TaxTMI 
TaxTMI 
2019 (6) TMI 1120
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.... explanation, it was stated, that the assessee issued shares in FY 2011-12 (AY 2012-13) and received the consideration for such shares in FY 2011- 12 (AY 2012-13). Further, it was contended the shares were actually allotted in FY 2012-13 (AY 2013-14 present year) and applicability of provision u/s 56(2)(viib) does not arise as it was came into force in AY 2013-14 only for the reason that the assessee received consideration for such shares in AY 2012-13 but not in the relevant assessment year under consideration. The AO did not accept the submissions as made by the assessee and held the consideration for shares is to be treated as it is received in the year of allotment of shares i.e. present AY and added an amount of Rs. 61,69,200/- [(100-41.38) X 10,60,000] to the total income of the assessee. 4. In the first appellate proceedings, the assessee reiterated the same submissions as made in the assessment proceedings. The CIT(A) considering the same held that provision u/s 56(2)(viib) is not applicable to the present AY under consideration and deleted the addition made by the AO by giving reasons as under:- 4.2. "I have considered the issue with reference to the assessment order as....
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....apportionment between share capital and share premium is crystallised and fully understood. This happens only when the shares are fully allotted. 6. The Ld.DR created a situation that what of the situation where share application money is returned instead of shares being allotted? He answered, in such a case, since such probability exists, then no AO will apply this section and make any addition and the time of receipt of share application money, but will wait for the transaction to be completed by way of allotment of said shares, i.e. the impossible situation. 7. Further, he contended the final account as seen from the assessee's Paper Book at page 7 together with Page No.37, it is seen in the preceding FY 2011-12 (AY 20112-13), the assessee already issued Rs. 70 lacs worth of share capital out of its authorized share capital of Rs. 1 crore. In addition to this, it had received another Rs. 70 lacs as share application money. In FY under question i.e. AY 2013-14, fresh share capital issued during the year was Rs. 10,60,000/- [1,06,000 shares @ Rs. 10 per share]. In addition to this, Rs. 95,40,000/- was charged as share premium and added to the existing reserves. The total consid....
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....s justified. 10. Further, the Ld.DR, Sh.C.J.Singh submits that in page No.2 of Paper Book, assessee agreed the share application money of Rs. 70 lacs was received in the preceding FY 2011-12 (AY 2012-13) and another Rs. 36 lacs both of consideration money was received by the assessee in FY 2012-13 (AY 2013-14). Next, in its Paper Book at page No.5, the assessee argued that section 56(2)(viib) is in reference to year of receipt which in this case of FY 2011-12 [AY-2012-13] prior to the said section come into effect. 11. Further, he drew our attention to the provision of section 56(2)(viib) of the Act which is reproduced herein below:- "[Sec. 56(2) (viib) where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares: Provided that this clause shall not apply where the consideration for issue of shares is received- (i) by a venture capital undertaking from a venture capital company or a venture capital fund; ....
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....find no infirmity in the order of CIT(A) and it is justified. Thus, Ground No.1 raised by the Revenue is dismissed. 14. Ground No.2 is relating to question the action of CIT(A) in deleting the addition made by invoking section 40(a)(ia) of the Act for the violation of provision u/s 194C of the Act. 15. Heard both parties and perused material available on record. According to AO, the assessee debited an amount of Rs. 36,97,339/- on account of shipping and clearing expenses in the P&L A/c. He observed on an examination of details filed by the assessee, the TDS u/s 194C of the Act is required to be deducted on the said expenses. The AO asked the assessee why disallowance u/s 40(a)(ia) should not be made. In response to said objection, the assessee submitted the above said expenses were paid to various clearing and forwarding agents, Kundu Mover Agency, U.P.Golden Carrier, D.K.Shipping Agency, Shree Balaji Shipping & Clearing Agency, Loknath Shipping & Clearing Agency, Bhomick Agency/Inc and Khanna & Co. Clearing Agency Pvt.Ltd. etc. on account of customs duty, CPT charges, octri charges, freight charges, insurance charges, survey charges, loading & unloading charges, transport char....