TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 1779
X X X X Extracts X X X X
X X X X Extracts X X X X
....the business of trading and investment in shares and securities and the assessee company was incorporated on 30.04.1981. The return of income for assessment year 2012-13 was filed by the assessee on 31.3.2013 declaring total income of Rs. Nil. The ld. AO in para 2 of his assessment order in page 1 observed that the details called for from the assessee were duly submitted together with the relevant information and documents. The same were also subjected to cross verification u/s 133(6) of the Act and summons u/s 131 of the Act were also issued where ever necessary. The ld. AO observed that during the year the assessee company has raised capital by issue of shares. From the accounts of the assessee company, he observed that the assessee had made investment of Rs. 20 crores approximately in shares during the year. The primary facts involved herein are that the assessee company purchased shares of another company from the following parties: i) P.S. Communication Pvt. Ltd. ii) Jhajharia Computer Pvt. Ltd. iii) R.L. Laundry Pvt. Ltd.(Formerly Sunshine Washers Pvt. Ltd.) iv) Aryadeep Supplier....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r than cash in lieu of assessee company making investment in shares in some other company. Effectively, the assessee purchased certain shares from the aforesaid six shareholders and instead of paying cash to them, the assessee company issued shares in its own company to those shareholders. Hence the assessee had made investments in shares of another company for which consideration was settled through issuance of its shares to those shareholders. Now the crucial point is whether the provisions of section 68 could be invoked in the instant case for making investment towards share capital. There was no receipt of any sum as provided u/s 68 of the Act in the instant case. It would be pertinent here to refer to the decision of Hon'ble Supreme Court in the case of Shri H.H. Rama Varma vs. CIT reported in 187 ITR 308 (SC) wherein it was held that 'any sum' means 'sum of money'. We find that ld. CIT(A) had deleted the addition by observing as under: "6. On consideration of the AR's submission, especially the portion reproduced above, it is seen that section 68 of I.T. Act, 1961 does not apply to cases of purchase of share assets and allotment of shares by the appellant when purchase and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... transactions are mere book entries. It was contended that the fact that the entries passed through the cash book could not detract from or efface the essential nature of the entries. It was also urged that the entries were passed through the cash book so that the repayment of loans by the said three companies could be established before the Reserve Bank of India. But, according to Shri Bajoria, that does not mean that it amounts to an artifice employed to deceive any authorities, because the transactions showing the amount as received in cash and paid away spontaneously and simultaneously were not actual but only notional. He, however, stated that, as far as the question of section 68 is concerned, the nature of the transactions and the entries clearly show that no cash, in fact, flowed. It was further stressed that the transactions are above board. No outsider is involved. The entries were made in the books of the concerns of the same group. The shares in question were also of the companies of the group. There was no attempt at hiding the transactions. Nor is it the case of any of the parties to the transaction that there was any passing of cash. Every party unequivocally stated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....down the debt-and-capital ratio, i.e., that while being discharged of the debt the said companies also jettisoned their assets, i.e., the shares held by them of equivalent sum without achieving the avowed purpose. Here the Tribunal certainly misdirected itself. The ratio to be reduced is of the loan in relation to the share capital and the reserves. Jettisoning the shares had the desired effect of reducing the borrowed capital. Again, as regards the Tribunal's refusal to take notice of the directions of the Reserve Bank, it is not correct for the Tribunal to hold that the said document was a new evidence in the true sense of the term. The assessee has been consistently pleading before the lower authorities that the entries had to be made in order to bring the companies in conformity with the said direction. Moreover, the direction of the Reserve Bank is a public document within the meaning of section 74 of the Evidence Act, 1872. Documents of a public nature and public authority are generally admissible in evidence subject to the mode of proving them as laid down in sections 76 and 78 of the Evidence Act. In our view, the effect and import of the transactions is that the as....