection that the Assessing Officer had no jurisdiction to proceed further in the name of the company, as no proceedings were initiated in the name of the amalgamating company. The Assessing Officer, relying on the provisions of S.170 and also the fact that this is assessment for the period prior to amalgamation, he held the proceedings as valid. The same was reiterated before the CIT(A) and contended that the assessment was on a non-existing company as with the amalgamation of the company, the original company ceased to exist in....
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....taken by it and bringing to tax an amount of Rs.10,61,71,760 as income from other sources as against the business income and in ground Nos.11 and 12, without prejudice, it is claiming for deduction on account of payment of proportionate interest and other incidental expenditure incurred for earning interest income. 9. On the issue of jurisdiction, the learned counsel reiterated the submissions made before the CIT(A) and also referred to various provisions of S.170 and case-law on the point. On being pointed out that the assessee did not intimate the amalgamation of the company till the end of scrutiny assessment proceedings, whereas the assessee was participating in the regular hearings from 6.10.2008 to 27.10.2009, the learned counsel for the assessee relied on the legal propositions. It is admitted that assessment pertained to the period prior to amalgamation. Keeping in mind the provisions of S.170 and the fact that the assessee did not raise any objection till a show cause notice dated 19.10.2009 was issued for making addition to the income, we are of the view, that these grounds relating to the jurisdiction issue do not require any consideration. We uphold the orders of AO an....
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....erest under S.234B of the Act. Since this is consequential, Assessing Officer is directed to charge the same while giving effect to this order, if required, as per the provisions of the Act. 14. In the result, assessee's appeal, ITA No.647/Hyd/2011 is partly allowed. Appeal arising out of Re-assessment proceedings:- ITA No.135/Hyd/2013 15. As briefly stated above, the Assessing Officer reopened the assessment for bringing to tax an amount of Rs.50,94,958 and also brought to tax share premium of Rs.7,73,27,003. The assessee is contesting the validity of the proceedings initiated under S.147 in ground No.2; besides the addition of Rs.50,94,958 in ground No.3; addition on account of share premium in ground No.4; and ground No.5 is with reference to levy of interest under S.234B. 16. Before considering the issue of jurisdiction, it is decided to consider the additions made on merits. 17. The third ground is with reference to addition of Rs.50,94,958. Facts in brief relating to this issue are that the assessee company made investment of Rs.248.32 crores in the debentures of M/s. New Cyberabad City Projects P. Ltd. during the assessment year 2007-08 out of which Rs.169.06 crores wo....
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....in this appeal of the assessee relates to addition on account of share premium of Rs.7,73,27,003, which was brought to tax by the Assessing Officer, as income from other sources, which was confirmed by the CIT(A). 21. Facts as noted by the Assessing Officer are that the assessee has shown the aforementioned amount as share premium in the Balance Sheet as on 31.3.2007. The Assessing Officer found that the assessee has allotted 2.65 crores of shares at Rs.10 per share to its promoter company and thereafter, the assessee has allotted 26,85,185 shares to M/s. Karvy group at Rs.27 which includes premium of Rs.17 per share on 20.10.2006 and 7,44,508 shares to various NRI investors at Rs.52.55 per shares, which includes premium of Rs.42.55 per shares as on 10.01.2007. It was the contention of the assessee that the share premium was arrived at through negotiations by the management with these investors. The Assessing Officer held that the share premium was not genuine and it was income from unknown sources, which has been disclosed under the head share premium, so as to escape taxation. By discussing this issue in para 5 of the assessment order and invoking the ratio of the judgment of th....
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....ch would show that such a premium was to be charged and that too from the selected investors. It is absolutely against any human probability that some unknown NRIs would purchase shares of that company at 05 times greater than the face value while a diligent investor like Karvy group would also buy the same at 03 times greater than the face value. There is no justifiable reason or evidence for such an action. 7.7 I also find that the argument of the appellant regarding the impending amalgamation of this company and the increase in price of the shares is not borne by evidence submitted by the appellant itself. On 20 October 2006 when there was no news of any amalgamation the shares of Rs.l0/- were sold for Rs.27/- Le at a premium of Rs.17/- per share. On 10th of January 2007 this premium increased to Rs.42.55 paise per share due to the impending amalgamation as the appellant would have us believe. However, on 25th January 2007 the share premium fell to O! This is absolutely in direct contradiction to the explanation given by the appellant as discussed. The proposed amalgamation was very much in the offing and nothing whatsoever had changed either with the appellant or with the othe....
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.... a public limited company, whose shares were quoted at relevant point of time at more than Rs.55. Therefore, issuing shares at a premium by the company cannot be faulted because it was a decision taken by the investors in their interest. There is also no dispute with reference to the fact that the shares were issued at a premium to a local group, M/s. Karvy and also to NRIs at premium rates which was stated to be after negotiations. The share premium cannot be brought to tax as it is a capital receipt and not on revenue account. Provisions of S.56(2) are amended by the Finance Act, 2012, so as to consider the unreasonable premium as income is effective from 01.04.2013. However, without any allegation of fraud or quid pro quo for any illegal transaction or any type of unjust enrichment or without any justification for receiving so much premium, in the absence of legal provision the capital receipt on premium account cannot be considered as income as made out by the Assessing Officer and the CIT(A). In this case assessee justifies the premium on proposed merger of the assessee company with another public listed company by name M/s. SSI Ltd, whose shares are being traded at a higher p....