Share premium received through share issuance is capital transaction, not taxable income under Section 68The SC dismissed a Special Leave Petition challenging an HC decision regarding addition under Section 68 for share premium received. The revenue authorities had treated the entire share premium as unexplained cash credit, alleging violation of Section 78(2) of the Companies Act, 1956 regarding utilization of share premium account. The HC had ruled that share premium received through share issuance is a capital account transaction that does not give rise to income. The assessing officers failed to distinguish between fund utilization and creation of share premium account in books. The SC upheld the HC's decision, finding no justification for the addition. The petition was dismissed both for excessive delay of 271 days in filing and on merits, with the SC finding no grounds to interfere with the HC's order.

The Supreme Court, through Hon'ble Justices J. B. Pardiwala and R. Mahadevan, dismissed the Special Leave Petition due to a "gross delay of 271 days" in its filing, which was "not satisfactorily explained" by the petitioner. Additionally, the Court found "no good reason to interfere with the impugned order passed by the High Court." Consequently, the petition was dismissed both on grounds of delay and merits, and all pending applications were disposed of.

Addition u/s 68 - Share premium - Transaction in the nature of Capital Account - violation of the provision of Section 78(2) of the Companies Act, 1956 with respect to the utilization of the share premium account - addition of entire share premium received as unexplained cash credit as there was no justification for charging share premium and there was violation of the provisions of Section 78(2) of the Companies Act, 1956 - delay filling SLP Whether the money received as premium of share issued on account of a capital account transaction can give rise to income? As decided by HC [2024 (2) TMI 891 - BOMBAY HIGH COURT] Share premium received by issuance of shares is on capital account and gives rise to no income.We are satisfied that the closing balance and the opening balance of the share premium money only indicates that there is an increase in the share premium account by way of infusion of funds and not depletion. There is nothing to indicate that the assessee has used the share premium money to invest in shares. The Assessing Officers have failed to understand the difference between utilization of funds and creation of share premium account in the books of accounts for the share premium receipt HELD THAT:- There is a gross delay of 271 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner. Even otherwise, we find no good reason to interfere with the impugned order passed by the High Court. The Special Leave Petition is, accordingly, dismissed on the ground of delay as well as merits. THE DEPUTY COMMISSIONER OF INCOME TAX Versus SHENDRA ADVISORY SERVICES P. LTD.
Income Tax
2025 (7) TMI 1126 - SC Order - TMI
SUPREME COURT - SC
Dated:- 15-7-2025
SPECIAL LEAVE PETITION (CIVIL) DIARY NO. 6353/2025 - -
Income Tax
HON'BLE MR. JUSTICE J. B. PARDIWALA And HON'BLE MR. JUSTICE R. MAHADEVAN For the Petitioner : Mr. Rupesh Kumar, Sr. Adv. Mr. Aditya Dixit, Adv. Mr. Raj Bahadur Yadav, AOR Mr. Varun Chug, Adv. Ms. Archana Sharma, Adv. ORDER UPON hearing the counsel the Court made the following. 1. There is a gross delay of 271 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner. 2. Even otherwise, we find no good reason to interfere with the impugned order passed by the High Court. 3. The Special Leave Petition is, accordingly, dismissed on the ground of delay as well as merits. 4. Pending applications, if any, shall also stand disposed of.
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