TaxTMI 
TaxTMI 
2021 (11) TMI 78
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....dition of Rs. 4,20,10,670/-being the balance in the Securities Premium reserve under the facts and in the circumstances of the appellant's case. 4. The Authorities belowhave not justified in making an addition of Rs. 48,00,799/-being the amount collected as share application money under the facts and in the circumstances of the appellant's case. 5. The appellant craves leave of your Honour to add, alter, amend, rectify, and delete any of the grounds urged above. 6. For the above and other grounds that may be urged at the time of hearing of the appeal, the appellant humbly prays that the appeal may be allowed and Justice rendered." Brief facts of the case are as under: 2. Assessee is engaged in the business of free service. It filed its return of income for your consideration on 26/09/2013 declaring loss of Rs. 3,89,11,362/-. This case was selected for scrutiny and notice under section 143(2) of the Act was issued. As assessee failed to respond to the notices issued. The Ld.AO after examining the returns filed Ld.AO completed assessment under section 144 of the Act, making following additions: • addition of Rs. 41,04,487/- being ....
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....Rs. 34,86,684/- had already been disallowed by the appellant, although depreciation as per Income Tax. Act had been reduced separately. Since the claim of depreciation is not disputed by the AO, so effectively the dispute is regarding expenditure of Rs. 7,86,31,911/-. The AO has made a disallowance of 5% of Rs. 8,20,96,945/-, which works out to Rs. 41,04,847/-. On the other hand the appellant has contended that 5% of Rs. 7,86,31,911/- only should be considered. Since a part of the expenditure debited to the P&L account has already been added back by the appellant in its computation of income, so this argument of the appellant is accepted and the disallowance is restricted to Rs. 39,31,596/-. Considering above the ground of appeal 2 of the appellant is partly allowed. 6.0 The grounds of appeal 3 and 4 relate to addition pertaining to Rs. 4,20,10,670/- being the security premium and Rs. 48,00,799/- being the share application money, as credited in the books of the appellant during the year under consideration. The addition was made by the AO as during assessment proceedings the appellant had failed to provide the details regarding identity of the shareholders, genuiness of t....
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....t the disallowance of 5% may be restricted to expenditure claimed towards conveyance and travelling. He submitted that assessee had already disallowed Rs. 34,86,684/- in the computation of income, which has been observed by the Ld.CIT(A) to cover the irregularities for which proper bills were not maintained. On the contrary the Ld.Sr.DR submitted that, the disallowance computed by the Ld.AO is reasonable and the same may be upheld. We have proposed submissions advanced by both sides in light of record space before us. 6. It is observed that total expenditure claimed by assessee in the P&L account was Rs. 8,21,18,595/- and assessee disallowed Rs. 34,86,684/- in the computation of income. It is a submission of assessee that travel expenses incurred amounting to Rs. 17,83,153/- for which assessee's is unable to substantiate by way of proper bills. It is the submission of the Ld.AR that, by considering the disallowance of 5% to the extent of the travel expenses incurred, irregularities if any would be covered. In the remand report we note that the Ld.AO is unable to identify the items against which the bills are not properly presented. However on the submissions advanced by Ld....
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....he decisions relied by both sides. 7.4 We refer to the share subscription and shareholders agreement dated 21/03/2013 entered into by assessee with the promoters. Clause 2.5 and 3 describes promoters obligation of funding the assessee against which shares would be allotted by assessee. Section 68 of the Act requires an assessee to explain the nature and source of credit appearing in the books. In the present facts, the nature of credit is in the form of share capital and share premium. The source of credit is money received from such creditors, and one of the creditor being a non resident. We agree that the source of source need not be established by the assessee, however, the assessee needs to place on record details of source from where a creditor deposits monies into its books of account. The foot not relevant to section 68 refers to Circular No.5 dated 20/02/1969. This circular is in respect of monies brought into India by Non residents migrants. We reproduce the circular as under: SECTION 68 CASH CREDITS 472. Persons migrating from West/East Pakistan, Burma, East African countries, namely, Mozambique, Zanzibar, Kenya, Tanzania andUganda - Claims as to origin of ....
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.... 22-5-1967 printed as Annex I)]. b. 1-1-1963 Zanzibar, Kenya, Tanzania and Uganda [vide Ministry of Finance Press Note, dated 22-5-1967 (Circular No. 8, dated 22-5-1967 printed as Annex I)]. c. 1-1-1964 East Pakistan and Burma [vide Ministry of Finance Press Note dated 15-6-1964/22-5-1965 (Circular Nos. 16D, dated 15-6-1964 and 11, dated 22-5-1965 printed as Annex II and Annex III respectively)]. d. 1-10-1965 West Pakistan [vide Ministry of Finance Press Note, dated 3-2-1969]. 2. He had sufficient resources in the foreign country. 3. He had no source of income either in India or in any foreign country, other than the country from which he migrated, prior to migration and he was not assessed as "resident" in India either for the assessment year preceding the year in which he migrated or for earlier years. 4. The amount brought in has been duly introduced in the books regularly maintained in India and an intimation of such introduction is given to the Income-tax Officer within two months of the migrant's arrival. 4. Cases not covered by preceding paragraph, namely : a. where the money (in the case of Mozambique, ....