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2020 (8) TMI 756 - AT - Income TaxUnexplained Share Premium u/s 68 - CIT(A) deleted the said addition - HELD THAT:- Hon’ble Mumbai High Court had sanctioned the scheme of demerger of investment division of Hemant Tools Pvt. Ltd. with Jayvik Foresight Innovation and Solution Pvt. Ltd. in view of Section 391 to 394 of the Companies Act, 1956. M/s. Hemant Tools Pvt. Ltd. was having reserve and surplus fund and on account of demerger the appellant has shown the receivable from Hemant Tools and received interest thereon which was offered for taxation under the head income from other sources. The assessee has also shown the income from sale of investment as capital gain. Identity and creditworthiness is not doubted. There is nothing on record to which it can be assumed that the own money has been introduced on account of demerger of the investment division of Hemant Tools Pvt. Ltd. The assessee was also receiving the funds continuously from the Hemant Tools. What was not explained by assessee is not on record. The transaction has been properly explained and there is no iota evidence on record to which it can be assumed that the own money has been introduced which liable to be addition u/s 68 Hemant Tools Pvt. Ltd. during the investing activity which was never treated as business activity. The investment was from other sources as well as from capital gain. The investment activity was not liable to be treated as business activity of M/s. Hemant Tools Pvt. Ltd. Accordingly, demerger of the Hemant Tools Pvt. Ltd. with the appellant cannot be held within the provisions of Section 2(19AA). The facts are not distinguishable at this stage. We nowhere found illegality and infirmity and the order passed by the CIT(A) in question. CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, all these issues are decided in favour of the assessee against the revenue.
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