TaxTMI 
TaxTMI 
2022 (6) TMI 566
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....ces of the case and as per law, the Hon'ble ITAT was justified in directing to delete the addition of Rs.1,99,99,815/- made u/s.68 of the Income-tax Act, 1961, treating the Share Capital & Security Premium' received by the assessee as unexplained credits' in the assessment order, without appreciating that the same is covered by the ratio laid down in the judgment of the Bombay High Court in the case of Major Metals Vs. Union of India? ii. Whether on the facts, in the circumstances of the case and as per law, the Hon'ble ITAT was justified in directing to delete the addition of Rs.1,99,99,815/- made u/s.68 of the Income-tax Act, 1961, without appreciating that the same is covered by the ratio laid down in the judgment of the....
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....ng with share premium from following entities : Date No. of Shares applied No. of shares allotted Name of share holder Face value Issue price with premium Total payment received 15/06/2011 1108 1108 Hope Island Pvt. Ltd. 10 3000.76 33,24,847/- 27/08/2011 559 559 Hope Island Pvt. Ltd. 10 2999.37 16,74,969/- 27/08/2011 4166 4166 GHIOF 10 4166 1,50,00,000/- Total 1,99,99,816/- 3. The Assessing Officer during scrutiny proceedings asked the assessee to justify the premium charged during the year. According to the Assessing Officer, the assessee-company was a loss making company from the very first year of....
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....ompany for Rs. 200 lakhs to Non- resident companies. The inward remittance of share capital was reported to the Reserve Bank of India in the appropriate forms. This being first venture of the technocrats / promoters, the question of accumulated black money being brought back to India, does not arise. The money was parked in ICICI bank till the same was utilised towards business and later on the same was used for the business purpose only. It was also submitted by the assessee that in the initial years all start up companies incur heavy losses and the same is funded by investors with issue of shares at premium. In this regard the assessee has cited the examples of some startups like the Ola cabs company's ANI Technologies Private Limited....
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....e company was making huge losses. Therefore, the AO has made the additions u/s68 of the Act. However, in his assessment order, the AO has recorded a categorical finding that the source of funds was not doubted. It was not the case of the AO that genuineness of transactions or credit worthiness of the creditors was not proved by the assessee. It was also not the case of the AO that the assessee was not a startup company. It is a common knowledge that most of the start up companies make losses in the beginning but their shares are valued at a very high premium because of their potential to make huge profits in the future. The investors in the case of start up companies like the assessee are guided by the future prospects of projects and their....
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....Finvest Ltd (ITA 232 OF 2012 DATED 22.11.2012 ( Delhi), has held that attracting the ratio of Lovely Exports (supra) to all cases of share capital without considering the facts, evidences and materials is not understandable. It seems to be justified, as it is necessary that due regard should be given to the facts and circumstances of each case, which generally differ from case to-case and, thus, no standard rule can be applied to all cases ignoring the facts, evidences and materials that form the very foundation of a case. 4.3.2 In view of the above discussion and judicial precedents, I am of the view that the NO was not justified in making additon u/s 68 of the Act when the AO himself was satisfied as to the source of funds and no....