AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 528
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....AO observed that since there was no substantial business activity except profit on sale of investment 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 investment in unquoted equity shares of companies and properties. The assessee raised share capital and share premium from 18 corporate entities. The assessee company issued 220000 equity shares of Rs. 10 each at a premium of Rs. 90 per share totaling to Rs. 2,20,00,000/-. Out of this, total sum of Rs. 2,20,00,000/- a sum of Rs. 22,00,000/- was attributed towards share capital and remaining sum of Rs. 1,98,00,000/- was attributed towards share premium. The ld AO admitted in his order that in support of share subscriptions received , the assessee company had furnished documents supporting the payment of share subscription amounts by share subscribers. Notice u/s 133(6) of the Act were issued to all the shareholders which were duly replied by them directly before the ld. AO. The ld. AO observed that reply sent by the share holders were....
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....fore the ld AO. The director of the assessee company appeared before the ld AO for giving his deposition along with his identity proof, copy of bank statement of the assessee company supported by the bank ledger and share subscribers' ledger but the ld AO did not gave him an opportunity to present his case before him. Later the director of the assessee company furnished the explanation and the details called for in summons u/s 131 of the Act in writing as directed by the ld AO. It was pleaded that apart from the aforesaid documents, confirmations together with explanation with regard to immediate sources of payment of share premium were also furnished before the ld. AO. It was pleaded that the assessee also placed on record the fact that the investor companies had sufficient investible funds to make investment in the assessee company thereby proving their creditworthiness beyond doubt. It was submitted that from the aforesaid documents and evidences, the identity and creditworthiness of the share subscribers stand conclusively proved together with the genuineness of the transaction. It was submitted that the share subscribers had even established the source of source of funds in th....
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....b of share capital and share premium. The Ld. CIT(A) gave a categorical finding that each of the share subscribers are regularly assessed to income tax and that the investments made by each of them were duly and fully reflected in their audited books of accounts as well as in their income tax returns which are part of the paper book. The notices u/s 133(6) of the Act issued by the ld. AO to each of the share subscribers also stood duly complied with. He held that each of the share applicants maintained bank statement , from where, it is evident that all the transactions were routed through proper banking channels and duly reflected in their respective books of accounts which proves the genuineness of the transaction beyond doubt. He also observed that all the share applicants explained their respective source of funds in their replies to 133(6) notice directly before the ld. AO and that the net worth of each of the share subscribers are far higher than the amount of investments made by them in the assessee company, which clearly proved the creditworthiness of the share subscribers to make investments in the assessee company. He held that the very fact that notices u/s 133(6) were d....
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....nt received from the very same shareholders as bogus. We held that all the three necessary ingredients of section 68 had been duly complied with by the assessee with proper documentary evidences. We find that notices issued u/s 133(6) have been duly complied with. We find that the director of the assessee company was present before the ld AO and the assessee had submitted that the ld AO had informed them to file the necessary details called for in the summons u/s 131 of the Act in his office through proper mode in tapal, which was accordingly done by him. It was also submitted that the director of the assessee company offered himself for deposition which was refused by the ld AO. This fact was not controverted by the revenue before us. In our considered opinion, for this reason alone, there cannot be any addition u/s 68 of the Act in the facts of the instant case. We find that the decision of Hon'ble Delhi High Court in the case of Novo Promoters and Finelease Pvt. Ltd. reported in 342 ITR 169 (Del) vehemently relied upon by the ld. DR before us, is not applicable in the instant case, as in the facts before the Hon'ble Delhi High Court, the notices u/s 133(6) have not been duly com....
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....mined by the Tribunal. Therefore, no occasion to consider the question as prayed for arises. (c) In any case, we may point out that the amendment to section 68 of the Act by the addition of proviso thereto took place with effect from April 1, 2013. Therefore, it is not applicable for the subject assessment year 2012-13. So for as the pre-amended section 68 of the Act is concerned, the same cannot be invoked in this case, as evidence was led by the respondents-assessees before the Assessing Officer with regard to identity, capacity of the investor as well as the genuineness of the investment. Therefore, admittedly, the Assessing Officer did not invoke section 68 of the Act to bring the share premium to tax. Similarly, the Commissioner of Income-tax (Appeals) on consideration of facts, found that section 68 of the Act cannot be invoked. In view of the above, it is likely that the Revenue may have taken an informed decision not to urge the issue of section 68 of the Act before the Tribunal. (d) We may also point out that decision of this court in Major Metals Ltd. v. Union of India [2012] 19 taxmann.com 176/207 Taxman 185/[2013] 359 ITR 450 Bom. proceeded on its own facts to uphol....