TaxTMI 
TaxTMI 
TaxTMI 
2021 (4) TMI 486
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.... that the assessee is engaged in the business of manufacturing and sales of Bi-axially oriented polypropylene and the return of income for the Asst Year 2012-13 was filed by the assessee company on 30.9.2012 declaring total loss of Rs. 29,25,45,580/- under normal provisions of the Act and book profit of Rs. 1,51,56,973/- u/s 115JB of the Act. The assessee company is in the process of carrying on business as manufacturers, importers, exporters, buyers, sellers, suppliers, distributors, stockiest, designers and dealers in polymers, monomers, elastomers and resins of all types, grades and copolymer formulations and in all forms such as resins / chips, powder, flakes, granules, films, sheets, tubes, pipes, fibres, laminates or as processed goods and including specifically polyethylene, polypropylene, polyethylene polystyrene, polyvinyl acetate, methacrylate, resins, alkide resins, melamine, polyesters, such as polyethylene, terephihallate and polyethylene, sphathalate or any other or new substances being improvements upon, modifications of our being derived from additions to petrochemicals or other / products or resulting for many processes. 2.2. We find that the assessee was in recei....
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.... from the said competent authority. The ld AO observed that the assessee did not furnish the details of source of funds for OMIL and accordingly concluded that the assessee had not proved the creditworthiness of OMIL to make investment in assessee company. 2.4. We find that similar amount of share capital and premium was received by the assessee company from OMIL in earlier year i.e Asst Year 2011-12 in the sum of Rs. 4,47,10,385/- which was sought to be added by the ld AO as unexplained cash credit u/s 68 of the Act. We find that the ld CITA had deleted the said addition in Asst Year 2011-12 , against which revenue had preferred an appeal before this tribunal for Asst Year 2011-12. We find that the ld CITA had deleted the addition made in the year under consideration by placing reliance on the order of his predecessor for Asst Year 2011-12 wherein, on similar facts and circumstances in respect of share capital and premium received from the same party i.e OMIL, the addition made u/s 68 of the Act was deleted. We find that the ld CITA had also observed in para 10.7 of the order that reference made to CBDT Foreign Tax Division had not brought out any adverse remarks on the bonafides ....
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....stor on receipt of full payment of Rs. 19.8 crores. We also find that the assessee has filed all the requirements complying with RBI guidelines by filing FIRE with RBI and also filed unique identification No. from RBI. Further, it has also filed FCGPR with RBI in this connection. Hence, there was no requirement of increasing the authorized share capital as the assessee was having sufficient authorized share capital to issue shares to the investor. During the year under consideration, the assessee received fund of Rs. 4,47,10,385/- on 25.03.2011 out of total investment of Rs. 19.80 crores. The balanced funds were remitted by the investor in subsequent years, which is already mentioned in FCGPR attached in assessee's paper book. We find from the case records and the assessment order and the order of CIT(A) that the assessee has filed complete paper book in respect to these investments like the following details: - Sr. No. Name of the shareholders No. of share Amount of premium Details submitted Particulars Paper Book 1 Paper Book 2 Paper Book 3 Page No. Page No. Page NO 1. M/s Orange Mauritius Inves....
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....nance Act, 2013 with effect from 01.04.2013 i.e. for and from the AY 2013-14. We will dealt with the case laws in the next part of this order which was cited before us by both the sides. 13. As regards to the addition of share application money of Rs. 23,47,38,900/- by the AO and deleted by CIT(A), the facts relating to this dispute is that the assessee has issued 2,37,100 shares to ten different shareholders along with evidences filed by assessee are as under: - Ground of Appeal No. (ii)- Share Premium on issue of shares -Rs. 23,47,38,900 1. M/s Desert Diamond General Trading LLC 12,977 12,847,230 1. PAN and complete address 20 377 2. shareholder's agreement 378-413 3. Share Application form received from investor 414-415 663-664 4. FIRC issued by RBI in the case of NR investors 43-45 416-418 5. letter issued by RBI allotting UIN No. 48-51 419-422 6. Share allotment certificate issued to investor 423 665 7. Let....
