2018 (8) TMI 866

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....al being I.T.A.No.871/Mds/2016 filed by the appellant assessee, M/s.V.R.Global Energy Private Limited, against an order dated 25.02.2016 passed by the Commissioner of Income Tax (Appeals) 11, Chennai. 2. The appellant assessee is a Company carrying on business of manufacture of Wind Electric Generators and parts of Wind Electric Generators. 3. The appellant assessee filed its return of income for the assessment year 2012-13 on 30.9.2012 declaring income of Rs. 40,46,570/-. 4. In the balance sheet, the assessee showed Rs. 90,18,00,000/- as share premium as against Nil in the immediately previous year ending on 31.3.2011. The assessee had also introduced share capital of Rs. 16,70,000/-. 5. It appears that during the aforesaid ass....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....yable by the appellant assessee to M/s.Shriram Auto Finance to Smt. Vathsala Ranganathan. Consequently, in the books of accounts of the appellant assessee, the said amount was shown as due to Smt. Vathsala Ranganathan. 10. On retirement of Smt. Vathsala Ranganathan from M/s.Shriram Auto Finance, in all, a sum of Rs. 65.95 Crores became payable by the appellant assessee to Smt. Vathsala Ranganathan. The appellant, therefore, decided to allot its shares to Smt. Vathsala Ranganathan in settlement of the amount due to her. The appellant assessee allotted 1,19,000 shares with face value of Rs. 10/- at a premium of Rs. 5400/- and, therefore, the allotment of shares by the appellant to Smt.Vathsala Ranganathan was in settlement of the pre-exist....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 143(3) of the said Act on 31.3.2015 determining the total income of the appellant assessee for the assessment year 2012-13 at Rs. 91,06,12,134/-. 15. The Assessing Officer, vide the assessment order dated 31.3.2015, added the share premium and the share capital for the fresh allotment of 167000 shares and treated the same as unexplained cash credits under Section 68 of the said Act, while holding that the method of valuation was not acceptable and that the share premium of Rs. 5400/- was unreasonable. The Assessing officer held that the assignment agreement furnished by the appellant assessee was only a purported agreement without any substance and the transaction was a mere book adjustment. 16. Aggrieved by the order of assessment, ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....eal raising, inter alia, the following questions of law: (i) Whether the learned Tribunal erred in confirming the valuation of shares allotted in settlement of the pre-existing liability taxable as unexplained cash credit? (ii) Whether the learned Tribunal erred in holding that value of shares allotted to individuals would amount to unexplained cash credit? 19. The learned counsel for the appellant assessee contended that shares were allotted to Smt. Vathasala Ranganathan and others in settlement of pre-existing liability and, therefore, it will not amount to unexplained cash credit. 20. Counsel argued, and rightly, that when there was no cash involved in the transaction of allotment of shares, provisions of Section ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....on of law. 25. However, the second question is answered in favour of the assessee and against the Revenue by the judgment of the Division Bench of this Court in Commissioner of Income Tax v. Electro Polychem Ltd., supra, and Commissioner of Income Tax v. Steller Investment Ltd., supra. 26. This case is distinguishable from the case of C.I.T. v. Lovely Expos Pvt. Ltd., reported in 216 CTR 195, in that the transactions were only book transactions, and there was no cash receipt. The decisions in (i) Commissioner of Income Tax v. Focus Exports Pvt. Ltd., reported in (2014) 90 CCH 0105 (Delhi); (ii) Commissioner of Income Tax v. Globus Securities & Finance Pvt. Ltd., reported in (2014) 264 CTR 481 (Delhi); (iii) Onassis Axles Private Limit....