TMI Blog2015 (4) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... of Respondent No.2 have been answered by the assessee or the subscribers in question especially when all questionnaires addressed to subscribers were duly answered by the subscribers. We may add a word of caution here. Although the Petitioner has relied upon the decision of this Court in the case of Vodafone [2014 (10) TMI 278 - BOMBAY HIGH COURT] and the department has accepted the said decision and decided against challenging it by issuing a circular, we would not equate all cases of share premium as being covered by the said judgment and circular. In a given case and the given fact situation, assessees may be required to be probed for valid reasons. Thus no justification for reopening of the assessment - Decided in favour of assessee. - Writ Petition (L) No.735 & 736 of 2015 - - - Dated:- 27-3-2015 - S. C. Dharmadhikari And A. K. Menon,JJ. For the Appellants : Mr J D Mistri, Senior Adv. with Mr Madhur Agarwal And Mr Atul Jasani For the Respondents : Mr A R Malhotra With Mr N A Kazi JUDGMENT (Per A. K. Menon, J.) 1. Rule, made returnable forthwith. By consent of the parties taken up for final hearing. 2. By this order, we dispose of both the writ p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sharyans Resources Ltd. 1,20,000 4,60,00,000 04-09-2008 4. Atlas Hospitality Co. Pvt. Ltd. 10,90,000 11,99,00,000 04-09-2008 5. Fulda River Ltd. 2,91,200 45,13,60,000 22-12-2008 6. K2A Hospitality Ltd. 2,60,140 18,60,00,100 22-12-2008 4. For the assessment year 2008-09, the Petitioner filed a return of income on 28th September, 2008 declaring Nil income. The return of income was accepted under Section 143(1) of the Act. For the assessment year 2009-10, the Petitioner filed return of income on 29th September, 2009 declaring the total loss of ₹ 4,39,504/- under the provisions of the Act. The matter was taken up for scrutiny. 5. In the course of the scrutiny, the Petitioner vide letter dated 11th October, 2010 filed a copy of the return of income,annual report along with audited profit and loss account, balance sheet and all its annexures and also a copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Vide letter dated 25th April, 2014, the Petitioner submitted that the return of income filed on 28th September, 2008 should be treated as its response in compliance of the impugned notice and further requested for a copy of the reasons recorded by Respondent No.2 for reopening the assessment. Vide letter dated 16th July, 2014, Respondent No.2 provided an extract of the reasons as recorded by him. For ready reference, the extract of the reasons is reproduced below :- ........ 2. From the records, it is seen that the assessee is in receipt of huge share premium amounting to ₹ 14,10,01,300/- during the financial year 2007-08 relevant to A.Y. 2008-09. As scrutiny assessment u/s. 143(3) of the Income-tax Act, 1961 has not been done in this case for this year, huge share premium having been received by the assessee has not been examined. The assessee is an unlisted company and the nature of share application money received (the intrinsic value of the share in comparison to the excess premium received) is not substantiated by any cogent evidence as could be noticed from records... 3. ....... 4. ....... 5. In view of the above stated facts and the judicial de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. He submitted that the revenue had in fact accepted this judgment and the Central Board of Direct Taxes issued a circular F.No..500/15/2014/APA-1 dated 29th January, 2015. The circular is crisply worded and records as follows:- Subject Acceptance of the order of the Hon'ble High Court of Bombay in the case of Vodafone India Services Pvt. Ltd. - reg. In reference to the above cited subject, I am directed to draw your attention to the decision of the High Court of Bombay in the case of Vodafone India Services Pvt. Ltd. for AY 2009-10 (WP No.871/2014), wherein the Court has held, inter-alia, that the premium on share issue was on account of capital account transaction and does not give rise to income and, hence, not liable to transfer pricing adjustment. 2. It is hereby informed that the Board has accepted the decision of the High Court of Bombay in the above mentioned Writ Petition. In view of the acceptance of the above judgment, it is directed that the ratio decidendi of the judgment must be adhered to by the field officers in all cases where this DRPs and CsIT (Appeals). 3. This issues with the approval of Chairperson CBDT. 14. Mr. Mistri then submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14,10,01,300/- during the financial year 2007-08 relevant to assessment year 2008-09 and that in fact the scrutiny assessment had not been done. Apropos, Respondent No.2's contention that he had the authority to reassess the income chargeable to tax which he believed had escaped assessment, Mr.Mistri submits that in fact such communication is entirely bereft of any real reasons. 16. Vide letter dated 21st August, 2014 the assessee clarified that the reasons cited were in fact no reasons at all and objected to the reopening of the assessment. Mr.Mistri pointed out the decision of the Hon'ble Supreme Court in the case of Assistant Commissioner of Income-Tax V/s. Rajesh Jhaveri Stock Brokers P. Ltd. reported in [2007] 291 ITR 500 (SC) relied upon by the Assessing Officer was not applicable to the present case, while highlighting the fact that in Rajesh Jhaveri (supra), the reopening was within four years of the relevant assessment year, whereas in the present case, it is proposed to be done after four years. Mr.Mistri, therefore, submitted that there was no factual basis in the claim that the assessing officer had reasons to believe that income had escaped assessment. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat reasons furnished to the Petitioner-assesee were identical as in the present case. The Court was prima facie of the view that from the share premium and share application money, no income arises as the receipt is on capital account. However, we find that the said order was at an ad-interim stage and it need not continue to engage our attention. 21. Mr.Malhotra, learned counsel for the Respondents has vehemently supported the issuance of the notices. He contended that such large premium being paid is suspect, especially if the company has no track record and its earning per share were negligible, in fact it was a loss making company. Referring to the balance-sheet and profit and loss account, he submitted that they were not a hugely profiteering company so as to command such high share premium. According to him, the matter needs to be investigated further, notwithstanding the fact that some public companies are stated to have invested in the assessee company and have subscribed to the share premium. He submitted that there is total absence of business acumen if such high premium had been paid. This itself raises serious doubts about bonafides of the assessee company and justi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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