2019 (2) TMI 1773
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....al provisions of the Act and book profit of Rs. 43,700/- u/s.115JB of the Act. During the year under consideration, the assessee issued 2,27,500 shares at a face value of Rs. 10/- at premium of Rs. 90 per share and accordingly, received share capital of Rs. 22,75,000/- and share premium of Rs. 2,04,75,000/-. The total sum received from the following 11 share applicants were to the tune of Rs. 2,27,50,000:- Sr. No. Name of the Party Amount Involved (In Rs.) 1. M/s. Kirti Goods Pvt Ltd., 10,00,000/- 2. M/s. Kanyu Commercial Pvt. Ltd., 18,50,000/- 3. M/s. Anupriya Vinimay Pvt.Ltd., 30,00,000/- 4. M/s. VKJ Tresim Pvt. Ltd., 16,00,000/- 5. M/s. Nilima Goods Pvt. Ltd., 10,00,000/- 6. M/s. Muktanand Commercial Pvt. Ltd., 10,00,000/- 7. M/s. Mahavir Retail Pvt. Ltd., 2,00,000/- 8. M/s. Aditi Trade Finance Pvt. Ltd., 12,00,000/- 9. M/s. Swadist Sweets Pvt. Ltd., 9,00,000/- 10 M/s. Sitara Fincom Pvt. Ltd., 45,00,000/- 11. M/s. Padmavati Credit Capital Pvt. Ltd., 65,00,000/- 3.1. The Ld. AO sought to examine the veracity of the receipt of the aforesaid share capital and share premium and accordingly issued notices u/s.133(6) of the Act to all the 11 shar....
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....ing to Rs. 84,50,000/-, from which the nature and source of credit thereof stands duly proved within the meaning of Section 68 of the Act. 3.5. The assessee admittedly submitted copies of share application, bank statements of share applicants, balance sheets, PAN, ITR acknowledgements, return of allotment filed with Registrar of Companies and bank statements of assessee. The assessee submitted that the Ld. AO had not drawn any adverse inference on the details submitted in the form of various documentary evidences and merely proceeded to treat the same as unexplained cash credit on the ground that notice u/s.133(6) of the Act could not be served on three applicants and no replies were received from two applicants on whom u/s.133(6) was served. The assessee submitted from the aforesaid details that it could be easily inferred that all the five share applicants are regularly assessed to income tax and hence their identity is duly proved. All the transactions were routed through regular banking channels and that the genuineness of the transactions are also proved. All the share applicants had advanced monies to the assessee company out of their available bank funds which go to prove t....
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....ut owning land, building or factory. The assessee further submitted that the receipt of share application money, share capital and share premium is a capital receipt and placed reliance on the Hon'ble Delhi High Court in that regard in the case of CIT vs. Sophia Finance Ltd., reported in 205 ITR 98. It was specifically pleaded that the receipt of share premium is only a capital receipt and the provisions of Section 78 of the Companies Act only suggests how such share premium could be utilised / adjusted. Accordingly, the reliance placed by the Ld. AO of provisions of Section 78(2) of the Companies Act erroneously for justifying the additions made under the Income Tax Act is totally unwarranted. The assessee with regard to violation of shares for justification of the share premium submitted that there is no provision either in the Companies Act or in the Income Tax Act mandating the same which is relevant to the year under consideration. As has already been stated, the management of the assessee company had derived share premium amount after considering the factors like future prospects and the profitability from development rights acquired from M/s.Nigo's Properties Ltd. It was als....
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....TA No.49/2018 dated 17/01/2019 wherein the decision was rendered in favour of the revenue. 5.2. We are in agreement with the preliminary argument of the Ld. DR that the nature and source of credit appeared in the books of the assessee are to be proved by the assessee, to that extent the onus is indeed on the assessee. In the instant case, the assessee by furnishing the name, address of the shareholders, PAN, ITR acknowledgements, copies of share applications, balance sheets, relevant pages of the bank statements had duly explained the nature of credit received in the books of the assessee as share capital and share premium and from the bank statements of the respective shareholders, it could be seen that those shareholders have sufficient bank balance on their own to make payments to the assessee. Hence, the source of credit is also proved by the assessee in the instant case. Hence, it could be safely concluded that the nature and source of credit within the meaning of Section 68 of the Act has been duly complied with by the assessee together with the three necessary ingredients of Section 68 of the Act. With regard to the decision relied upon by the Ld. DR on Hon'ble Delhi High C....
