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2020 (1) TMI 852 - AT - Income TaxUnexplained cash credits u/s 68 - assessee’s finances and operations do not justify the share premium, but the entire share premium raised has been diverted in paying off long term loan of the assessee - lifting of corporate veil - contention of the assessee that the issue of compliance of Section 78 of the Companies Act, 1956 or diversion of share premium cannot be considered - HELD THAT:- The assessee-company, having raised share premium, has diverted the same in paying off long term loans. The mandate of the decision DURGA PRASAD MORE [1971 (8) TMI 17 - SUPREME COURT] is duly applicable. Hence the submission of the learned counsel of the assessee that utilisation of share premium amount in paying off loans is irrelevant is not legally sustainable. It is also settled law that substance prevails over form. It is undisputed that share premium amount has been actually utilised for paying off loan. Furthermore, we note that the transaction is between group concerns. Assessee submitted that these concerns belong to a reputed group and they are not fly by night operators. This makes it amply clear that for paying off the loan of the assessee-company, a group company has accommodated by introducing money in the form of share premium. In substance, it is not at all share premium. It is, in fact, a misuse of the corporate veil. Assessee-company has no obligation to pay back the amount received as share premium in any event. However, we also find that in this regard learned counsel of the assessee has made various submissions which interest of justice demands that this aspect of adjudication needs to be remitted to the file of the Assessing Officer. The Assessing Officer shall examine this aspect in view of our observation and the Hon'ble Apex Court’s decisions referred above. The Assessing Officer shall also consider the submissions of the learned counsel for the assessee and give the assessee proper opportunity of being heard. Appeal of the assessee is allowed for statistical purposes.
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