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2016 (11) TMI 1235

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..... ing the facts of the case, the genuineness of the transactions is duly established. In view of the above, we hold that the assessee has duly discharged the onus of proving the credit of share capital in its account and learned CIT(A) was fully justified in accepting the same and in deleting the addition. Addition u/s 14A - Held that:- No investment was made for earning of exempt income. That various Benches of the ITAT have taken the view that where the investment has been made for acquiring the controlling interests in the group companies, then the disallowance cannot be made u/s 14A. He also stated that no expenditure was incurred by the assessee for earning of exempt income because no borrowed money was invested and moreover, it is a permanent investment in the few group companies. Thus, no expenditure was incurred. Learned DR stated that no such claim was made before the Assessing Officer. All these aspects would require verification at the end of the Assessing Officer, thus restore the matter to the file of the Assessing Officer. - ITA No.2262/Del/2013, ITA No.3440/Del/2013, ITA Nos.2263/Del/2013, 6968/Del/2014 & 6969/Del/2014, ITA No.3438/Del/2013 - - - Dated:- 5-9-2016 - .....

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..... s were made by the Assessing Officer in the case of the assessee and other group companies. In that year also, the shares of ₹ 100/- were allotted at a premium of ₹ 39,900/-. The ITAT, vide order dated 31st December, 2013 in ITA No.2749/Del/2010, after considering all the facts, has upheld the order of learned CIT(A) wherein the credit of share capital was treated as explained. That Revenue had filed the appeal before Hon'ble Jurisdictional High Court against the above order of the Tribunal. Hon'ble Jurisdictional High Court, vide order dated 16th April, 2015 in ITA No.523/2014, dismissed the appeal of the Revenue. He further stated that the assessee and other four private limited companies are holding the major equity stakes in the Uflex group of companies. The assessee has referred to its paper book where there is calculation of net worth of the three companies and shareholding pattern of the group and has pointed out that the value of each share comes to ₹ 40,616/-. He, therefore, stated that the issue of per share at ₹ 40,000/- was quite justified and it was at a lesser rate than the book value of the assets of the company which are ultimately he .....

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..... e in the case of the assessee and other group concern. We find that in the case of the assessee, there was total credit by way of share capital amounting to ₹ 12,78,60,000/-. In that year also, the share of ₹ 100/- was sold at a premium of ₹ 39,900/-. The Assessing Officer made the addition treating the credit by way of share capital as unexplained. The same was deleted by the CIT(A). Hence, the Revenue was in appeal. The ITAT, vide order dated 31st December, 2013 in ITA No.2749/Del/2010, sustained the order of learned CIT(A). The Revenue filed the appeal before Hon'ble Jurisdictional High Court and Hon'ble Jurisdictional High Court in ITA No.523/2014 vide order dated 16th April, 2015 sustained the order of the ITAT. The relevant finding of Hon'ble Jurisdictional High Court reads as under:- 6. The onus cast upon the assessee under Section 68 of the Act to satisfy the department about the true identity of an investor, its creditworthiness and genuineness of a transaction was explained by the Supreme Court in CIT Vs. Lovely Exports (P) Ltd., 216 CTR 295. Whilst, the AO acted legitimately in enquiring into the matter, the inferences drawn by him were .....

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..... Jurisdictional High Court in assessee s own case would be squarely applicable. However, for the sake of completeness, we wish to mention the facts of this year as well. At page 161 of the assessee s paper book, there is copy of income tax return of AEPPL wherein the income of more than ₹ 30 lakhs has been disclosed. At page 166 of the assessee s paper book, there is balance sheet from which we find that the share capital is ₹ 7.16 crores and reserves and surplus is ₹ 96.48 crores. Thus, the net worth of the share applicant company is ₹ 103.64 crores which is mainly invested in shares. The company was incorporated in the year 1994 for which certificate of incorporation is placed on record. The amount has been paid by cheque. Copy of bank statement is also placed on record. The Assessing Officer doubted the creditworthiness on the ground that before the issue of cheque to the assessee company, there was credit of ₹ 12 crores in the account of AEPPL. However, we find that such credit was by way of sale of shares of another company. AEPPL has investment of about ₹ 100 crores in shares and, therefore, if the said company has sold the shares of one co .....

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..... Holding of different shareholding Groups in AIPL 2009 2008 Main promoter group 9250 9250 Old shareholders : Excluding main promoter group 4729 4729 New shareholder M/s Adhyay Equipref Pvt.Ltd. 1000 0 Total shares 14979 13979 Value of per share (In Rs.) 40616 58767 Amount in Lac Book Net Worth Belongs to Different 2009 2008 Shareholding Group : Main Promoter Group 3756.94 Old shareholders : Excluding main promoter group 1920.71 New Shareholder M/s Adhyay Equipref Pvt.Ltd. 406.16 9. From the above, it is evident that the value of each share is worked out at ₹ 40, .....

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..... ies. Thus, no expenditure was incurred. Learned DR stated that no such claim was made before the Assessing Officer. All these aspects would require verification at the end of the Assessing Officer. He, therefore, submitted that on this issue, the matter may be set aside to the file of the Assessing Officer. Learned counsel for the assessee has no objection to this suggestion of learned DR. 13. In view of the above, we set aside the orders of authorities below on this point and restore the matter to the file of the Assessing Officer. We direct the Assessing Officer to allow adequate opportunity of being heard to the assessee. We also direct the assessee to furnish detailed explanation before the Assessing Officer on the ground on which he is claiming that no disallowance u/s 14A is warranted. Thereafter, the Assessing Officer will pass a speaking order. ITA No.3438/Del/2013 Revenue s appeal for AY 2009-10 in M/s A.R. Leasing Pvt.Ltd. :- 14. The only ground raised by the Revenue in this appeal reads as under:- On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 6,99,60,000/- made by the Assessing Officer und .....

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