TaxTMI 
TaxTMI 
2018 (11) TMI 1131
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....y to the other appeal in I.T.A. No. 2270/kol/2016 also in view of the identical facts except with variance in figures. 2. The only effective issue to be decided in this appeal (i.e. I.T.A. No. 2273/Kol/2016) is as to whether the ld. CIT(A) was justified in deleting the addition made towards share premium in the sum of Rs. 2,88,92,100/-, in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee company raised share capital and share premium during the year under appeal. The ld. AO observed that since there was no substantial business activity carried on by the assessee, the assessee company cannot command huge share premium. Accordingly he sought to verify the veracity of the share capital and share premium raised by the assessee. The assessee submitted that it is engaged in the business of trading and investment in shares of limited companies. The assessee raised share capital and share premium from the following share holders: Atlantic Merchants Pvt. Ltd. Rs. 3,50,000/- Ayush Vinimay Pvt. Ltd. Rs. 1,57,00,000/- Matarani Marketing Pvt. Ltd. Rs. 20,00,000/- Positive Properties Pvt. Ltd. Rs. 80,00,000/- Skylight....
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.... assessee also submitted each of the assessee subscriber company was regularly assessed to income tax and the payments towards share capital and share premium amounts were made by them to the assessee through their respective bank accounts. It was also submitted that the notice issued u/s 133(6) of the Act to the share subscribers independently were duly complied with by them before the ld. AO. Even the details called for u/s 131 of the Act were also complied with by the assessee. It was also submitted that from the perusal of the bank statement, it could be seen that there were no cash deposits made prior to the issue of cheques to the assessee company. It was pleaded that apart from the aforesaid documents, confirmations together with explanation with regard to immediate source of payment of share application monies were also furnished before the ld. AO. It was pleaded that the assessee also placed on record the following details of investible funds available with the share subscriber companies to make the investment in the assessee company. It was submitted that from the aforesaid documents and evidences, the identity and creditworthiness of the share subscribers stand conclu....
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....und" and "venture capital undertaking" shall have the meanings respectively assigned to them in clause (a), clause (b) and clause (c) of Explanation to clause (23FB) of section 10]; It was pleaded that the aforesaid provisions cannot be made applicable for the year under appeal. Accordingly, it was argued that the issuance of shares of premium cannot be brought to tax under any section of the Income Tax Act up to assessment year 2012-13. Submissions were also made with specific reference to a proviso inserted by the Finance Act, 2012 w.e.f. 01.04.2013 in section 68 which reads as under: "[Provided that where the assessee is a company ( not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless - (a) The person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) Such explanation in the opinion of ....
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....ness of the transactions in respect of receipt of share capital in the sum of Rs. 57,900/-. While that is so, how can the same be doubted for the purpose of receipt of share premium alone. Accordingly he deleted the addition made on account of share premium to the tune of Rs. 2,88,92,100 /- for the year under appeal. Aggrieved the revenue is in appeal before us. 3.3. We have heard the rival submissions. The fact stated hereinabove remain undisputed before us by either of the parties and hence the same are not reiterated for the sake of brevity. At the outset, we find that the assessee had received share capital of Rs. 57,900/- from six shareholders and Rs. 2,88,92,100/- from the very same shareholders towards share premium. The share capital received by the assessee has been duly accepted by the ld. AO within the ken of section 68 of the Act. However, share premium component has been doubted by the ld. AO. We find that the assessee in the instant case had duly complied with by furnishing the complete details of share subscribers to prove their identity, genuineness of the transaction and creditworthiness of share subscribers beyond doubt. These are duly supported by the document....
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....ase of Major Metals Ltd. vs. Union of India [2013] 359 ITR 450 (Bom)? B. Whether on the facts and circumstances of the case and in law, the Tribunal as well as the Commissioner of Income Tax (Appeals) was right in deleting addition made by the Assessing Officer, by holding that the share premium receipt is capital in nature?" The Hon'ble Court held as under: Regarding Question A: (a) The issue raised by the Revenue in this question is to bring to tax the share premium received under section 68 of the Act. We find that the issue of bringing the share premium to tax under section 68 of the Act was not an issue which was urged by the appellant Revenue before the Tribunal. The only issue which was urged before the Tribunal as recorded in para 11 of the impugned order is the addition of share capital and share application money in the hands of the assessee as income under section 28(iv) of the Act. We find that the Commissioner of Income-tax (Appeals) did consider the issue of applicability of section 68 of the Act and concluded that it does not apply. The Revenue seems to have accepted the same and did not urge this issue before the Tribunal. Mr. Bhoot, le....
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.... given by the authorities that shareholder/share applicants were unidentifiable or bogus. (e) In the above view Question No. A is not being entertained in view of the decision in Tata Chemical Ltd. (supra). Accordingly, the question (A) is not entertained. Regarding Question B : (a) We find that the impugned order of the Tribunal upheld the view of the Commissioner of Income-tax (Appeals) to hold that share premium is capital receipt and therefore, cannot be taxed as income. This conclusion was reached by the impugned order following the decision of this court in Vodafone India Services (P.) Ltd. (supra) and of the apex court in G. S. Homes and Hotel (P.) Ltd. (supra). In both the above cases the court has held that the amount received on issue of share capital including premium are on capital account and cannot be considered to be income. (b) It is further pertinent to note that the definition of income as provided under section 2(24) of the Act at the relevant time did not define as income any consideration received for issue of share in excess of its fair market value. This came into the statute only with effect from April 1, 2013 and thus, would have,....