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2017 (12) TMI 1635 - AT - Income TaxAddition u/s 68 - share application money received treating it as unexplained - assessee has failed to offer any explanation with regard to the credits found in the nature of share capital and share premium - Held that:- All the given evidences go to prove an undoubted fact that these companies are not paper companies and recognized with business activity. The assessee also filed affidavit form the directors of subscriber companies, wherein thy have explained the reasons for not receiving communication sent by the AO u/s 133(6). They further stated in the affidavit that they have subscribed to the share capital of the company and also furnished supporting evidences to justify investment in share capital of the company - The assessee has furnished bank statement of subscribers wherein we do not find any instance of cash deposits or transfer from other companies prior to the date of transfer to the assessee company - AO was incorrect in treating share capital alongwith share application money as unexplained cash credit u/s 68 Coming to the observation of the AO with regard to the issue of shares at a premium merit in the findings of the AO for the reason that the issue of shares at a premium and subscription to such shares is within the knowledge of the company and the subscribers to the share capital and the AO cannot have any role to play as long as the assessee has prove the genuineness of transactions. We further notice that the AO cannot question the issue of shares at a premium and also cannot bring to tax such share premium within the provisions of section 68 of the Act, before insertion of Proviso to section 68 by the Finance Act, 2012 wef 01-04-2013 which evident from the fact that the Hon’ble Bombay High Court has held that Proviso inserted to section 68 is retrospective in nature. Therefore, we are of the considered view that the AO has treated share capital and share premium as unexplained credit u/s 68 of the Act, on flimsy grounds ignoring all evidences filed by the assessee. - decided against revenue
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