2014 (11) TMI 479 - ITAT MUMBAI

Addition u/s 68 - Share capital and share premium received treated as unexplained cash credits – Held that:- The issue of shares at premium is always a commercial decision which does not require any justification - Further the premium is a capital receipt which has to be dealt with in accordance with Sec. 78 of the Companies Act, 1956 - the company is not required to prove the genuineness, purpose or justification for charging premium of shares, share premium by its very nature in a capital receipts and is not income for its ordinary sense - the assessee had filed all the requisite details/documents which are required to explain credits in the books of accounts by the provisions of Sec. 68 of the Act - The assessee has successfully established the identity of the companies who have purchased shares at a premium - The assessee has also filed bank details to explain the source of the shareholders and the genuineness of the transaction was also established by filing copies of share application forms and Form No. 2 filed with the Registrar of Companies.

The amendment has been brought in the Income Tax Act under the head "Income from other sources" by inserting Clause (viib) to Sec. 56 of the Act wherein it has been provided that any consideration for issue of shares, that exceeds the fair value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be treated as the income of the assessee but the legislature in its wisdom has made this provision applicable w.e.f 1.4.2013 i.e. on and from A.Y. 2013-14 - the transaction has to be considered in the light of the provisions of Sec. 68 of the Act - the assessee has given details of names and addresses of the shareholders, their PAN Nos, the bank details and the confirmatory letters - the initial burden of proof as rested upon the assessee has been successfully discharged by the assessee - Even if it is held that excess premium has been charged, it does not become income as it is a capital receipt - The receipt is not in the revenue field - if the identity is proved, no addition can be made u/s. 68 of the Act – the order of the CIT(A) is upheld – Decided against revenue.

Restriction of disallowance u/s 14A r.w. section 8D – Held that:- The AO has followed the decision in the case of GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] - CIT(A) has very correctly upheld the findings of the AO that Rule 8D is applicable during the year under consideration - CIT(A) has restricted the disallowance of expenditure to the extent claimed by the assessee – there was no error or infirmity in the findings of the CIT(A) – Decided against revenue.