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2023 (2) TMI 1011 - AT - Income TaxAddition u/s 68 - disbelieving agricultural receipts - allowability of agricultural expenses incurred by the assessee - CIT-A deleted the addition - HELD THAT:- CIT(A) had recorded a categorical finding that the ld. AO in the remand report had conceded that five agriculturists agreed that their lands were given to the assessee company on rent basis. Considering the remand report of the ld. AO, considering the various details furnished by the assessee, as detailed supra, considering 7/12 extracts from the said Revenue authorities furnished by the assessee and considering the independent reports from Superintendent of Agriculture department of Taluk Akkalkot in Solapur District and District Superintendent, Agriculture Officer, Pune, the ld. CIT(A) held that the net agricultural income shown by the assessee at Rs.1,17,31,323/- to be genuine and deleted the addition made by the ld. AO in respect of gross receipts in the sum of Rs.3,65,09,908/- as unexplained cash credit u/s.68 of the Act. By this process, the sale proceeds received by the assessee from agricultural activities in the sum of Rs.3,65,09,908 was accepted as genuine and agricultural expenses debited by the assessee in its profit and loss account were also accepted as genuine. We do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee in the facts and circumstances of the instant case. Accordingly, the ground Nos. 1 & 2 raised by the Revenue are dismissed. Addition on account of share premium u/s.56(2)(viib) treating the same as income from other sources - shares issued by the assessee company to its holding company @Rs.125/- per share using DCF method - CIT-A deleted addition - HELD THAT:- We find that assessee company admittedly had used the share premium amounts for the purpose of its business, which fact has been admitted by the ld. AO in his assessment order. Hence, the observations made by the ld. AO in this regard are totally baseless, devoid of merits and deserves to be dismissed in limine. CIT(A) had rightly placed reliance on the decision of Vodafone India Services Pvt. Ltd [2014 (10) TMI 278 - BOMBAY HIGH COURT] wherein it has been held that receipt of share capital and share premium is capital in nature and cannot be brought to tax. Pursuant to the amendment made in proviso to Section 56(2)(viib) which has been introduced from 01/04/2013, (hence, applicable from A.Y.2013-14 onwards), the assessee is bound to justify the receipt of share premium by way of valuation report. In the instant case, the assessee had duly justified the charging of premium on its holding company by way of an independent valuation report using discounted cash flow method which is one of the recognised valuation method prescribed under Rule 11UA of the Income Tax Rules. This decision of the Hon”ble Jurisdictional High Court has been accepted by the department and no further appeal to Hon”ble Supreme Court has been preferred. In fact there is also a Board Instruction No.2/2015 in FNo.500/15/2014-APA-I dated 29/01/2015, wherein the Central Board of Direct Taxes (CBDT) had categorically stated that the aforesaid decision of the Hon”ble Bombay High Court has been accepted by the Board - we do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee in respect of this issue. Accordingly, the ground Nos. 3,4 & 5 raised by the Revenue are dismissed. Addition u/s.68 - loan received by the assessee company from its holding company - CIT-A deleted addition - HELD THAT:- On perusal of the financial statements of the lender company, we find that it has own funds of Rs.59.97 Crores and Rs.59.66 Crores as on 31/03/2012 and 31/03/2013 respectively. Confirmation for receipt of loan was also placed on record by the assessee before the ld. AO from the lender company. The lender company is duly assessed to Income Tax and the Income Tax assessment particulars were also furnished before the ld. AO. The monies invested by the lender company in the assessee company is duly reflected in the books of accounts of the lender company and the same has been paid out of accounted sources of the lender company. Sufficient creditworthiness is proved for advancing loan by the lender company to the assessee company as is evident from the bank statements of the lender company. All the three ingredients of Section 68 of the Act viz. identity, creditworthiness of the lender and genuineness of the transactions are proved beyond doubt in the instant case. Hence, we hold that the ld. CIT(A) was justified in deleting the addition made u/s.68 - Ground No.6 raised by the Revenue is dismissed.
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