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....ed before the Ld. AO thereby proving their identity. We find that the Hon'ble Jurisdictional High Court in the case of CIT vs. Gagandeep Infrastructure Pvt. Ltd., in ITA No.1613/Mum/2014 dated 20/03/2017 had held as under:- "1. This Appeal under Section 260A of the Income Tax Act, 1961 (the Act) challenges the order dated 23rd April, 2014 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order is in respect of Assessment Year 2008-09. 2. Mr. Suresh Kumar, the learned counsel appearing for the Revenue urges the following reframed questions of law for our consideration:- "i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the addition of Rs. 7,53,50,000/- under Section 68 of the Act being share capital/share premium received during the year when the Assessing Officer held the same as unexplained cash credit? (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in restricting the disallowance under Section 14A of the Act only to the amount of expenditure claimed by the assessee in the absence of any such restriction under Section 14A and....
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....ry fact that the detailed names, addresses of the shareholders, PAN numbers, bank details and confirmatory letters were filed. The genuineness of the transaction was established by filing a copy of share application form, the form filed with the Registrar of Companies and as also bank details of the shareholders and their confirmations which would indicate both the genuineness as also the capacity of the shareholders to subscribe to the shares. Further the Tribunal while upholding the finding of CIT(A) also that the amount received on issue of share capital alongwith the premium received thereon, would be on capital receipt and not in the revenue field. Further reliance was also placed upon the decision of Apex Court in Lovely Exports (P) Ltd. (supra) to uphold the finding of the CIT(A) and dismissing the Revenue's appeal. (d) Mr. Suresh Kumar, the learned counsel appearing for the Revenue contends that proviso to Section 68 of the Act which was introduced with effect from 1st April, 2013 would apply in the facts of the present case even for A.Y. 200809. The basis of the above submission is that the de hors the proviso also the requirements as set out therein would have to b....
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....come Tax Act Rules would permit the Revenue to disallow expenditure not claimed i.e. much larger than the expenditure / debited in earning its total income. The Counsel inform us that there is no decision on this issue of any Court available and it would affect a large number of cases where similar issues arise. Therefore, this issue would require an early determination. In the above view, at the request of the Counsel, the appeal is kept for hearing on 17th April, 2017 at 3.00 p.m., subject to overnight part-heard. 5. Registry is directed to communicate a copy of this order to the Tribunal. This would enable the Tribunal to keep the papers and proceedings relating to the present appeal available, to be produced when sought for by the Court. 5.3. In the aforesaid order, the Hon'ble Jurisdictional High Court had also categorically said that the proviso to Section 68 brought in by the Finance Act 2012 in the statute is applicable only from A.Y.2013-14 onwards and not earlier. We find that the Ld. CIT(A) apart from adjudicating the issue on facts had also placed reliance on the decisions of Hon'ble Jurisdictional High court as under:- 6.24. "In the case of CIT vs. Goa Sponge a....
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....nd Manager of IDFC Ltd. Moreover, the contributions in IDFC Private Equity Fund Hare all by public sector undertakings. c) Mr. Chhotaray the learned counsel for the Revenue states that the impugned order itself holds that share premium of Rs. 490 per share defies all commercial prudence. Therefore it has to be considered to be cash credit. We find that the Tribunal has examined the case of the Revenue on the parameters of s. 68 of the Act and found on facts that it is not so hit. Therefore, s. 68 of the Act cannot be invoked. The Revenue has not been able to show in any manner the factual finding recorded by the Tribunal is perverse in any manner. (d) Thus, question No. (ii) as formulated does not give rise to any substantial question of law and thus not entertained." 5.4. The Ld. AR also stated that all the share applicant companies are still active even today and had even filed their balance sheets for 31/03/2018. The Ld. AR also drew our attention to pages 23 to 36 of the paper book containing copy of agreement dated 22/02/2011 entered into by the assessee and M/s. Nigo's Properties Ltd., wherein the assessee had informed Nigo's Properties Ltd., (developers) that the asse....