TaxTMI 
TaxTMI 
2019 (9) TMI 338
X X X X Extracts X X X X
X X X X Extracts X X X X
....or consideration in this appeal is with regard to the correctness of an addition of Rs. 5,09,04,876 made by the Assessing Officer (AO). 3. The aforesaid addition was made by the AO under the following facts and circumstances. The assessee is a company engaged in the business of commercial training of computer gaming, art and animation. In the course of assessment proceedings u/s. 143(3) of the Income-Tax Act, 1961 ["the Act"] for the AY 2015-16, the AO noticed from the audited financials of the assessee that assessee has shown a sum of Rs. 5,09,04,876 under the head 'Other current liability' - "Share application money received (Amount received in excess of authorized capital - Note 1.1)". In the Notes to the Accounts in Note 1.11, it was....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Enterprises Foreign 88,83,919 No PAN 6. The query of the AO was two-fold: (i) How the assessee received share application money in excess of authorized share capital of assessee; & (ii) receipt of share application money is liable to be taxed as income from other sources u/s. 56(2)(viib) of the Act. The provisions of sec.56(2)(viib) of the Act, reads as follows:- Income from other sources. 56. (1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head "Income from other sources", if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E. (2) In particular, and without prej....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (b) "venture capital company", "venture capital fund" and "venture capital undertaking" shall have the meanings respectively assigned to them in clause (a), clause (b) and clause (c) of Explanation to clause (23FB) of section 10;" 7. In reply to the aforesaid query of AO, the assessee pointed out that- (i) the provisions of section 56(2)(viib) applies only to issue of shares. Since the assessee has received only share application money, those provisions are not attracted; (ii) the aforesaid provisions are applicable only when shares are issued for a consideration which exceeds face value in such shares. Since there was no premium charged by the assessee, there is no question of invoking the aforesaid provisions; and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,09,04,876 to tax under the head 'income from other sources' for the following reasons:- Conclusion: 11.1. Considering the following fact that: 11.1.1. Huge amount is received totally amounting to Rs. 5.09 crore is received by the assessee company since financial year 2007-08. 11.1.2. The amount received crossed the limits of Authorized Share Capital on 04/01/2008. 11.1.3. No evidence is produced that the money is kept separately in bank account. 11.1.4. The entire money is utilized in the business. 11.1.5. No effort is made to increase the Authorized Share Capital till the date of this assessment order. 11.2. Further, the only reason quoted by the assessee for not incr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d, the AO or the CIT(A) has not brought on record as to which of the three ingredients necessary for making the addition u/s. 68 of the Act were present in the case of assessee. His next submission was that an addition u/s. 68 can be made in an assessment year relevant to previous year in which there was an entry of cash credit. He pointed out that the undisputed factual position is that during the previous year relevant to AY 2015-16, the assessee received share application money only to the tune of Rs. 35 lakhs and therefore addition of Rs. 5,09,04,876 made by the revenue authorities cannot be sustained. 12. The ld. DR relied on the order of the CIT(Appeals). 13. We have considered the rival submissions. The details of receipt of sh....