CIT & Anr. v. Mulberry Silk International Ltd.

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The Tax Publishers2012 TaxPub(DT) 2066 (Karn-HC) : (2012) 046 (I) ITCL 0232 : (2012) 068 DTR 0149 INCOME TAX ACT, 1961 --Income from undisclosed sources--Addition under section 68Unexplained share capital contribution--During the course of search, it was found that certain amount of capital contribution received during block period was not satisfactorily explained by assessee. AO, therefore, treated the same as undisclosed income under section 68. On appeal, Commissioner (Appeals) allowed the appeal in part after following the decision of Supreme Court in case of CIT v. Steller Investments Ltd. (2001) 251 ITR 263 (SC) : 2001 TaxPub(DT) 507 (SC). Tribunal confirmed the order of Commissioner (Appeals). Being aggrieved, revenue challenged the order of Tribunal. Assessee submitted that before AO, its sister concern had written a letter stating that it had subscribed to additional share capital and, therefore, AO ought to have accepted the letter and should not have made addition under section 68. Held: The order of the Tribunal was upheld in view of the decision of the Supreme Court in Steller Investment Ltd. (supra) the decision of the Division Bench of this Court in Ask Brothers Ltd., it is clear that even an amount of share capital contributed is not found to be genuine and the same cannot be treated as undisclosed income under section 68 and in the present case having regard to the letter given by the MSIL, sister concern stating that it had contributed to the share capital could not be disputed. Income Tax Act, 1961, Section 68 IN THE KARNATAKA HIGH COURT V.G. SABHAHIT & S. N. SATYANARAYANA, JJ. CIT & Anr. v. Mulberry Silk International Ltd. ITA No. 170 of 2006 A.Y. 1989-90 to 1999-2000 12 December, 2011 Income Tax Act, 1961, S. 68 Decision: In assessees favour. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 2066 (Karn-HC) : (2012) 046 (I) ITCL 0232 : (2012) 068 DTR 0149

INCOME TAX ACT, 1961

--Income from undisclosed sources--Addition under section 68Unexplained share capital contribution--During the course of search, it was found that certain amount of capital contribution received during block period was not satisfactorily explained by assessee. AO, therefore, treated the same as undisclosed income under section 68. On appeal, Commissioner (Appeals) allowed the appeal in part after following the decision of Supreme Court in case of CIT v. Steller Investments Ltd. (2001) 251 ITR 263 (SC) : 2001 TaxPub(DT) 507 (SC). Tribunal confirmed the order of Commissioner (Appeals). Being aggrieved, revenue challenged the order of Tribunal. Assessee submitted that before AO, its sister concern had written a letter stating that it had subscribed to additional share capital and, therefore, AO ought to have accepted the letter and should not have made addition under section 68. Held: The order of the Tribunal was upheld in view of the decision of the Supreme Court in Steller Investment Ltd. (supra) the decision of the Division Bench of this Court in Ask Brothers Ltd., it is clear that even an amount of share capital contributed is not found to be genuine and the same cannot be treated as undisclosed income under section 68 and in the present case having regard to the letter given by the MSIL, sister concern stating that it had contributed to the share capital could not be disputed.

Income Tax Act, 1961, Section 68

IN THE KARNATAKA HIGH COURT

V.G. SABHAHIT & S. N. SATYANARAYANA, JJ.

CIT & Anr. v. Mulberry Silk International Ltd.

ITA No. 170 of 2006

A.Y. 1989-90 to 1999-2000

12 December, 2011

Income Tax Act, 1961, S. 68

Decision: In assessees favour.