TaxTMI 
TaxTMI 
2019 (4) TMI 198
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....ar 2008-2009 may be followed in another appeal. For the sake of disposal of both the appeals, we proceed to decide ITA.No.5629/ Del./2013 for the assessment year 2008-2009 as under. ITA.No.5629/Del./2013 - A.Y. 2008-2009 : 4. The facts of the case are that the assessee is a Company filed return of income declaring loss of Rs. 13,72,942/-. The assessing officer on perusal of the return and details submitted found that during the year under consideration the assessee-company has received share application money of Rs. 7,92,19,406/- on 15th February 2008 from the Holding Company M/s. Palm Technologies (P) Ltd., Mauritius. Thus, assessee was asked to furnish complete details regarding share application money received and prove the creditworthiness of the Investor. In response thereto, the assessee submitted as under : "Evidence of credit worthiness of Palm Technology Ltd., The said company was incorporated in Mauritius on 31.10.2000 under the name of Y2K Ltd. (a) Certified copy of Certificate of Incorporation dated 16.11.2010 is enclosed. (b) Thereafter, the name of the company was changed into Palm Technologies Ltd., in terms of certificate is....
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.... financed through borrowings. During the course of assessment proceedings, a Reference to Government of Mauritius through Director General of Income Tax (Inv.), Delhi was made through F.T.&T.R. Division of CBDT under DTAA. In this Reference, Government of Mauritius was requested to provide the following details : 'Enquiries to be conducted with regards to M/s Palm Technologies Ltd. Mauritius with following specific queries: - a) Source of funds in the remitter banks. b) Copy of account of M/s Palm Technologies Ltd. in the remitter banks from 1.4.2000 to 27.02.2007. c) Equity structure in M/s Palm Technologies Ltd. Mauritius. d) Beneficial owner of M/s Palm Technologies Ltd. Mauritius. e) Sources of funds in M/s Palm Technologies Ltd. Mauritius. f) Copy of all bank accounts of M/s Palm Technologies Ltd. Mauritius in for the period 1.4.2000 to 27.02.2007. g) Copy of Annual Accounts of M/s Palm Technologies Ltd. Mauritius filed before the Mauritian Tax Authorities, if any, starting from financial year 2000-01 till 2006-07. h) Photo copies of documentation filed before the Competent Authorities in....
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....eceding assessment years. The details of investment made by M/s. Palm Technologies (P) Ltd., in Claridges SEZ Private Limited [Now M/s. River Vallery Meadows & Township Pvt., Ltd.,]. The table below gives the details of share capital in assessee company as under : A.Y. Share Capital Share Application Money 2004-05 Rs. 34,60,000/- 2005-06 Rs. 34,60,000/- 2006-07 Rs. 34,60,000/- Rs. 3,25,00,000/- 2007-08 Rs. 17,32,98,000/- Rs. 1,90,00,000/- 2008-09 Rs. 17,32,98,000/- Rs. 9,57,19,406/- 4.6. The assessing officer also noted that investment in the share capital of the assessee-company has been made through the borrowings from two entities controlled by Shri Suresh Nanda that are as under : UBS Trading FZC US $ 3,000,000 Y2K SIL US $ 431, 197 4.7. Thereafter, the assessing officer tried to make a point that as to how there was a close link of Shri Suresh Nanda with UBS Trading FZC and Y2KSIL which were noticed from the documents recovered during the course of search under section 132 of the Income Tax Act on 28th February 2007. The documents are described below : &....
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....  Page 55-69 Annexure No. A-15, seized from the residence of Mr. Suresh Nanda-4, Prithvi Raj Road New Delhi. These contain major operational highlights of UBS Trading FZC since its inception and it has been shown to have earned a profit of USD 1.411 Million - March 2002-30th June, 2003 USD 8.311 Million -1 July 2003-31st December, 2004 USD 4.4311 Million - 1.1.2005 -31.12.2005 USD. 2.884 Million - 1.1.2006 - Nov 2006 These pages also include personal profile of Mr. Suresh Nanda. 4.8. The assessing officer further noted from the above mentioned documents that it is evident that Mr.Suresh Nanda is the owner of M/s. UBS Trading FZC, Dubai. He has been making investments in Mauritius based company to hide the true source of money, till it is finally invested in India. The fact that investment in assessee-company is financed through the borrowings from M/s. UBS Trading FZC, Dubai and Mr.Suresh Nanda close association with the affairs of Claridges SEZ Pvt. Ltd., in India goes to show that it is Mr.Suresh Nanda's money that has been routed through M/s. Palm Technologies (P) Ltd., Mauritius into Indian Company. The assessing off....
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....CIT vs. Nova Promoters & Finlease (P) Ltd., [2012] 342 ITR 169 (Del.) 3. CIT-II vs. MAF Academy (P.) Ltd., [2014] 361 ITR 258 (Del.) 4. CIT vs. N.R. Portfolio (P.) Ltd., [2014] 42 taxmann.com 339 (Del.) 5. CIT, West vs. Durga Prasad More [1971] 82 ITR 540 (SC) 6. Sumati Dayal vs. CIT 1995 AIR (SC) 2109 7. On the other hand, Learned Counsel for the Assessee reiterated the submissions made before the authorities below. He has referred to PB-2, Page-17 which is order of Ld. CIT(A) for the assessment year 2004-2005 in the case of the same assessee, in which, similarly, share application money was received from M/s. Palm Technologies (P) Ltd., Mauritius and Ld. CIT(A) deleted the addition following the decision in the case of M/s. Russian Technology Centre Pvt. Ltd., The Learned Counsel for the Assessee further submitted that the Department has filed appeal before ITAT, Delhi Bench against the order of Ld. CIT(A) for the assessment year 2004-2005 and assessee also filed cross-objection. The Tribunal has quashed the assessment order being barred by limitation vide order dated 28th September 2017. Learned Counsel for the Assessee submitted that if Mr.Suresh Nand....
