TaxTMI 
TaxTMI 
2026 (8) TMI 392
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....he fact and in circumstances of the case and in law, the Hon'ble ITAT was right in upholding the decision of Ld. CIT(A) deleting the addition made on account of share premium ignoring the fact that the AO has brought on record that though the assessee has consistent negative EPS and there was no valuation report, the shares of the assessee have been purchased at premium and the credit worthiness of the investor is not established in view of the negative Reserve and Surplus and only interest bearing funds available with them and the use of share premium for business purposes in the form of making short term advances? (ii) Whether, on the facts and in circumstances of the case and in law, the Hon'ble ITAT was right in upholding the d....
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....not incurred any expenditure in relation to exempt income. Over and above this, the Assessee also challenged the addition made by the Assessing Officer towards share capital and share premium under Section 68 of the IT Act, and on the basis of that submitted that premium is a capital receipt and that the Assessee being a Company, is not required to prove the purpose or justification for charging premium on shares, and what is relevant is whether the identity, genuineness and creditworthiness of the parties investing has been proved or not. According to the Assessee it had filed all details in order to prove all the ingredients, and hence the Assessing Officer erred in making any addition towards share capital and share premium under Section....
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....e to the conclusion that the CIT (Appeals) rightly deleted the addition made by the Assessing Officer on this count. To put it in a nutshell, the ITAT, after perusing the facts and circumstances of the present case, came to the conclusion that the Assessee had filed complete details including identity of the subscriber to the share capital, as per which the Assessee has issued Rs. 22,50,000/- equity shares at Rs. 50/- per share having a face value of Rs. 10/- per share with a premium of Rs. 40/- per share. The ITAT noted that the Assessee had also filed complete details of the financial statement of the subscriber of the shares and their bank statements. Further the share capital issued by the Assessee had also been disclosed by the subscri....
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....lay, as long as ingredients provided under Section 68 of the IT Act were proved or established. 7. Having gone through the order of the ITAT as well as the order of the CIT (Appeals), we find that no substantial question of law arises in the present case. In the present case, both authorities below, on facts, were fully satisfied about the genuineness of the transaction, the identity of the subscriber, the creditworthiness of the subscriber as well as the source from which the monies were invested. Once this is the case, we are of the view that the order of the ITAT does not give rise to any substantial question of law. 8. To get over this hurdle, Mr. Sharma, the learned counsel appearing on behalf of the Revenue, brought to our atten....
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....claratory". He, therefore, submitted that the proviso cannot have retrospective operation and would apply only prospectively from A.Y.2013-14. This apart the learned counsel submitted that even assuming for the sake of argument that the said proviso were to apply, in the facts of the present case, there was clearly an explanation about the nature and source of funds that were invested by the subscriber, namely the investor. He, therefore, submitted that the reliance placed on the second proviso to Section 68 is wholly misconceived. 10. Having heard both counsels on this aspect, we are clearly of the view that in the facts of the present case, there is no requirement for us to determine whether the second proviso to Section 68 operates pr....