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....nbsp; 7. Notice 01.11.2013, 24.12.2013 and 04.02.2014 issued under section 133(6) of the Income Tax Act. 828-833 8. Response to notice issued under section 133(6) of the Income Tax Act. 834-845 5. M/s BhushanPetrofils Pvt. Ltd. 35,000 34,650,000 1. PAN and complete address 20 2. Confirmation of Accounts 22 3. Return of income 29 4. Minutes recorded in board meeting for allotment of shares 59-64 5 Share application from received from investor 74-75 6. Share allotment certificate issued to investor 87 7. Response to notice issued under section 133(6) of the Income Tax Act. 846-856 6. M/s Shanti Educational Initiatives Ltd. 5,500 5,445,000 1. PAN and complete address 20 2. Confirmation of Accounts 23 ....
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....p; 2. Confirmation of Accounts 26 3. Return of income 33 4. Minutes recorded in board meeting for allotment of shares 59-64 5 Share application from received from investor 80-81 6. Share allotment certificate issued to investor 85 7. Notices dated 01.11.2013, 24.12.2013 and 04.02.2014 issued under section 133(6) of the Income Tax Act. 802-805 8. Response to Notice issued under section 133(6) of the Income Tax Act. 806-815 10. M/s Vijay SubhamContrade Pvt. Ltd. 1,000 990,000 1. PAN and complete address 20 2. Confirmation of Accounts 27 3. Return of income 34 4. Minutes recorded in board meeting for allotment of shares 59-64 5 Share application from received from investo....
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....arket value of shares. But, in any case the amendment will apply for and from AY 2013-14 and not to earlier Assessment Year because the amendment is prospective and not retrospective. Hence, on the issue of share premium, the provisions of section 56(2) (viib) of the Act cannot be applied for making addition even under section 68 of the Act. 15. Now let us go through the decision relied on by the assessee of Hon'ble Bombay High Court in case of CIT vs. Gagandeep Infrastructure (P) Ltd. (2017) 394 ITR 680 (Bom) which reads as under:- "(c) Being aggrieved, the Revenue carried the issue in the appeal to the Tribunal. The impugned order of the Tribunal holds that the respondent assessee had established the identity, genuineness and capacity of the shareholders who had subscribed to its shares. The identity was established by the very 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 ind....
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.... share capital, genuineness of the transaction and the capacity of the subscriber to the share capital. It found that the identity of the subscribers was confirmed by virtue of the Assessing Officer issuing a notices under Section 133(6) of the Act to them. Further, it holds that the Revenue itself makes no grievance of this identity of the subscribers. So far as the genuineness of the transaction of share subscriber is concerned, it concludes as the entire transaction is recorded in the Books of Accounts and reflected in the financial statements of the assessee since the subscription was done through the banking channels as evidenced by bank statements which were examined by the Tribunal. With regard to the capacity of the subscribers the impugned order records a finding that 98% of the shares is held by IDFC Private Equity Fund which is a Fund Manager of IDFC Ltd. Moreover, the contributions in IDFC Private Equity Fund-II are all by public sector undertakings. (c) Mr.Chhotaray the learned counsel for the Revenue states that the impugned orderitself holds that share premium of Rs. 490/¬ per share defies all commercial prudence. Therefore it has to be considered to be cash cr....
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....n Infra Ltd (Supra). 19. The Ld. Counsel for the assessee made another argument that the power of carrying valuation is not envisaged by the Legislature for the purpose of Section 68 of the Act. He argued that, wherever the Legislature intended to give the power to determine the value to the AO, it either prescribes Rule for valuation of a particular thing or vested upon the AO the power to refer to the Valuation officer. The power of AO to make a reference to the Valuation Officer is contained in section 142A of the Act. Section 142A of the Act as it stood for the year under consideration reads as under: "142. (1) For the purposes of making an assessment or reassessment under this Act, where an estimate of the value of any investment referred to in section 69 or section 6911 or the value of any bullion, jewellery or oilier valuable article referred to in section 69A or section 6911 or fair market value of any property referred to in sub-section (2) of section 56 is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him". 20. We have considered the issue and find that this section does not cove....
