Share Premium on Shares Is Capital, Not Income; Section 68 Addition Disallowed Due to No Section 78(2) Violation

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....The SC dismissed the SLP on grounds of both unexplained delay of 271 days and merits. The Court upheld the HC's finding that share premium received on issuance of shares constitutes a capital account transaction and does not generate income. The addition of the entire share premium as unexplained cash credit under Section 68 was improper, given the absence of any violation of Section 78(2) of the Companies Act, 1956 regarding utilization of the share premium account. The Assessing Officer's failure to distinguish between creation of share premium and utilization of funds was affirmed. Consequently, no interference was warranted with the HC order, and the addition to income was disallowed.....