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2020 (3) TMI 465 - AT - Income TaxTaxability of proceed of share premium u/s 56(1) - utilization of share premium account for not specified purposes - violation of section 78 of the Companies Act, 1956 - HELD THAT:- We find that the provisions of Section 78(2) of the Companies Act, 1956 specifies the manner of utilization of share premium account for specified purposes which are relevant only for compliance with the provisions of the Companies Act, 1956 and have agreed absolutely no relevance for the purpose of Income Tax Act, 1961. In the instant case, there is absolutely no dispute with regard to receipt of share premium by assessee at ₹ 990/- per share was duly justified. There is no dispute that all the necessary documents were duly filed before the AO and all the share subscribers have directly replied to the notice issued u/s 133(6) of the Act by Ld. AO. It is not in dispute that the money was received from 10 corporate share holder group companies of the assessee. We find that the Ld. CIT(A) had given categorical finding that the entire transactions cannot be termed as unrealistic and cannot be termed as not genuine. There is absolutely no dispute in the instant case that the amount and share premium account were utilized by assessee for its business purposes. Respectfully following observations and respectfully following the judicial precedent hereinabove we direct the Ld. AO to delete the addition made in sum of ₹ 10,66,23,000/- u/s 56(1) of the Act. Accordingly, the ground nos. 2 & 3 raised by assessee are allowed.
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