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....56(2)(viib) of the Act redundant and nugatory. This cannot be the intention of the Legislature especially when the amendments in the two sections are brought in at the same time. 22. In view of the matter, the Ld Counsel explained that it is a settled law that where two views are possible, the view favorable to the assessee should be adopted as held by Hon'ble Supreme Court in case of CIT Vs. Vegetable Products Ltd. (1973) 88 ITR 192. In view of the above facts and circumstances, we are of the view that the assessee has discharged its onus by adequately disclosing the transaction in its books of accounts, filing statutory forms as regards allotment of shares, providing name, address and PAN of the shareholders, etc. the assessee has sufficiently discharged the onus cast upon it for the purpose of section 68 of the Act and no addition can be made on this account. Hence, we are of the view that the CIT(A) has rightly deleted the addition and we confirm the same. These two common issues of Revenue's appeal are dismissed." 2.5. We find that the decision rendered by this tribunal for Asst Year 2011-12 in assessee's own case on the similar set of facts shall apply mutatis mutandis to ....
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....oubted by the revenue. The only issue is the rate of depreciation thereon. The ld CITA had also observed that the assessee is eligible for 25% depreciation but had claimed only 10% and accordingly deleted the disallowance made by the ld AO. Hence we do not deem it fit to interfere in the order of the ld CITA. Accordingly, the Ground No. II raised by the revenue is dismissed. 4. The last issue to be decided in this appeal is as to whether the ld CITA was justified in deleting the addition made in the sum of Rs. 6,12,92,931/- u/s 56(2)(viia) of the Act in the facts and circumstances of the case. 4.1. We have heard the rival submissions and perused the materials available on record. We find that assessee became member in Vraj Integrated Textile Park Ltd (VITPL) formed on the basis of Scheme of Integrated Textile Park (SITP) of Ministry of Textiles, Government of India. The main objective of the said Scheme is to provide State of the Art Infrastructure and support to the members, who are setting up units in the Textile Park. As per the SITP policy, Special Purpose Vehicle (SPV) shall invariably be a Corporate Body registered under the Companies Act . To become a member in the said T....
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....ence of Rs. 48.35 per share was required to be brought to the charge of tax as income from other sources as stipulated u/s.56(2)(vii)(a). Accordingly, the AO added the amount being different in consideration which is paid less in comparison to the fair market value in excess of Rs. 50,000/- i.e. amounting to Rs. 1,18,67,508/- as taxable in the hands of the assessee company under section 56(2)(viia) of the Act. For this, the AO observed in Para 6.4 as under: - "a. As per the provisions of section 56(2)(vii)(a) of the Act, where a company receives, in any previous year, from any person or persons on or after the 1" day of June, 2010, any property being shares of a company for a consideration which is less than the aggregate fair market value by an amount exceeding fifty thousand rupees shall be chargeable to income tax under the head income from other sources. b. The appellant is company which has either purchased or received on allotment the shares in question after 01.06.2010 which is after the provisions of the said section came into effect. C. The valuation as contended by appellant is not supported by any corroborative evidences. The method as prescribed under the Rule 11U....
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....ived from the Government of India and, therefore, this amount cannot be taken into account while determining the fair market value of shares under Rule 11UA. In the submissions which have been reproduced above, the appellant-company has provided calculation of fair market value after ignoring the said subsidy and on this basis has contended that the fair market value does not exceed the face value of Rs. 10. During the course of the appellate proceedings, it has been submitted on behalf of the appellant-company, that it is only a matter of presentation in the balance sheet as to how the Government grant is reflected. By following some different method, the Government grant could have been directly reduced from the cost of the assets and if the appellant had followed this method, the fair market value of the shares would have automatically come to a level which is not more than the face value of Rs. 10. It is, therefore, contended that having regard to the entire facts and circumstances and the objective of thescheme of integrated Textile Park no income can be brought to the charge of tax u/s 56(2)(vii)(a) of the IT Act. 9.26 I have carefully considered the facts and circumstances....