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....annexure. (a) Two letters dt. 26.08.2008 addressed to RBI (b) Form No. FC-GPR (c) Compliance certificate dated 26.08.2008 issued by the Company Secretary. (d) FIRC No.098902 dt. 26.02.2008 issued by the IDBI Bank. (e) Compliance certificate dated 25.08.2008 issued by Chartered Accountant. (f) Valuation certificate dt. 05.08.2008 issued by the Chartered Accountant along with Annexure-A (g) Copy of Annexure-II, III forming part of Form No.FCGPR. 7.1. The assessee, therefore, proved source of the source as well which is not required by Law. Learned Counsel for the Assessee referred to PB-2-52 which is order of ITAT, Delhi G-Bench in the case of Mr Suresh Nanda in ITA.Nos.2237 & 3718, 3431 & 4641/Del./2013 dated 11th April 2014, in which, similar addition has been deleted in the hands of Shri Suresh Nanda. Para-70 of the order is reproduced as under : "70. Ground No. 4 relates to addition made on protective basis. We find that Ld CIT(A) has clearly held that share capital was subscribed Palm Technologies Ltd. which is a separate entity. Ld. CIT(A) held by a clear finding that the capital did....
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....he case of CIT, Central-1 vs., M/s. Russian Technology Centre (P) Ltd., in ITA.Nos.547, 549 & 555 of 2013, Dated 15th December 2016, in which, similar documents have been considered and Departmental Appeal has been dismissed. The findings of the Hon'ble Delhi High Court in Paras 12 to 14 are reproduced as under : "12. The preceding enumeration of the circumstances of the case show that the assessee had furnished all relevant data before the AO and the CIT(A), which, however, were not inquired into by the AO. Instead he obdurately adhered to his first impression and/or initial understanding that the entire transaction was neither creditworthy nor genuine. The assessee relied upon the documents to prove that the monies had been received through banking channels from its principal and other related companies: it had submitted the FIPB Approval dated 10.12.2005 authorizing the assessee company to raise capita! unto '600crores. copy of certificates of incorporation of share holders, copy of bank statement copy of Form 2 filed before ROC, copies of Certificates of (i) Incorporation of RTCHL, (ii) Incumbency of RTCHL, (iii) Good Standing of RTCHL. (iv) Director Certi....
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.... reasoned one to which we do not find reasons to interfere with. The same is upheld. The ground No. 2 is accordingly rejected." 7.4. Learned Counsel for the Assessee further submitted that the CBDT Circular says "when the money come from foreign country through banking channel, it should be considered." He has submitted that Amendment under section 68 is applicable from the year 2013 and source of the source is to be proved in the case of resident company only. However, the Investor M/s. Palm Technologies Pvt. Ltd., Mauritius is NRI, therefore, the amended provision would not apply to the case of assessee. Learned Counsel for the Assessee, therefore, submitted that the issue is covered in favour of the assessee by the order of ITAT, Delhi Bench in the case of assessee as well as in the case of Mr Suresh Nanda and M/s. Russian Technologies Pvt. Ltd., (supra). Apart from the above, the Learned Counsel for the Assessee also relied upon the following decisions : 1. Commissioner vs. Orissa Corporation Ltd. reported in (1986) 159 ITR 78 (SC) 2. CIT vs. M/s Pondy Metal and Rolling Mill in ITA No. 788/2006 3. CIT vs. Diamond Products Ltd. [2009] 177 T....
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....iled by the assessee-company have not been disputed and doubted by the Revenue Authorities. Thus, the assessee has been able to prove the Identity of the Investor, its creditworthiness and genuineness of the transaction in the matter. The assessing officer also noted in the assessment order that even in earlier years the assessee-company has received the share application money from the same Investor. The assessing officer made similar addition against the assessee-company in assessment year 2004 2005 and the Ld. CIT(A) deleted the addition. The order of the Ld. CIT(A) have been confirmed by the ITAT, by dismissing the Departmental Appeal, though, on the ground that the assessment order is time barred. The finding of fact recorded by the Ld. CIT(A), have been confirmed by the Tribunal by dismissing the Departmental Appeal. No distinguishing fact or evidence have been pointed-out by Ld. D.R. as to how case of Revenue is different from earlier years. In assessment year under appeal, based on the same facts, the assessing officer made certain inquiries with regard to source of the money and sought information from the Government of Mauritius, who have supplied certified copies of the ....
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....ave been correctly appreciated and accepted by the Ld. CIT(A) for the purpose of deleting the addition. No addition could be made merely on presumption as has been done in the present case. Since the similar addition have been deleted by the Ld. CIT(A) in assessment year 2004- 2005 and the Departmental Appeal have been dismissed by the Tribunal and similar addition have been deleted in the case of Mr. Suresh Nanda by ITAT on substantive basis and the Order is confirmed by the Hon'ble Delhi High Court, therefore, the issue is covered in favour of the assessee by the Order of the Tribunal in its own case as well as in the case of Mr. Suresh Nanda (supra). Therefore, there is no justification to make the addition against the assessee-company. No cash was found routed by any person related to this transaction. The assessing officer cannot ask the assessee-company to prove source of the source. We, rely upon the Judgment of the Hon'ble Gujarat High Court in the case of Rohini Builders 256 ITR 360 (Guj.), and Judgment of Hon'ble Delhi High Court in the case of Dwarakadheesh Investment Pvt. Ltd., 330 ITR 298 (Del.) and Judgment of Hon'ble Allahabad High Court in the case of Zafar Ahmed....