TaxTMI 
TaxTMI 
2018 (4) TMI 435
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....essment u/s. 143(3) r. w. s 147 of the Act on 09/01/ 2015, determining the income of the assessee at Rs. 5. 94 crores. 2. Solitary Ground of appeal is about deleting the addition made on account of premium received by the assessee. During the re-assessment proceedings, the AO observed that the assessee had received premium money amounting to Rs. 2. 97 crores as share application money. He directed the assessee to submit details in that regard and to explain as to how the share premium was determined, that it had issued 3000 equity shares of face value of 100 each at the premium of Rs. 9, 900/- that it received share application money amounting to Rs. 2. 97 crores. He observed that the book value as on 31/03/11 was Rs. 1000/- and premium ....
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.... per the report, value of each equity share worked out to Rs. 74, 136/- as on 31/03/2010 . He referred to the order of the Tribunal delivered in the case of Green Infra ltd. ITA/7762/Mum/2012 dated 23/8/13 and held that addition made by AO were not sustainable. 4. The Departmental Representative(DR)supported the order of the AO and stated that genuineness of the transaction was not proved, that provisions of section 68 of the Act talked about nature of the transaction, that the premiums charged by the assessee was abnormal, that the AO had rightly made the addition to the total income of the assessee. The Authorised Representative(AR)stated that the assessee had obtained valution report from an authorised person, that the shares were pur....
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....nd the material evidences brought on record in the form of Paper book. The entire dispute revolves around the charging of share premium of Rs. 490/- per share on a book value of Rs. 10/- each. This dispute is more so because of the fact that the assessee company was incorporated during the year under consideration. Therefore, according to the revenue authorities, it is beyond any logical reasoning that a company with zero balance sheet could garner Rs. 490/-per share premium from its subscribers. Such transaction may raise eyebrows but considering the subscribers to the assessee company, the test for the genuineness of the transaction goes into oblivion. It is an undisputed fact admitted by the Revenue authorities that 10, 19, 000 equity sh....
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....on should also be judged within the parameters of the Sec. 68 of the Act. The counsel for the assessee strongly objected to this but in the interest of justice and fair play, we allowed the DR to raise this issue. For this, we draw support from the decision of the Hon'ble Supreme Court in the case of Kapurchand Shrimal v. CIT [1981] 131 ITR 451/7 Taxman 6, wherein the Hon'ble Supreme Court has laid down the ratio that "It is well known that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afres....
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.... 11. 2 Now the only point of dispute is the nature of transaction which according to the Revenue authorities is beyond any logical sense and which is the charging of share premium at the rate of Rs. 490/- per share. According to the Revenue authorities this is a sham transaction . So far till now, we have seen and examined the sources of funds. Let us see the application of funds and who are the ultimate beneficiaries of this share premium which may clear the clouds over the transaction alleged to be a sham. We find that the assessee company has invested funds in its three subsidiary companies namely (i) Green Infra Corporate Wind Ltd. (ii) Green Infra Wind Assets Ltd and (iii) Green Infra Wind Farms Ltd. , wherein the assessee is holdi....
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.... addition of Rs. 47, 97, 10, 000/-. Ground No. 2 & 3 are accordingly allowed. " The Hon'ble Bombay High court, confirming the order of the Tribunal, held as under: "For the assessment year 2011-12, the Department raised an issue before the Appellate Tribunal that the share premium of the assessee had to be charged to tax under section 68 of the Income-tax Act, 1961. The Appellate Tribunal examined the applicability of section 68 on the parameters of the identity of the subscribers to the share capital, genuineness of the transaction and the capacity of the subscribers to the share capital. It found that the identity of the subscribers were confirmed by the issuance of notices to them under section 133(6) by the Assessing O....