AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 575
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....et profit rate of 0.75% to the total Rs. 40,00,00,000/- comprising of the share capital as well as the share premium raised by the assessee." 3. The assessee has raised the following grounds of appeal in the cross-objection:- "For that the Ld. CIT(A) was not justified in applying a net profit rate of 0.75% on the total amount of Rs. 40 Crore comprising of share capital and share premium. For that the Ld. CIT(A) ought to have applied a reasonable percentage of net profit on the aforesaid amount of Rs. 40 Crore." 4. Brief facts of the case are that the assessee is a limited company. It filed its return of income for the year under consideration on 30/09/2018 showing Nil income. The case of the assessee was reopened u/s 147 of the Act on the ground that the assessee company had received an amount of Rs. 40 Crore by way of allotting 16,00,000 equity shares at a premium of Rs. 240/- per share, having face value of Rs. 10/- each. The ld. Assessing Officer completed the assessment u/s 144/147 of the Act vide order dt. 29/03/2016. Subsequently, the ld. Pr. CIT, Guwahati -2, vide order u/s 264 of the Act dt. 23/05/2016 set aside the assessment order passed u/s 144/147/144A of the A....
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....the total amount of Rs. 40 Crore comprising of share capital and share premium, thereby granting part relief to the assessee by following various judicial pronouncement of the ITAT as well as other Hon'ble Courts. 5. Aggrieved the revenue is in appeal before us and the assessee has filed cross-objection. 6. We have heard rival contentions and perused the material placed before us. We find that the ld. CIT(A) has after considering each and every aspect of the present case has partly allowed the assessee's appeal by observing as follows:- "Thus, neither I sustain the addition made herein and keep the huge controversial demand alive, consequently, thereby, keeping the AO, for the purpose of recovery, at the travails of locating an Appellant which does not even have any permanent office, are apart any financial assets, and the demand so confirmed keeps on increasing year after year until one fine day it is written off as unrecoverable by the Department or tax the Appellant on its real income. I find that under the factual matrix, in view of [the ratio of the above as well as foregoing judgments-and also in view of the above discussion, it would be prudent to tax the Appellant oh it....
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....t of his claim that the commission estimated at 2% of the deposits made is excessive. At the last para of page 3 of his order, he held as follows:- "During appeal, the appellant has once again not been able to produce any supporting material in support of his ground of appeal but to the take the plea that the AO had committed an error in estimating the income at 2%. In view of the fact that the appellant has produced no evidence to show that the findings of the AO are erroneous, and in view of the fact that the appellant himself, as mentioned in his ground itself, had accepted that he is an entry provider working for a commission and that similar entry operators have declared their commission to much lower than 2%, in their depositions made before the Investigation Wing of the Department. I cannot find any material to differ from the findings of the AO, and the same stand confirmed" 3. Aggrieved the assessee is before us. 4. The Id. Counsel for the assessee relies on the decision of the Kolkata 'A' Bench of the Tribunal in ITA No. 1775/Kol/2016; Assessment Year 2010-11; Jaswant Singh vs. ITO; order dt. 14/09/2018, for the proposition that in such cases commission a....
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....cts for the assessment year 2003-04 and 2004-05, the Tribunal after referring to various decisions have upheld the percentage of commission on net profit @ 0.15% which was quite consistent with the statement recorded at the tune of search. Accordingly, following the judicial precedence in the case of the assessee's sister concern (supra), we uphold the rate of commission/rate of net profit from such activities at 0.15%. Accordingly, ground nos. 4&5 as raised by the assessee are allowed" In the case of ITO vs. M/S. Sohail Financials Ltd. [ITA No 4867/Del/2011; dated 28 September, 2018], it was held/averred, as follows, by Hon'ble ITAT - Delhi: "27. Based on above, we are of the opinion that the Id CIT(A) has deleted the addition based on irrelevant documents, which does not prove the identity, creditworthiness, and genuineness of the shareholders/transactions. Therefore in view of above facts we reverse the order of the Id CIT(A) deleting the addition u/s 68 of the act of Rs 1,94,00,000/- from 8 companies whose creditworthiness and genuineness of the transaction of issue of shares at a high premium and restore the order of the Id AO. Accordingly ground no 1 of the appe....
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....ions of the Hon'ble Supreme Court, wherein the name of the Appellant appears in the latest judgment of the Hon'ble Supreme Court in the case of NRA Iron & Steel Private Limited wherein the Hon'ble Supreme Court has held the Appellant to be non-existent. Also, the attributes as well as the financial statement of the Appellant have been found akin to that of a paper/shell company. Moreover, during the course of appellate proceedings, the AR of the Appellant, then confronted with these facts had conceded the true nature of the transactions carried out by the Appellant. In view of these peculiar facts which have come to the notice of the undersigned while adjudicating the resent appeal, the decision taken in the earlier appeals of the same Appellant, which were disposed ex-parte cannot be applied to the present appeal. ACTION OF THE AO CONTRARY - ACCEPTANCE OF SHARE CAPITAL BUT REJECTION OF SHARE PREMIUM In this case, notwithstanding that the Appellant has been held to be a paper/shell company, If the undersigned were to take the view of the AO, then in that case, the undersigned would have been constrained to accept the share premium received by the Appellant as genu....
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....in the case of PCIT vs. NRA Iron & Steel (P.) Ltd. reported in [2019] 103 taxmann.com 48 (SC). Perusal of the judgment reveals that the addition in that case was made in the hands of the assessee, namely, NRA Iron & Steel Ltd. u/s 68 of the Act for the alleged share capital/ share premium received from various companies which also included share capital/share premium received from Guwahati based company, namely, Ispat Sheets Limited, which is the assessee in the instant appeal. The Hon'ble Apex Court while confirming the addition u/s 68 of the Act, specifically made observation about the various field enquiries conducted by the Assessing Officer with respect to the identity and creditworthiness of the investor companies and also to examine the genuineness of the transactions. And with respect to the Guwahati company, namely, Ispat Sheets Limited and Novelty Traders Ltd., the enquiries conducted by the Assessing Officer revealed that they were non- existent at the given address. Further, the Hon'ble Apex Court in para 11 & 12 of the said order observed as follows:- "11. The principles which emerge where sums of money are credited as Share Capital/Premium are : i. The assessee i....
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....iled a NIL return, but had purchased Shares worth Rs. 95,00,000 in the Assessee Company - Respondent. Another example is of Ganga Builders Ltd. - Kolkatta which had filed a return for Rs. 5,850 but invested in shares to the tune of Rs. 90,00,000 in the Assessee Company - Respondent, etc. iii. There was no explanation whatsoever offered as to why the investor companies had applied for shares of the Assessee Company at a high premium of Rs. 190 per share, even though the face value of the share was Rs. 10/- per share. iv. Furthermore, none of the so-called investor companies established the source of funds from which the high share premium was invested. v. The mere mention of the income tax file number of an investor was not sufficient to discharge the onus under Section 68 of the Act." 8. Under these circumstances, we do not find any reason to interfere with the finding of the ld. CIT(A) deleting the addition u/s 68 of the Act and treating the assessee as an entry provider working for earning commission income. Accordingly, the sole effective grounds raised by the revenue is dismissed. 9. Coming to the cross-objection raised by the assessee, the ld. Counsel for the as....