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2016 (8) TMI 375 - AT - Income TaxShare premium received - treating the receipt as a business receipt and thereby confirming the addition of share premium u/s. 56(1) of the Act to its total income - Held that:- While dealing with the assessment or appeals, under the provisions of the Income tax Act, the basic principle every officer of the department has to remember that he is the representing the Sovereign and his duty is to collect Due taxes only. For determining the Due taxes they should avoid bringing farfetched fancies and ideas. In the case under consideration they have done the same. Without understanding the basic philosophy of income they have referred to the provisions of CA, so that the amount in question can be taxed at any cost. It is not a fair or judicious approach to deal with the Subjects of the State. Even if the assessee had violated the provisions of CA, it will be penalised by the provisions of that Act. But, it would never turn a capital receipt in to revenue receipt or visa-versa. Neither the AO nor the FAA has proved that the share premium money was utilised by it for running its day today business. The assessee had proved that the opening and the closing balance of the share premium money account was same for the year under consideration. We find that the factual position assailed by the assessee was not proved incorrect by both the authorities. If there was no difference in the balances how the conclusion was drawn that the share premium money was utilised for business purposes and not preserved for the purposes for which it was collected. Without any evidence both the authorities held that the assessee had used the money for purposes other than the purposes for which it was collected. Therefore, in our opinion there was no foundation of the building that was built by them. We are not in position to validate such a classical factual blunder. Section 100 of the CA deals with reduction of share capital. In short, the stand taken by the FAA is not endorsable either legally nor factually. - Decided in favour of assessee.
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