TaxTMI 
TaxTMI 
2022 (5) TMI 212
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....dings has been rejected without rebutting the same. 3. Notwithstanding the above grounds of appeal, the Ld. CIT(A), Bathinda has erred on facts and law in confirming the action of the AO of making an addition of Rs.2,58,00,000/- u/s 68 of the Income Tax Act, 1961 on account of share capital/premium received by the assessee while rejecting the contention of the assessee that the Proviso to section 68, putting the onus on the person in whose name credit is recorded in the books of the assessee company to offer an explanation about the nature and source of sum so credited, was brought on the statute w.e.f A.Y. 2013-14 but the case of the assessee company related to A.Y. 2012-13. Hence the provisions of the amended section 68 did not apply to the case of the assessee company and, thus, the CIT (A) has ignored the binding judgment of Hon'ble Supreme in the case of Roshan Di Hatti as reported in 107 ITR 938. 4. That the Ld. CIT(A), Bathinda erred on facts and law in confirming the action of the AO of making an addition of Rs.2,58,00,000/- u/s 68 of the Income Tax Act, 1961 on account of share capital/premium received by the assessee despite the fact that this was the fi....
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.... large premium as has been shown to have been received for allotment of shares. Besides, one of the promoters of the company and also shareholder viz Shri Akshay Bharadwaj was investigated independently at Faridabad by the Investigation Wing of the Department and was found to be involved in making such shell companies and routing unaccounted money through a web of such companies. Report of such investigation was forwarded to the Assessing Officer. It can, thus, be called an investigation by the AO for the purposes of forming his opinion as to the genuineness of the share creditors. Empty formality of merely providing the names of the subscribers of share capital do not establish the genuineness in any manner whatsoever. The paper *documentation of filing returns in the ROC regarding the existence of the companies is all too well known to be considered as genuinely genuine. In the circumstances and also preponderance of the surrounding facts, it is apparent that the unaccounted money of the promoters of the appellant company have been brought in and clothed as share capital and premium. It cannot but be treated as income exigible to tax under the provisions of section 68 of the Act.....
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....vant Paper book page Documents Submitted Direct Mercantile Company 19 to 29 Confirmation of the amount contributed as 'Share Capital' and 'Share Premium' in the form of letter addressed to the AO along with the audit report as on 31.03.2012 with all the annexures. Domains Enterprises Pvt. Ltd. 30 to 40 Confirmation of the amount contributed as 'Share Capital' and 'Share Premium' in the form of letter addressed to the AO along with the audit report as on 31.03.2012 with all the annexures. M/s. Nachiketa Agotech Pvt. Ltd. 41 to 54 Confirmation of the amount contributed as 'Share Capital' and 'Share Premium' in the form of letter addressed to the AO along with the audit report as on 31.03.2012 with all the annexures. M/s. Kabir Enterprises Pvt. Ltd. (Now known as Blooms Tax Pvt. Ltd.) The document of change of name is attached at page 56. 55 to 70 Confirmation of the amount contributed as 'Share Capital' and 'Share Premium' in the form of letter addressed to the AO along with the audit report as on 31.03.2012 with all the annexures. M/s. Legacy Mercantile Pvt. Ltd. 71 to 96 Confirmation of the amount contributed as 'Share Capital' and 'S....
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....apital and share premium are on 'capital account' and cannot be considered to be the income of the assessee. 11. Further, the Ld. counsel of the assessee invited our attention to the question of law before the Hon'ble High Court and referred to para 6 at page 112 of the said judgment wherein, the Hon'ble Bombay High Court has relied upon the judgment of the 'Vodafone India Services (P) Ltd.' vs. Union of India and also the judgment of the Apex Court in the case of G. S. Homes & Hotels P. Ltd. and also one unreported judgment of the Hon'ble Bombay High Court in the case of 'Idea Cellular Ltd. vs Union of India' reported in 40 taxmann.com 112 and whereby dismissing the appeals of the revenue, it was held that the Share Premium being on capital account cannot be brought to tax as income and finally, same dictum have been by rendered by the Hon'ble High (CLPB-II, Pg. 114). 12. The Ld. Counsel further relied upon the decision of the Bombay Bench of the ITAT in the case of 'Arogya Bharti Health Park Pvt. Ltd.', reported in ITA NO. 2943/Mum/2014 (Mumbai), (CLPB. Pg. 89 to 109) and in that judgment, on the same issue of the share capital, where the addition was made u/s 68 on the bas....
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....een approved by the Hon'ble Apex Court reported in [2018] 98 taxmann.com 84 (SC), where again, it has been held that once the identity of the parties have been established then the onus would be on the revenue. 16. The Ld. Counsel also relied upon the decision of the Hon'ble Apex Court in the case of 'Adamine Construction (P) Ltd.' reported in [2018] 99 taxmann.com 45 (SC) and also on the other decisions placed on the paper book to substantiate that no fault has been found by the lower authorities about the PAN Numbers of the subscribers and the confirmations received by the Assessing Officer on the basis of the enquiries made u/s 133(6) and it was argued, that while the Assessing Officer made the addition by relying upon the report of the 'Investigation Wing', which was not valid as per the decision of the Delhi High Court in the case of 'PCIT vs. Krishna Devi' reported in 431 ITR 361, copy placed at paper book 49 to 57, in which, similar facts are there and rather the facts in the case of the assessee were strong in the sense that enquiries u/s 133(6) were made, which were replied by the respective subscribers to the Share Capital/Share Capital and, thus, the confirmation of a....
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....that share premium is capital receipt and therefore, cannot be taxed as income. This conclusion was reached by the impugned order following the decision of this court in Vodafone India Ltd. (Supra) and of the apex court in G. S. Homes & Hotels (P.) Ltd. (Supra). In both the above cases the court has held that the amount received on issue of share capital including premium are on capital account and cannot be considered to be income." 20. It is seen that there was an amendment in Section 68 by Finance Act, 2012 w.e.f. 01.04.2013, which placed heavy onus on the assessee-company, where the sum credited consists of the Share Capital, Share Application Money and Share Premium which was not there upto AY 2012- 13. Similarly, there is an amendment to Section 56(viib) by Finance Act, 2012 w.e.f. 01.04.2013, coupled with the definition of income as per clause (xvi) of Section 2(24) of the Income Tax Act, 1961 which was also amended from 01.04.2013. Thus, all these sections were amended from 01.04.2013 and which have been analyzed at length by the Bombay Bench of ITAT in the case of 'Arogya Bharti Health Park P. Ltd. (supra)', copy placed at CLPB, pages 81 to 109 and this issue of Section....
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.... in the previous year relevant to the AY prior to 2013-14. Similarly, the amendment to section 68 of the Act, by addition of Proviso was made subsequent to previous year relevant to the subject assessment year and cannot be invoked. Therefore, we are of the considered view that even under this count no addition can be made towards share premium u/s 68 of the Act, as it is on account of capital a receipt does not come within the ambit of definition of "income". 19. Coming to the case laws relied upon by the Ld. DR. The Ld. DR has relied upon the decision of Hon'ble Kerala High Court in the case of Sunrise Academy of Medical Specialities India Pvt Ltd vs ITO in W.A. No.1297 of 2018 dated 12-07-2018 to argue that any premium received by a company on sale of shares come in excess of its face value, if the company is not one in which the public is substantially interested, would be treated as 'Income from other sources', as seen from section 56(2)(viib) of the Act, which we do not think can be controlled by the provisions of section 68 of the Act. We have gone through the case law relied upon by the Ld. DR in the light of facts of the present case and find that the case laws re....