TaxTMI 
TaxTMI 
2019 (3) TMI 556
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....s of manufacture and sale of cement, filed its return of income for the AY. 2009-10 on 30-09-2009 admitting income of Rs. 2,91,01,250/- under the head 'Income from Other Sources' being interest earned on Fixed Deposits. During the assessment proceedings u/s. 143(3) of the Act, the Assessing Officer observed that the assessee has claimed to have received a total sum of Rs. 70,32,63,855/- which included share capital of Rs. 48,50,080/- and share premium of Rs. 69,84,11,520/- from three companies i.e., Dalmia Cements Ltd., New Delhi, India Cements Ltd., Chennai and Suguni Constructions Pvt. Ltd., Hyderabad. He examined the issue in detail and taking note of the fact that the assesseecompany had no business operations, huge funds were infused t....
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....he amount received towards share application money from M/s. India Cement Ltd., as benefit accrued to the assessee". Thus, a show cause notice u/s. 263 of the Act was issued to the assessee. In response to the same, assessee appeared and filed written submissions through its AR. However, CIT was not satisfied with the contentions of assessee and held that the Assessing Officer having recorded that the investments made by India Cements Ltd., are not in the nature of capital investment but are the payments made for certain benefits, has erred in not bringing the full amount to tax on receipt basis. He held that the book entry of treating certain portion as share application money and certain portion as share capital has no bearing on the re....
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....res to income of assessee is one possible view of the matter and is not unsustainable in law and has been reached after conducting extensive enquiries; 6. Because, insofar as receipt of share application money is concerned, there is no incorrect assumption of facts by the Ld. AO; 7. Because, section 263 does not visualize substitution of the judgment of the Ld. CIT for that of the Ld. AO who passed the order u/s 143(3) when the order is not unsustainable in law; 8. Because, when the notice that was served on assessee by the Ld. CIT refers to addition u/s 28(iv), it is not open to the Ld. CIT to pass an order directing the Ld. AO to add the amount under "appropriate head of income" without determining the applicable section. The ....
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....irections. Therefore, according to her, the assessment order is clearly erroneous insofar as it is prejudicial to the interest of Revenue and the order u/s. 263 should be sustained. 6. Having regard to the rival contentions and the detailed written submissions filed by them and also the material on record, we find that the issues in the assessment order u/s. 143(3) of the Act for the AY. 2009-10 had come up for adjudication before the Co-ordinate Bench of the Tribunal vide order dt. 10-08-2018, wherein the Tribunal had remitted the matter to the file of Assessing Officer with the following directions: "9.2 We notice that AO has invoked section 28(iv) to convert the capital receipt as revenue. This section refers to any benefit/perquisite....
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....d with the portfolio of investment. We also noticed that in the subsequent submission, AO found that these shares were sold without having any say by the investors. All the negotiations were made by the directors and the proceeds were also reinvested in the assessee company as loans etc. 9.3 Again, we also cannot presume or apply test of human probabilities, we are dealing with the business transaction, it has to be based on cogent material. Considering the whole situation, in our considered view, the AO/CIT(A) have restricted themselves by stopping the investigation based on circumstantial evidence and applying test of human probabilities. In order to lift the corporate veil for the purpose of determining whether any benefit is passed o....