| The Tax Publishers2020 TaxPub(DT) 2058 (Mum-Trib) : (2020) 183 ITD 0397 INCOME TAX ACT, 1961
Section 68
Assessee by filing copy of resolutions passed by assessee-company for allotment for equity shares of Rs. 10 each at a premium of Rs. 190 per share and copy of resolutions passed by share applicant companies to subscribe equity shares. Copies of ITR filed by share applicant companies, their balance sheet and bank statements, etc., proved identity and creditworthiness of share applicants and genuineness of transaction of receipt of share premium. Accordingly, AO was not empowered in examining justification of share premium so as to make addition under section 68.
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Income from undisclosed sources - Addition under section 68 - Receipt of share premium - AO took adverse inference on ground that assessee-company's performance did not command justification for share premium
Assessee-company issued shares on premium of Rs. 190 per share. AO drew adverse inference on the ground that assessee-company's performance did not command justification for share premium and accordingly, AO treated shares premium as unexplained credit under section 68. Held: Share price is a business consideration and AO cannot step into the shoes of businessman. Assessee by filing copy of resolutions passed by assessee-company for allotment for equity shares of Rs. 10 each at a premium of Rs. 190 per share and copy of resolutions passed by share applicant companies to subscribe equity shares. Copies of ITR filed by share applicant companies, their balance sheet and bank statements, etc., proved identity and creditworthiness of share applicants and genuineness of transaction of receipt of share premium. AO had categorically mentioned that there was no doubt about genuineness of source of fund. Accordingly, AO was not empowered in examining justification of share premium. Further, it was not the case of notices returning unserved and, therefore, AO was not justified in making addition under section 68.
Supported by:CIT v. Gagandeepdeep Infrastructure Private Limited (2017) 80 Taxmann.com 272 (Bom) : 2017 TaxPub(DT) 1238 (Bom-HC) and Pr. CIT v. Chain House International (P) Ltd. (2018) 98 Taxmann.com 47 (MP) : 2018 TaxPub(DT) 5193 (MP-HC). Distinguished:Pr. CIT v. NRA Iron & Steel Pvt. Ltd. [Civil Appeal No. 29855 of 2018) (SC) : 2019 TaxPub(DT) 1628 (SC), Pr. CIT v. NDR Prompters Pvt. Ltd. [ITA No. 49 of 2018) (Del-HC) : 2019 TaxPub(DT) 886 (Del-HC), CIT v. Navodaya Castle Pvt. Ltd. (2014) 367 ITR 306 (Del-HC) : 2014 TaxPub(DT) 3789 (Del-HC), Novodaya Castle Pvt. Ltd. v. CIT (2015-TIOL-314-SC-IT) (SC) : 2015 TaxPub(DT) 1868 (SC), CIT v. MAF Academy (P) Ltd. (2014) 361 ITR 258 (Del) : 2014 TaxPub(DT) 87 (Del-HC), Rick Lunsford Trade & Investment Ltd. v. CIT (2016) 385 ITR 399 (Cal) : 2016 TaxPub(DT) 3442 (Cal-HC), Rick Lunsford Trade & Investment Ltd. v. CIT (2016-TIOL-207-SC-IT) : 2017 TaxPub(DT) 915 (SC), CIT v. Nipun Builders & Developers (P) Ltd. (2013) 350 ITR 407 (Del) : 2013 TaxPub(DT) 0526 (Del-HC), CIT v. Nova Promoters & Finlease (P) Ltd. (2012) 342 ITR 169 (Del) : 2012 TaxPub(DT) 1558 (Del-HC), CIT v. Ultra Modern Exports (P) Ltd. 220 Taxman 165, CIT v. Frostair (P) Ltd. (2012) 210 Taxman 221 (Del) : 2012 TaxPub(DT) 3185 (Del-HC), CIT v. NR Portfolio Pvt. Ltd. (2013) 263 CTR 456 (Del) : 2013 TaxPub(DT) 1173 (Del-HC), CIT v. Empire Builtech (P) Ltd. (2014) 366 ITR 110 (Del) : 2014 TaxPub(DT) 1850 (Del-HC), CIT v. Focus Exports (P) Ltd. (2014) 228 Taxman 88 (Del) : 2014 TaxPub(DT) 4283 (Del-HC), N.K. Proteins Ltd. v. CIT 2017-TIOL-23-SC-IT : 2017 TaxPub(DT) 1860 (SC), N.K. Proteins Ltd. v. CIT 2016-TIOL-3165-AHM-IT : 2016 TaxPub(DT) 3862 (Guj-HC) and Udit Kalra v. ITO [ITA No. 220/2019 & CM No. 10774/2019, dt. 8-3-2019) : 2019 TaxPub(DT) 3068 (Del-HC).
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