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2018 (10) TMI 1393 - ITAT MUMBAIAddition of excess premium received by the assessee on issue of preference shares u/s. 68 - Held that:- We are of the view that the “nature” of the transaction has been explained by the assessee as Share Premium, which could not be contradicted by the revenue with any other material. There is no dispute with regard to the “Source”. Hence, in effect, the conditions prescribed in sec. 68 of the Act has been fulfilled by the assessee. With regard to the basis for excess premium, we have noticed that the AO has considered the share premium amount as excess in nature, only for the reason that it is in excess of Book value of shares. We have noticed that the “book value” of shares would value only “Equity shares” and not “Preference shares”. Hence, the very basis on which the AO determined the excess premium” should, in our view, is not sustainable. The assessee has shown that the transaction is a commercial transaction involving receipt of money @ ₹ 500/- per share and repayment of the same @ ₹ 750/- per share after a period of five years. Yet another point, which supports the case of the assessee is that the assessee had received funds in the earlier years and not during the year under consideration. During the year under consideration, the assessee has transferred the funds to “preference shares account” and “shares premium” account by passing journal entries. There should not be any doubt that the provisions of sec.68 shall apply only in the year in which the cash credit was found. There is no justification in assessing the alleged excess premium as income of the assessee. Accordingly we are of the view that the CIT(A) was justified in deleting the impugned addition and accordingly we uphold his decision. - Decided against revenue.
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