TaxTMI 
TaxTMI 
2024 (3) TMI 726
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....ions regarding the lack of genuineness of the transaction? 3. The appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of appeal." 3. Briefly stated, the assessee is a non-resident individual. He derived income from salary, house property, capital gains, dividend and interest in India. He filed his return for A.Y. 2018-19 on 19.07.2018 declaring income of Rs. 6,28,87,870/-.Subsequently, he revised his return on 05.03.2019 declaring income of Rs. 4,23,71,630/- and claimed refund of Rs. 24,41,900/-. His case was selected for scrutiny which was carried out through E-assessment. Statutory notice u/s 143(2) of the Income Tax Act, 1961 ("the Act") was served. Notice u/s 142(1) of the Act with questionnaire was issued to which the assessee responded. The Ld. Assessing Officer ("AO") found that during the year the assessee received the consideration amount of Rs. 2,34,48,938/- on buyback of 46 shares @ of Rs. 6,07,500/- per share from Uday Management Services Pvt. Ltd. ("UMS") and filed Balance Sheet and P&L Account of UMS. Vide show-cause notice issued on 23.09.2021, the Ld. AO sought information from the assessee and explanation as to ....
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....ngs, the assessee filed written submissions which have been reproduced by the Ld. CIT(A) in para 5 at page 4-19 of the appellate order. The Ld. CIT(A) deleted the addition holding it to be without any basis and unjustified. The observations and findings of the Ld. CIT(A) contained in paras 8, 9, and 10 are reproduced below. "8. It has been submitted that during the year, the appellant received an amount of Rs. 2,34,48,398/- in respect of the buyback of 46 shares of a Private Ltd Company, Uday Management Services Pvt Ltd (UMS), which is exempt from tax under section 10(34A) of the Act as the company paid tax under 115QA of the Act to the tune of Rs. 1,14,93,317/- which pertains to tax on distributed income of domestic company for buy-back of shares. It is submitted that these shares were bought back by UMS at a value of Rs 6,07,500/- per share which was determined as per Rule 11UA of the Income Tax Rule. It is stated that UMS was incorporated in 1983 and had been running business of business centers successfully and has got huge reserves and surplus created from the profits earned during its lifetime. These reserves have been utilized for the payments for dividend income an....
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....t as on 30.11.2017. Therefore, from the capacity/ creditworthiness of UMS is also established. The AO has also not doubted the creditworthiness of the company. 9.4 For effecting the buyback of shares, it has been shown that UMS duly complied with the provisions of the Companies Act for buy back of shares. Accordingly, the company was authorized by Articles of Association to Buy Back its own share; Board Resolution and Special Resolution was passed for this purpose; Form MGT-14 as required, was filed with the Registrar within 30 days of passing the Special Resolution; after the Special Resolution but before the buy-back of shares, company had also filed with the Registrar of Companies a letter of offer in Form No. SH-8; declaration was filed with the Registrar of solvency in Form SH-9, along with the letter of offer, the company filed a return Form No. SH. 11 after the completion of the buy-back file with the Registrar. 9.5 Thus, as per law, copy of Board Resolution, copy of Shareholder Resolution, copy of Valuation Report, Form SH-8 (Letter of Offer), Form SH-9 (Declaration of Solvency). Form SH-11 (Return of Buy Back) etc. were duly filed with the Registrar of Co....
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....e above, it is concluded that the AO completely misunderstood a plain and simple case of buyback of shares effected after duly complying with the statutory procedure prescribed by the Companies Act and obtaining approval from the Registrar of Companies. The company has paid due tax on such buyback of shares u/s 115QA of the Act and the income arising to the appellant/ shareholder as a result of buyback is exempt u/s 10(34A) of the Act. By no stretch of imagination, the buyback amount received by the appellant can be termed as unexplained. The addition made by the AO is without any basis and is unjustified. The addition is deleted." 7. The Revenue is dissatisfied and is in appeal before the Tribunal and both the grounds relate thereto. 8. The appeal came up for hearing on 18.04.2023, 06.06.2023, 05.10.2023, 13.12.2023 and finally on 18.12.2023. None of the hearing was attended either by the assessee or by his Authorised Representative, though Ld. Sr. DR was present on all the hearings. We, therefore proceeded to decide the appeal exparte after hearing the Ld. Sr. DR. 9. We have considered carefully the submission of the Ld. Sr. DR who supported the order of the Ld. AO and p....