TMI Blog2016 (8) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... hey have referred to the provisions of CA, so that the amount in question can be taxed at any cost. It is not a fair or judicious approach to deal with the Subjects of the State. Even if the assessee had violated the provisions of CA, it will be penalised by the provisions of that Act. But, it would never turn a capital receipt in to revenue receipt or visa-versa. Neither the AO nor the FAA has proved that the share premium money was utilised by it for running its day today business. The assessee had proved that the opening and the closing balance of the share premium money account was same for the year under consideration. We find that the factual position assailed by the assessee was not proved incorrect by both the authorities. If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the assessee at ₹ 58. 20 crores. 2. The effective Ground of Appeal is about treating the share premium received by the assessee, amounting to ₹ 56. 10 crores as a business receipt and thereby confirming the addition of share premium u/s. 56(1) of the Act to its total income. During the assessment proceedings, the AO found that the assessee had issued 40 lakhs equity share of face value of ₹ 10/- each out of which 10 lakh shares had been issued at par, that the premium received by the assessee was credited to Securities Premium under the head reserves and surplus in the balance sheet. He called for the details of premium receipt. Relying on the decision of the Chennai Tribunal in the case of Ascendas India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any item under section 56 (1). He finally concluded that the assessee had received ₹ 56. 10 corrodes in the guise of share premium and that the same had to be taxed under the head income from other sources. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA). Before him, it was argued that the assessee had issued cumulative redeemable preference shares of face value of ₹ 10/- each at a premium of ₹ 187/-, that the shares were converted into equal number of equity shares at the same time, that in compliance with the FDI Regulations a valuation report was obtained from a chartered accountant, that the fair value of the preference share was determined to be S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t share premium at the beginning of the year was the same as the end of the year, that share premium had not been utilised at all, that the AO had relied upon the cases that had no relevance to decide the issue. The assessee referred to the case of Vodafone India Services Pvt. Ltd. (368ITR1)and argued that premium received on issue of share was a capital receipt and the same should not be taxed under the head income from other sources . 3. 1. After considering the submission of the assessee and the assessment order the FAA held that face value of the shares had been ₹ 10/- only, that it was not known as to how assessee had worked out the premium at ₹ 187/- per share, that no evidence was adduced either before AO or before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a change from capital to revenue over a period of time, that the AO had rightly held that share premium had changed its colour/character. He upheld the addition made by AO amounting to ₹ 56. 10 crores. 4. During the course of hearing before us, the Authorised Representative (AR) argued that the CBDT, vide its Instruction no. 2/2015 dt. 29. 1. 2015, had informed the officers of the Department about accepting the order of Hon ble High Court of Bombay in the case of Vodafone (supra). He further argued that facts of the case of Sundaram Iyengar and Sons Ltd. were not applicable to the case under consideration, that assessee had not utilised the share premium for its business. He referred to the case of Hillcrest Reality SDN. BHD (IA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income tax Act, the basic principle every officer of the department has to remember that he is the representing the Sovereign and his duty is to collect Due taxes only. For determining the Due taxes they should avoid bringing farfetched fancies and ideas. In the case under consideration they have done the same. Without understanding the basic philosophy of income they have referred to the provisions of CA, so that the amount in question can be taxed at any cost. It is not a fair or judicious approach to deal with the Subjects of the State. Even if the assessee had violated the provisions of CA, it will be penalised by the provisions of that Act. But, it would never turn a capital receipt in to revenue receipt or visa-versa. Now, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
