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2019 (7) TMI 293 - AT - Income TaxAddition of undisclosed income u/s 69B - difference between market price per share and shares acquired - addition u/s 56(2)(viia) though not invoked by AO - share were purchased from directors - HELD THAT:- Nothing on record would demonstrate any exchange / flow of funds, out of books, between the assessee and the sellers. It is trite law that no additions could be made merely on the basis of assumptions, conjectures or surmises. We find that the primary onus to substantiate the transactions was duly fulfilled by the assessee and the same had shifted to revenue to dislodge assessee’s claim. In our opinion, nothing has been brought on record by Ld. AO to prove that any excess price was paid by the assessee to the sellers. Therefore, in the absence of any evidences establishing receipts & payments outside regular books of accounts, the provisions of Section 69B could not be invoked. So far as the submissions made by Ld. CIT-DR is concerned, we find that, firstly the aforesaid provisions of Section 56(2)(viia) has not been invoked by Ld.AO and secondly, these provisions do not apply in case of receipts of shares for inadequate consideration by the assessee, of a company not being a company in which the public are substantially interested [as defined in Section 2(18)]. However, we find that shares being transacted by the assessee are not of a private company but of a public listed company which is evident from the fact that Ld. AO proceeded to tax the difference of listed price and the acquisition price u/s 69B. Therefore, the said provisions, in our opinion, do not apply to the factual matrix. Accrual of benefit to the assessee u/s 28(iv) - HELD THAT:- We again find that the provisions of Section 28(iv) have not been invoked by Ld. AO to make the impugned additions. Secondly, the allegations of Ld. AO stem from the suspicion that the assessee has paid the differential amount of ₹ 28/- per share to the seller. Under these circumstances, nothing would suggest that the assessee has received certain benefit during the course of its business so as to attract the provisions of Section 28(iv) since it is not the case of Ld. AO that the assessee had received certain benefit by way of purchase of shares of higher value at lower prices. - ground of revenue’s appeal stands dismissed. Disallowance u/s 14A - HELD THAT:- We find that it is undisputed fact that the assessee has not earned any exempt income during the year. This being, so no disallowance u/r 8D(2)(iii) would be warranted. So far as the disallowance u/r 8D(2)(i) is concerned, we find that the aforesaid payment of ₹ 0.50 Lacs has been paid by the assessee to SEBI for certain statutory compliances. These payments, being more in the nature of statutory & mandatory payments, could not be said to be incurred in relations to making-off of investments. - ground of revenue’s appeal stands dismissed. Set off of losses - disallowance of interest u/s 36(1)(iii) - assessee alternatively submitted that borrowed funds had direct nexus with investment in debenture since the moneys were borrowed hence allowable u/s 57(iii) - HELD THAT:- it emerges that the assessee’s alternative claim of deduction u/s 57(iii) has been accepted by Ld. first appellate authority and the same has attained finality in view of the fact that the revenue is not in further appeal before us. Therefore, in the given situation, once the claim was accepted u/s 57(iii), the Ld. CIT(A), in our opinion, was not justified in not allowing the inter-head set-off of losses under the head Income from other sources against business income, which otherwise was allowable to the assessee in terms of Section 71(1). Therefore, Ld. AO is directed to allow set-off of losses under the head Income from other sources against business income. The assessee’s appeal stands allowed
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