TaxTMI 
TaxTMI 
2022 (9) TMI 1314
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....e and in law the Ld.CIT(A) was correct in deciding the issue in favour of assessee solely relying on the decision of Hon'ble ITAT in the assessee's own case for AY 2009-10, without appreciating the legal position that the said issue had not attained finality since departments appeal filed u/s.260A against the said decision was still pending before Hon'ble Bombay High Court? 3. Whether on the facts and circumstances of the case and in law the Ld.CIT(A) has erred in holding that the Share Premium was by assessee, ignoring the findings of the Assessing Officer given in the assessment order that the assessee company failed to furnish authentic documentary evidence to justify basis of charging premium, the Return of assessee company filed for year under consideration as well as for earlier years showed consistent losses and hence the valuation of shares done adopting DCF without considering the Income Tax Liability of preceding years was meaningless, as once these liabilities were taken into consideration the Share Valuation would be much below the value arrived at by assessee and hence the share premium was not justified? 4. Whether on the facts and circum....
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....es. The assessee further submitted that issuance of shares at a premium was a commercial decision and as per the terms of issue. Further, the valuation was done using discounted cash flow method and the same was adopted for charging the premium. The assessee also contended that all the subscribers have explained the source of income and the assessee group has also shown substantial grown in a subsequent year in a consolidated form. The Assessing Officer, vide order dated 09/03/2015, passed under section 143(3) of the Act did not agree with the submissions of the assessee and held that the assessee company has shown consistent losses and in such a scenario the valuation done by adopting DCF method without considering the income tax liability of the preceding year, which is confirmed and crystallized in appellate proceedings is meaningless. The Assessing Officer further held that once these liabilities are taken into consideration, the share valuation will be much below the valuation arrived at by the assessee. The Assessing Officer further held that no documentary evidence has been filed to justify the basis on which the premium is charged and, therefore, the assessee has totally fa....
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....lding 18% of shares. The contributors to the IDFC PE Fund-II who is a subscriber to the assessee's share capital, are LIC, Union of India, Oriental Bank of Commerce, Indian Overseas Bank and Canara Bank which are all public sector undertakings. Therefore, to raise eyebrows to a transaction where there is so much of involvement of the Government directly or indirectly does not make any sense. 10.1. No doubt a non-est company or a zero balance company asking for a share premium of Rs. 490/- per share defies all commercial prudence but at the same time we cannot ignore the fact that it is a prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of the share holders whether they want to subscribe to such a heavy premium. The Revenue authorities cannot question the charging of such of huge premium without any bar from any legislated law of the land. Details of subscribers were before the Revenue authorities. The AO has also confirmed the transaction from the subscribers by issuing notice u/s. 133(6) of the Act. The Board of Directors contains persons who are associated with IDFC group of companies, therefore their integrity and cred....
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....own that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh, unless forbidden from doing so by statute." 11.1. Considering the submissions of the Ld. DR in the light of the above ratio, let us test the transaction in the light of the provisions of Sec. 68 of the Act. As per Section 68 - the initial onus is upon the assessee to establish identity, genuineness of the transaction and the capacity of the lender or the depositor. The subscribers to the share capital are all companies. The confirmations of the transactions have been received by the AO by issuing notice u/s. 133(6) of the Act, therefore, identity has been established beyond all reasonable doubts nor the Revenue authorities have questioned the identity of the share holders. The genuineness of the transaction can also be safely concluded since the entire transaction has been done through the banking channels duly recorded in the books of accounts of the assessee duly reflected in ....