TaxTMI 
TaxTMI 
2024 (1) TMI 1572
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....s without assigning any reason for allowing only 30% of total expenditure claimed by the assessee." Share Application Money: Excerpts taken from the Assessing Officer: 3. During the assessment proceedings, the Assessing Officer observed that the assessee had issued 1500000 shares of Rs.10 each on a premium of Rs.50/- per share and received Rs.90,00,000/- during the year. The assessee was asked to file the details of increase in share capital and share premiums vide notice u/s 142(1) of the Income Tax Act, 1961 dated 09.04.2013. The assessee had filed its reply vide letter dated 14.05.2013 stating that the company received a share application/share premium money of Rs.90,00,000/- for 150000 equity shares from various companies and issued the share of Rs.10/- each on premium of Rs.50/- per share. The company had received the share application money/share premium money from the following companies: Sl . No. Share Holders Name & Address No. of Shares Amount Recd. Share Money Share premium @ 50/Share 1 M/s Albatross Share Registry Pvt. Ltd. 4F2, Court Chambers, 35 Marine Line, Mumbai 30000 18,00,000 3,00,000 15,00,000 2 M/s Sidh Housing....
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.... ld. CIT(A) relied on the judgment o f Tarika Properties Investments Pvt. Ltd. (SC) wherein the subscribers bank account statements were forged and fabricated. 7. Aggrieved with the order of the ld . CIT(A), the assessee filed appeal before the Tribunal. Arguments of ld. AR: 8. The ld. AR argued that in the case o f M/s Oshin Inves tment & Finance Pvt. Ltd. and M/s Sidh Housing Development Co. Ltd., the Assessing Officer has not conveyed the assessee any adverse view with regard to the defective confirmation filed or confirmations not filed. It was argued that the assessee has duly furnished confirmation in three cases hence, the observation of the Assessing Officer that there has been failure on the part of the assessee to file the confirmation is not correct. With regard to the statement of Sh. Mukesh M. Choksi, it was argued that the statement has not been taken in the case of assessee or in respect of the fact relating to the assessee but with relation to some other assessee namely, Sahakar Global Ltd. It is argued that the purchases and transactions which were inquired by the Revenue pertain to the A. Y. 2009-10, A.Y. 2010-11 but not for the A. Y. 2011-12 which is the....
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....679; Share application Form alongwith cover letter (79-80) 152-153 ● Resolution of Board meeting for Investment in shares. 154 ● Confirmation of share investment dated 17.03.2010 155 9. On this issue, the judgments of various authorities have been perused: Kesha Appliances Pvt. Limited Vs. ITO in ITA No. 2715/D/2016, order dated 09.03.18 (Delhi ITAT) "Held that the assessee cannot be penalized merely on the ground that the six companies as discussed above failed to reply to the notices issued to them under section 133(6) of the Act." Al Anam Agro Foods (P.) Ltd. Vs. CIT [2013] 38 taxmann.com 375 (Allahabad) "Section 68 of the Income-tax Act, 1961 - Cash credits [Share application money] - Assessment year 2004-05 - In course of assessment, Assessing Officer made addition to assessee's income under section 68 in respect of share application money received from various persons - Tribunal, however, held that since identity of shareholders stood proved on record, amount of share application money could not be added to income of assessee - According to Tribunal, in such a case amount could be taxed in hands of persons who had inve....
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....cumstances for application of Sec.40A(2)(b) are not established by A.O., however in the absence of complete details and documentary evidence, only 30% is allowed, 70% disallowed. 13. The relevant background of addition is as under: Flagship Co. Trinity Insurance Broker Pvt. Ltd. is working as an insurance broker and procures the insurance covers from various general insurance companies for its clients mainly for Food Corporation of India (FCI) and for other clients. Against insurance policy, the flagship Co. receives brokerage from the insurance companies. For convincing and procuring the insurance cover from the clients like FCI, the flagship Co. gives them assurance of getting maximum risk coverage at minimum premium. These insurance covers are for the reimbursement of losses incurred by FCI etc. in transportation of food grains etc. from one place to another places, mainly through railways. The quantity at the time of loading the food grain on the trains and the quantity at the time of unloading at the destination shows a huge shortage due to which the FCI etc. had been suffering big losses. It is for covering this type of loss that the insurance covers are being taken by ....
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....ns of the plants and to furnish reports to such clients for minimizing the losses due to plant defects, replacements needed and other timely actions to be taken so that, the loss to the plants/machinery is minimum and is within the limits for which the insurance cover is secured. The assessee Co., carries out the above activities at its own end and also outsource the same to another related concern namely M/s M.M. Carpet & Industries Ltd. M.M. Carpet also has to keep the skilled, semi-skilled and other workforce for performing various functions mentioned above. These expenses paid to M/s M.M. Carpet & Industries Ltd. by the assessee are booked under the head "Risk Management & Supervision Charges". 14. The Assessing Officer sought the explanation of the assessee with regard to the work done by M.M. Carpet & Industries Ltd. The assessee submitted to the Assessing Officer that M/s M & M Carpet and Industries Ltd. is in the business of Risk Management and Supervisory work over the years and become pioneer in its field over the period based on its experience and expertise. Company has worked for various big government organizations over the periods. The company was involved in vario....
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.... been indeed payable and paid, no comparable cases have been brought on record, the M. M. carpets recipient company is also a tax paying company in the highest bracket, hence the revenue's allegation that this is ploy for tax avoidance holds no good. 19. The judicial pronouncements on this issue are as under: IKEA Trading (India) (P.) Ltd. Vs. DCIT [2021] 123 taxmann.com 129 (Delhi -Trib.) "Section 40(A)(2) of the Income-tax Act, 1961 - Business disallowance - Excessive or unreasonable payments (Payments to directors) - Assessment year 2004-05 - During course of scrutiny assessment proceedings, Assessing Officer asked assessee to explain payment made to two persons covered under section 40(A)(2)(b) - Assessee furnished details of remuneration paid to Director and claimed same to be in prescribed limits as per Industry Norms - Assessing Officer was of opinion that assessee failed to justify nature of services rendered by Directors so as to command such a huge remuneration - Accordingly Assessing Officer restricted remuneration to Rs. 50 lakhs and added balance of Rs. 56 lakhs to income of assessee - Commissioner (Appeals) observed that Assessing Officer had failed....