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Tax Publishers 2017 TaxPub(DT) 4448 (Guj-HC) : (2017) 397 ITR 0573

 

Associated Transrail Structure Ltd. v. Asstt. CIT

 

INCOME TAX ACT 1961

--Income from undisclosed sources--Addition under section 68Genuineness of share application money----If the share application money is received by the assessee-company from the alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen the individual assessments in accordance with law and such amounts could not be regarded as undisclosed income under section 68 in the hands of assessee company.--Assessee was a company engaged in the business of fabrication and erection of transmission towers. One of the shareholders, Smt. M, applied for shares of the company and the assessee received Rs. 5,00,000 towards share application money on different dates. According to the AO, this source of Rs. 5,00,000 could not be explained by Smt. M and therefore, addition of Rs. 5,00,000 was made in the hands of the assessee under section 68. The said Smt. M also filed a confirmation letter confirming that she had paid by cheque the above amount to the company towards shares and she also stated that her husband was a businessman who expired in the year 1986 leaving the business funds and income. Held: The AO having traced out the source of funds to specific persons who had invested the same in share of the assessee-company, it was open for the AO to proceed against the said persons. The funds not having emanated from the assessee-company, there was no warrant for making addition of the said amount as undisclosed income under section 68 in its hands.

Income Tax Act 1961 Section 68

Applied: CIT v. Lovely Exports (P) Ltd. (2009) 319 ITR (St.) 5 (SC)

REFERRED : CIT v. Belgium Glass and Ceramics (P) Ltd. (Tax Appeal No. 442 of 2011, dt. 13-6-2012) CIT v. Bhavana Property Developers Ltd. (Tax Appeal No. 1039 of 2009, dt. 11-1-2011) CIT v. Gay Lord Industries Ltd. (Tax Appeal No. 1426 of 2011, dt.d 27-6-2012) CIT v. Guptex (P) Ltd. (Tax Appeal No. 1309 of 2010, dt. 14-9-2011) CIT v. Lovely Exports (P) Ltd. (2009) 319 ITR (St.) 5 (SC) CIT v. Maruti Aluminium (P) Ltd. (Tax Appeal No. 330 of 2011, dt. 27-6-2012) CIT v. Nikhem Capital Ltd. (Tax Appeal Nos. 2087 and 2088 of 2009, dt. 14-11-2011) CIT v. Ranchhod Jivabhai Nakhava (Tax Appeal No. 50 of 2011, dt. 20-3-2012) CIT v. Satyendra Traders (P) Ltd. (Tax Appeal No. 692 of 2010, dt. 4-10-2011) CIT v. Shree Rama Multi Tech Ltd. in (Tax Appeal No. 555 of 2012, dt. 28-1-2013) CIT (Asst.) v. Tarujyot Investment Ltd. (Tax Appeal No. 457 of 1999, dt. 9-8-2010) Hindustan Inks and Resins Ltd. v. Dy. CIT (2011) 60 DTR 18 (Guj)

FAVOUR : In assessee's favour

A.Y. : 1994-95



IN THE GUJARAT HIGH COURT

K.S. JHAVERI & G.R. UDHWANI, JJ.

Associated Transrail Structure Ltd. v. Asstt. CIT

Tax Appeal No. 724 of 2006

16 June, 2016 A.Y. 1994-95

Against Revenue

CIT v. Lovely Exports (P) Ltd. (2009) 319 ITR (St.) 5 (SC)--Applied.

Cases Referred to:--

CIT v. Belgium Glass and Ceramics (P) Ltd. (Tax Appeal No. 442 of 2011, dt. 13-6-2012)

CIT v. Bhavana Property Developers Ltd. (Tax Appeal No. 1039 of 2009, dt. 11-1-2011)

CIT v. Gay Lord Industries Ltd. (Tax Appeal No. 1426 of 2011, dt.d 27-6-2012)

CIT v. Guptex (P) Ltd. (Tax Appeal No. 1309 of 2010, dt. 14-9-2011)

CIT

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