TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1058
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....crutiny through CASS and notice u/s 143(2) dated 18.09.2015 was issued and served upon the assessee. During the assessment proceedings, the AO noted that the assessee had received share capital of Rs. 9,85,95,750/- from nineteen (19) share subscribers. With a view to verify the identity of the shareholders, genuineness of the transactions and their creditworthiness, the AO issued notices u/s 133(6) to all the parties. In response, all the parties filed their replies. The AO noted that in six (6) cases, though the names of the share subscribers had underwent change but the share application forms contained their erstwhile names and therefore in AO's view the identity of these six share subscribers was in doubt. The AO further observed that the creditworthiness of the remaining shareholders remained unestablished. Summarizing his observations, the AO noted that, the shares were issued at a premium of Rs. 540/- which was unusually high and that the share subscribers did not comply the summons issued to them. The AO further observed that, though the share subscribers had filed their details but their financials revealed that they had NIL or nominal income. With these observations and a....
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....licants and provided the details for source of income in the hands of the entities who have invested in the share capital of the Company. 6.2.3. The assessee to support its averments relied in the case of 'Income Tax Officer Vs M/s. Wiz-Tech Solutions Pvt. Ltd. (ITAT Kolkata)', it was held that "the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants and it was held that the onus shifted to AO to disprove the documents furnished by assessee. This cannot be brushed aside by the AO to draw adverse view which cannot be countenanced. In the absence of any investigation, much less gathering of evidence by the Assessing Officer, an addition cannot be sustained merely based on inferences drawn by circumstance." 6.2.4. In the case of 'Income Tax Officer Vs M/s. Wiz-Tech Solutions Pvt. Ltd. (ITAT Kolkata)', where the following was held: "wherein the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. Thereafter, the onus shifted to AO to disprove the documents furnished by assessee. This cannot be brushed aside by the AO to draw adverse view which cann....
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....hiness of loan creditors. All these evidences are part of paper book filed by the assessee. Therefore, it is incorrect on the part of the Assessing Officer to allege that unsecured loans received by the assessee was not explained with necessary evidences. Therefore, the assessee has discharged its burden cast upon under section 68 by filing various details including financial statement of creditors, their bank statements and confirmation letters to prove transactions. Once an assessee discharged its burden, then burden shifts to Assessing Officer to prove otherwise that said transaction was nothing but undisclosed income of the assessee. In the instant case, the Assessing Officer has not brought on record any evidence to prove that said amount was undisclosed income of the assessee. Therefore, the Assessing Officer was completely erred in making additions towards unsecured loans received from three companies of the assessee group. The assessee has discharged burden cast upon under section 68 to prove unsecured loans received from three companies. The Assessing Officer as well as Commissioner (Appeals) without appreciating the evidences filed by the assessee has simply made....
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.... issued u/s 133(6) of the Act, submitted that the assessee as well as the subscribers have filed all the evidences proving the identity and creditworthiness of the subscribers as well as genuineness of the transactions. The Ld. AR also submitted that, when the lenders had complied with the notices u/s 133(6) which were issued and served through registered post, the impugned addition could not be made on the ground that there was no compliance to summon issued u/s. 131 of the Act upon the lenders. The ld. AR further pointed out that, subsequent to the amendments made in Section 56(2)(viib) of the Act by the Finance Act, 2012, the share capital was required to be issued at their fair value determined in terms of Rule 11UA of the Income-tax Rules, 1962. Taking us through the valuation report which was placed on Pages 31 to 45 of Paper book, he showed that the intrinsic value of the shares of the assessee was Rs. 547/- in terms of Rule 11UA and therefore the issuance of shares at a premium of Rs. 540/- was justified and in accordance with law. In so far as the mismatch of names in the share application forms was concerned, the assessee explained that, the share application forms were f....
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....) that the shareholders had filed the relevant evidences to discharge their onus of substantiating the identity and creditworthiness of the lenders and genuineness of the transactions. 09. Coming to the reasonableness of the share premium which was doubted upon by the Ld. DR, we observe that the shares were issued at the prevailing fair market value of the assessee computed in terms of Section 56(2)(viib) read with Rule 11UA of the Rules. Having gone through the copy of the valuation report, which is found at Pages31 to 45 of the paper book that, the intrinsic value of shares of the assessee was higher than book value due to the market value of the shares & securities held by it due to which the shares issued during the year commanded a premium. 010. With respect to creditworthiness not being there in case of subscribers, we are of the opinion that the mere fact that they had meagre recurring income is not relevant and creditworthiness cannot be doubtful when their own funds are several times the investment made in the assessee company. The case of the assessee find support from the decision of Hon'ble Delhi High court in the case of CIT Vs M/s Mayawati 338 ITR 563(Del). ....
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....e facts in brief are that during the impugned financial year, the assessee has not earned any exempt income from the investments in shares and securities. The learned AO during the course of assessment proceedings noted that though the assessee has not received any exempt income during the year but that the investments were capable of yielding exempt income in the subsequent years, and accordingly, by following the CBDT Circular No.5/2014, the AO invoked the provisions of Section 14A of the Act and made an addition of Rs.51,123/-. 015. The learned CIT (A) in the appellate proceedings allowed the appeal of the assessee after taking into account the contentions of the assessee by holding and observing as under: "7.2.1. I have perused the assessment order as well as the submission of the assessee. It is observed that the AO had disallowed Rs. 51,123/- u/s 14A on the grounds that the expenditure incurred in respect to income not includable to total income of the assessee. However, the appellant company stated that it has not earned any income exempt u/s 10(34)of the Act. Further, as per the details of expenditure furnished by the Appellant company, none of the expenditure i....
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....Act in the absence of any exempt income earned during the year it has been held by hon'ble Calcutta High Court in the cases of REI Agro [2022] 140 taxmann.com 71 and GKK Capital Markets Pvt. Ltd. (2017) 392 ITR 192(Cal) that no disallowance can be made u/s 14A in absence of exempt income earned during the year. However, section 14A was amended by Finance Act 2022. Post amendment to section 14A, disallowance u/s 14A can be made even if no exempt income is earned by the assessee. The issue whether the amendment to section 14A of the Act made by Finance Act, 2022 is retrospective or prospective has been settled by the Hon'ble Delhi High Court in the case of PCIT v. Era Infrastructure (India) Ltd [448 ITR 674] wherein the Hon'ble Court held that the amendment made by the Finance Act, 2022 to section 14A by inserting a non-obstante clause and Explanation will take effect from 1-4-2022 and cannot be presumed to have retrospective effect. 3.20 find that the ratio laid down in the case of PCIT v. Era Infrastructure (India) Ltd. (Supra) judgment dt. 20/07/2022, wherein the Hon'ble Court has held that the amendment made in Section 14A of the Act by Finance Act, 2022,....