AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (8) TMI 530
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.... that this provision is not applicable to the year under consideration. 1.3 The Appellant has furnished sufficient documents and the evidence to meet the principles of section 68 of the Act and that once the principal amount of share capital is accepted as genuine under section 68, there is no question of making an addition of premium amount received on issue of shares. The Appellant craves leave to add, alter, amend or withdraw any of the above grounds at or before the hearing of the appeal." 3. The brief facts of the case are that the assessee filed return of income for A.Y. 2011-12 declaring total income at Rs. 33,47,310/-, which was processed under Section 143(1) of the Act. Later on the Department received information that the assessee company had received share premium / share application money to the tune of Rs. 27,16,350/-. On perusal of the records, it was seen that during F.Y. 2010-11, the assessee company issued certain shares at the price which was over and above the nominal value and received total share premium of Rs. 27,16,350/-. The A.O. was of the view that this premium of Rs. 27,16,350/- was totally unjustified if it is compared with the book value of the ass....
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.... 11.03.2010. Further, in order to prove the genuineness of the share allottees, the assessee produced copy of PAN of Shri Ghanshyambhai, copy of pass port of Shri Ghanshyambhai and also copy of the share capital account and share premium account for the relevant year in which the shares were issued. Regarding justification of shares issued at premium of Rs. 390 per shares, the assessee submitted that Shri Ghanshyambhai is a friend and he approached the assessee to join their business. The assessee was in the business of industrial auto machine for last 15 years and has been on a continuous growth path. Mr. Ghanshaymbhai suggested new business proposals and shown keen interest to join the assessee and assured that he would invest huge amounts for fast business growth of the assessee company. Accordingly, after due discussions, the assessee appointed Shri Ghanshyambhai as Director of the company on 01.09.2009 and appropriate Form No. 32 for appointment as Director had also been filed with the ROC. After working with the assessee company for about six months, the the company decided to allot shares on the basis of planned growth of the company, the share premium has been decided. The ....
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....ly, Ld. CIT(A) confirmed the aforesaid amount as income of the assessee with the following observation:- "During the course of assessment proceedings, the appellant was asked to explain as to why the share premium of Rs. 27,16,350/- received during the year under consideration should not be added to the total income of the year under consideration. In response to the same, the appellant furnished its reply before the AO. The reply submitted by the appellant was considered carefully but not found to be acceptable. The AO stated that the appellant given reply in the routine/general manner. In the present case, the appellant company has allotted 215 shares to Mr. Ved Prakash Naithani and 6750 shares have been allotted to Ghanshyambhai Nandlal Charandas at face value of Rs. 10 per share at the premium of Rs. 390/- per share on 29-07-2010. The appellant contended that the company was in the business of industrial auto machine from last 15 years and continuously it is grooving and performing well enough in the business. Mr. Ghanshyambhai Nandlal Charandas suggested new business proposal and shown his interest to join the appellant company and also assured the appellant company to inves....
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....them, they were prevented from doing so. It was further held by the Hon'ble Apex Court that all that Section 110 of the Evidence Act, 1872 did, was to embody a salutary principle of common law jurisprudence viz, where a person was found in possession of anything, the onus of proving that he was not its owner, was on that person. Thus, this principle could be attracted to a set of circumstances that satisfies its conditions and was applicable to taxing proceedings. Respectfully following the decisions of Supreme Court in various cases and as the appellant has not proved/filed justification for fixing the premium at Rs. 3907- per share. Mere receiving the premium amount through banking channel does not prove that the company has worth to issue share at premium. No scientific method has been followed by the appellant to decide the premium, the appellant has only contended that Mr. Ghanshyambhai Nandlal Charandas has suggested some growth plan to the appellant company but he failed to explain what are the plans suggested for the growth of the appellant company based on which the worth of the appellant company can be increased so that premium can be charged for allotment of shares....
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....it case for invoking the provisions of Section 68 of the Act, looking into the instant facts. 13. In the case of Siyaram Metals Udyog (P.) Ltd. 156 taxmann.com 432 (Gujarat), the Assessee-company was incorporated in relevant assessment year by converting proprietary concern. Thereafter, assessee-company allotted shares at premium to proprietor and also to other investors. During course of assessment proceedings, Assessing Officer noted that a search was conducted at premises of assessee wherein it was found that share certificates were not issued to investors. He, thus, made additions under section 68 of entire credit of share capital and premium. On appeal, Commissioner (Appeals) deleted said additions. The Tribunal upheld said order on ground that identity of party was established by furnishing name, address and PAN detail, bank details, ITR etc. The Tribunal further held that it was first year of operation of assessee-company and declaration of dividend by company had nothing to do with share capital received by assessee and thus, assessee discharged onus cast upon it under section 68. The High Court held that the Tribunal had rightly held that provisions of section 68 could no....