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2019 (5) TMI 687 - AT - Income TaxAddition u/s 68 - whether the credit in the form of share capital in the companies under appeal can be considered to be application of undisclosed income of M/s Surya Food and Agro Limited who have declared such income before the Settlement Commission? - HELD THAT:- Before the Settlement Commission, the assessee has repeatedly stated, that the undisclosed income which is being offered before the Settlement Commission has been applied by way of introduction in the shape of share capital to group entities viz., M/s Surya Processed Food Pvt.Ltd. and M/s Surya Agrotech Infrastructure Limited. In paragraph 15 of the application before the Settlement Commission, M/s Surya Food & Agro Limited has made it clear that “there is no other undisclosed asset found or application of funds by the group”. This statement made before the Settlement Commission has neither been found to be incorrect nor before us it has been shown that M/s Surya Food and Agro Limited has applied the undisclosed income offered before the Settlement Commission for acquisition of any other asset. We entirely agree with order of the ITAT passed in stay petition wherein the ITAT held that “the disclosure has been made by the company who has earned the undisclosed income and routed in books through the petitioner companies as unaccounted share capital. The application of the income is taxed in the hands of the petitioner companies apparently it seems and sources of income is taxed in the hands of Surya Food and Agro Ltd. Therefore prima facie the case of the assessee shows that there is double taxation, once the source of income and secondly the application of income”. In view of the above, since the income has already been taxed in the hands of M/s Surya Food and Agro Limited, the application of the said income in the form of share capital in M/s Surya Processed Food Pvt.Ltd. and M/s Surya Agrotech Infrastructure Ltd. i.e., the appellants before us, cannot be taxed again. Accordingly, we delete the addition for unexplained share capital and allow ground No.1 in all the appeals. Expenditure being commission for acquiring the accommodation entries in the form of share capital - HELD THAT:- Both the parties have agreed that if it is accepted that the investment in the share capital was out of the undisclosed income of M/s Surya Food & Agro Limited, which is disclosed before the Settlement Commission, the same finding would be squarely applicable with regard to commission for arranging such accommodation entries. In view of the finding with regard to ground No.1, we hold that the addition for alleged expenditure on arranging the accommodation entries in the form of share capital is also made from the undisclosed income offered and settled by M/s Surya Food & Agro Limited before the Settlement Commission. - Decided in favour of assessee.
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