2020 (5) TMI 409

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....n deleting the disallowance made on account of share capital loss of Rs. 1,27,35,000/- u/ s 68 of the Act. 2. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in disregarding the fact that worth of the assessee, share capital and other long term liabilities were negative and that the assessee had no assets on which premium of shares can be valued at Rs. 90 /- as against face value of Rs. 10. 3. On the facts and circumstances of the case, Ld. CIT(A) erred in not appreciating the fact that the assessee does not have any valuation report to substantiate value of premium of shares at Rs. 90/- as against face value of Rs. 10. 4. On the facts and circumstances of the case and in law, Ld. CIT( A) has erred in deleting ....

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....to assets and liabilities of the assessee company. The assessee was also asked to prove the identity, creditworthiness and genuineness of the parties who have subscribed the above share premium. In response, the assessee vide letter dated 11.02.2015 has submitted as under: " During the year under consideration assessee company had issued 1, 41, 500 shares of face value of Rs. 10/- per share at a premium of Rs. 90 /- per share. In fact during the year under consideration assessee company had purchased agricultural land for the cost of Rs. 3, 19, 87, 955 /- at village Kherki Daula, Further, it had ventured into a project for construction of a multi storied residential project in village Dudaera and Harihera in Haryana for this purpose a sum....

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....o the system in the form of share premium. 5. Before us, the ld. DR relied on the order of the Assessing Officer while the ld. AR supported the order of the ld. CIT (A). 6. Heard the arguments of both the parties and perused the material available on record. 7. We find that the share premium of Rs. 90/- per share has been contributed by the share holders owing to various facts that the company had purchased the land for a cost of Rs. 3,19,87,955/- and also ventured into a project for construction of multistoried residential project and paid an amount of Rs. 4, 77,00,000 /- to the collaborator. For the said multistoried residential project, the approvals have been given on 04.06.2013 and on 23.10.2013 vide Licence No. 44 /2013 and 89/2013....

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....f construction. Against these transactions, the above companies have executed agreements. The AO noticed that the assessee did not purchase any property nor started any construction activity. It was noticed that both the above companies are related companies to the assessee company by the virtue of a common director share holder. From the perusal of the share holding pattern of the assessee company and the above two companies, the AO noticed that one of the Director Sh. Alimuddin is the common director in all the three companies having substantial interest and held that the amount received from the two companies is liable to be taxed u/s 2(22 )(e) of the Act. 9. The ld. CIT ( A) deleted the addition on the grounds that the advances were ma....