Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (5) TMI 829 - ITAT MUMBAIAddition u/s 56(2)(ix) - forfeited amount of application money collected on issuing shares against share warrants - six parties did not pay the balance amount of 75% and hence the assessee forfeited the payments of 25% already made by them - HELD THAT:- In the instant case, the assessee has received money on issuing share capital in the form of exercise of rights in share warrants. Share capital so collected by the assessee is not in the course of negotiations for transfer of capital asset. Shares so issued may constitute Capital asset in the hands of the persons, who purchased the shares, but that is not relevant here. Issuing share capital does not result in transfer any capital asset. Accordingly, since the money was not received in the course of negotiations for transfer of capital asset, the provisions of sec.56(2)(ix) will not apply to the facts of the present case. As decided in M/S. R.S. TRIVENI FOODS P. LTD. case [2019 (8) TMI 1674 - ITAT DELHI] forfeiture of the amount is not on account of failure of negotiation of transfer of capital asset of the assessee and thus, is not hit by section 56(2)(ix). The addition sustained by the Ld. CIT (A) is directed to be deleted. Thus we hold that the amount forfeited by the assessee out share capital issued by it shall not fall within the scope of sec.56(2)(ix) - Further, the said amount shall constitute a Capital receipt in the hands of the assessee. Accordingly, the above said amount is not taxable in the hands of the assessee. Appeal of assessee allowed.
|