TaxTMI 
TaxTMI 
2014 (11) TMI 479
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....s. 1,24,191/- against Rs. 1,88,012/- u/s. 14A r.w. Rule 8D and in the light of the decision of Hon'ble High Court in Godrej & Boyce Ltd. Vs DCIT reported in 328 ITR 81 (Bom) as the decision of Hon'ble Bombay High Court is not accepted by the Department." 3. The cross objections of the assessee read as under: "1. On the facts, circumstances and in law, the Ld. CIT(A) erred in confirming the disallowance of Rs. 1,24,191/- by wrongly applying the provision of Sec. 14A r.w. Rule 8D of the I.T. Act, 1961. This amount represents the total amount debited by the appellant to profit and loss account for the year ended 31.3.2008. The appellant submits that it has not incurred any expenditure attributable to earning of exempt income and no expense is disallowable u/s. 14A r.w. Rule 8D of the I.T. Act." 4. The return of income for the year under consideration was filed on 25.9.2008 declaring loss at Rs. 1,24,191/-. The return was processed u/s. 143(1) of the Act and thereafter it was selected for scrutiny assessment and statutory notices were issued and served upon the assessee. 4.1. During the course of the scrutiny assessment proceedings, the Assessing Officer noticed that the....
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..... 5,00,00,000 S.K. Infrastructure Ltd. 5,00,00,000 3. (*) Dnyaneshwar Trading & Investment P. Ltd. 39950000 328550000 Rolesoft Mercantile Pvt. Ltd. 30,00,000 Contact India Communications P. Ltd. 55,00,000 Meghraj Properties P. Ltd. 50,00,000 Gagandeep Infrastructure P. Ltd. 3,50,00,000 Money Matters Infrastructures P. Ltd. 1,70,00,000 Parshwanath Buildcon P. Ltd. 3,30,00,000 4. (*) Money Matters Properties Pvt. Ltd. 2,00,00,000 8,91,00,000 Gagandeep Infrastructure P. Ltd. 2,30,00,000 Rolesoft Mercantile Pvt. Ltd. 30,00,000 Money Matters Infrastructures P. Ltd. 2,25,00,000 Meghraj Properties P. Ltd. 25,00,000 Parshwanath Buildcon P. Ltd. 1,20,00,000 5 (*) Sitillite Properties Pvt. Ltd. 1,83,50,000 2,82,50,000 Rolesoft Mercantitle Pvt. Ltd. 10,00,000 Gagandeep Infrastructure P. Ltd. 20,00,000 Meghraj Properties Ltd. 25,00,000 Money Matters Infrastructure P. Ltd. 1,95,00,000 Parshwanath Buildcon P. Ltd. 45,00,000 6 (*) Terrain Properties Pvt. Ltd. 1,93,50,000 2,07,50,000 Gangdeep Infrastructure P. Ltd. 95,00,000 Meghraj Properties P. Ltd....
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....ied to some extent the charging of very high premium for allotment of shares. The only investment in shares of another company which is also new and with no track record or asset base. Hence the claim of assessee that, the company has future potential is totally disproved having regard to several incumbencies attached to its business as on date of call of share premium and is a subject matter of volatility and no valuation what so ever can been given to the subscriber to justify the premium on this basis. The companies which have invested in assessee's alleged share capital are all group concerns the sources of which are also through charge of premium on their own capital issue. Thus the documents furnished with regard to transactions between these closely held companies are not in line with the generally accepted lines for rising further capital and not authentic to be relied upon. 4.3. Thereafter, the AO went on to discuss the provisions of Sec. 68 of the Act and finally treated Rs. 7,53,00,000/- as unexplained cash credit within the meaning of Sec. 68 of the Act. The AO further noticed that the assessee has earned dividend income of Rs. 4,748/- and the same has been cla....
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....ted company. The Ld. CIT(A) was of the belief that the department cannot question the charging of premium by the company. The Ld. CIT(A) further observed that the genuineness and the credit worthiness of the investors could have been examined by the AO which he has not made. Drawing support from the decision of the Hon'ble Supreme Court in the case of Loevely Exports Pvt. Ltd. 216 CTR 195, the Ld. CIT(A) deleted the addition holding that the AO has not justified in adding the increase in share capital alongwith share premium as unexplained cash credit u/s. 68 of the Act. 7. In so far as disallowance u/s. 14A r.w. Rule 8D amounting to Rs. 1,88,012/-, the Ld. CIT(A) observed that the total expenditure claimed by the assessee in the Profit and Loss account was at Rs. 1,24,191/-. The Ld. CIT(A) directed the AO to restrict the disallowance to the extent of claim of expenditure of Rs. 1,24,191/- while upholding the decision of the AO that Rule 8D is applicable from the year under consideration. 8. Aggrieved by this, the Revenue is before us and the assessee is in cross objection in respect of the findings of the Ld. CIT(A) for disallowance u/s. 14A r.w. Rule 8D of the Act. 9. Th....
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....ares as exceeds the fair market value of the shares shall be treated as the income of the assessee but the legislature in its wisdom has made this provision applicable w.e.f 1.4.2013 i.e. on and from A.Y. 2013-14. In so far as the year under consideration is concerned, the transaction has to be considered in the light of the provisions of Sec. 68 of the Act. There is no dispute that the assessee has given details of names and addresses of the share holders, their PAN Nos, the bank details and the confirmatory letters. 11.1. Considering all these undisputed facts, it can be safely concluded that the initial burden of proof as rested upon the assessee has been successfully discharged by the assessee . Even if it is held that excess premium has been charged, it does not become income as it is a capital receipt. The receipt is not in the revenue field. What is to be probed by the AO is whether the identity of the assessee is proved or not. In the case of share capital, if the identity is proved, no addition can be made u/s. 68 of the Act. We draw support from the decision of the Hon'ble Supreme Court in the case of Loevely Exports Pvt. Ltd. 317 ITR 218. We, therefore do not find any....