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M/s Anshika Investments Pvt. Ltd. and M/s A.R. Leasing Pvt. Ltd Versus Commissioner of Income Tax (Appeals) III, New Delhi and Deputy Commissioner of Income Tax, Central Circle-18, New Delhi Versus M/s Anshika Investments Pvt. Ltd. and M/s A.R. Leasing Pvt. Ltd.

2016 (11) TMI 1235 - ITAT DELHI

Addition u/s 68 - undisclosed share capital - Held that:- The value of each share is worked out at ₹ 40,616/-. Thus, apparently, higher share premium of ₹ 39,900/- is justifiable because of limited number of shares of the assessee company who are actual owner of assets of worth more than ₹ 60 crores. Moreover, in the earlier year also, the shares were allotted at a premium of ₹ 39,900/- per share and in AY 2006-07, the Assessing Officer even got the verification made thro .....

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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 s .....

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os.2263/Del/2013, 6968/Del/2014 & 6969/Del/2014, ITA No.3438/Del/2013 - Dated:- 5-9-2016 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER For The Assessees : Shri Suresh Anantharaman, CA. For The Revenue : Shri S.K. Jain, DR. ORDER PER G.D. AGRAWAL, VP :- These appeals by the assessees and the Revenue for the assessment years 2009-10, 2010-11 & 2011-12 are directed against separate orders of learned CIT(A)-III, New Delhi dated 7th March, 2013 and 14th November, 20 .....

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under consideration, the assessee company has raised the share capital of ₹ 4 crores by issuing the share of ₹ 100/- each at a premium of ₹ 39,900/- per share. That the assessee is a private limited company and there cannot be any justification for such a huge premium. That M/s Adhyay Equi Pref Pvt.Ltd. (hereinafter referred to as AEPPL ) claimed to have acquired such shares from the assessee by investing huge sum of ₹ 4 crores just for 1,000 equity shares of ₹ 100/ .....

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ade the addition there for. Learned CIT(A) deleted the addition without properly appreciating the facts of the case. He, therefore, submitted that the order of learned CIT(A) should be reversed and that of the Assessing Officer may be restored. 4. Learned counsel for the assessee, on the other hand, pointed out that the identical issue has been considered by the ITAT in assessee s own case for assessment year 2006-07 wherein the similar additions were made by the Assessing Officer in the case of .....

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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 p .....

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than ₹ 2,000 crores while its book value is only ₹ 38.17 crores. Thus, the issue of shares at ₹ 40,000 per share is at a much lesser rate than the worth of the assets ultimately controlled by these private limited companies. He also stated that these shares acquired by AEPPL have not been sold till date. He also referred to the balance sheet of AEPPL and pointed out that the worth of AEPPL is more than ₹ 100 crores which has mainly been invested in shares. He further poin .....

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ce since 1994 and is regularly investing in the shares of various companies. He, therefore, submitted that the assessee has duly established the identity, creditworthiness and genuineness of transactions of AEPPL. 5. We have carefully considered the submissions of both the sides and have perused the material placed before us. Admittedly, the onus is upon the assessee to prove the credit in its books of account whether by way of loan or share capital. To discharge such onus, the assessee has to e .....

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sment year 2006-07, similar additions were made 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 .....

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estor, 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 not justified at all in the circumstances of the case. Whether the assessee company charged a higher premium or not should not have been the subject matter of the enquiry in the first instance. Instead the issue was whether the amount invested by the share a .....

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f the investors, the genuineness of the transaction and the creditworthiness of the share applicants would have been apparent. Even otherwise, the share applicants particulars were available with the AO in the form of balance sheets income tax returns, PAN details etc. While arriving at the conclusion that he did, the AO did not consider it worthwhile to make any further enquiry but based his order on the high nature of the premium and certain features which appeared to be suspect, to determine .....

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horities for appropriate action towards reflecting these observations suitably in service record of the concerned AO to avoid such instances in the future. 7. For the above reasons, this Court is of the opinion that the concurrent findings of fact, as to the true identity of the share applicants, their creditworthiness and genuineness of the transaction, are based on sound reasoning and do not call for interference. No substantial question of law arises. The appeals are dismissed. 6. The facts o .....

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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 .....

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neness of transactions, the Assessing Officer has doubted the genuineness mainly on the ground that share premium was too high. Apparently, it looks so. However, the assessee has explained why the share premium is so high. The assessee has explained that appellant company is one of the promoters of Uflex group of companies. The assessee company along with the other copromoters has promoted various operating companies of Flex Group. The major companies promoted by assessee company are :- (i) Ufle .....

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in each other. The remaining shareholders are the individual promoters and outside shareholders. Since all these investment companies are cross holding the shares of each other, hence any outsider by becoming shareholder in any of these companies also automatically becomes the shareholder in the other four companies. In nutshell, if a person becomes shareholder in the assessee company, it automatically becomes shareholder in the remaining four holding companies. He further submitted that if the .....

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lders : 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 ₹ 40,616/-. Thus, apparently .....

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of Investigation Wing of Kolkata. Hon'ble Jurisdictional High Court has also upheld the order of the ITAT in assessee s own case for assessment year 2006-07 after taking due note of high share premium. In view of the above, we are of the opinion that considering 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 .....

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t is contended that section 14A and Rule 8D are not applicable to the assessee. 11. All other grounds raised by the assessee are arguments in support of above ground No.1. 12. At the time of hearing before us, the limited argument made by the learned counsel was that the assessee had made the investment in the shares of other group companies to acquire controlling interests in those companies. No investment was made for earning of exempt income. That various Benches of the ITAT have taken the vi .....

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erification 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 t .....

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ade by the Assessing Officer under section 68 of the Income Tax Act, 1961. 15. At the time of hearing before us, both the parties fairly admitted that the facts in this case are identical to the facts in the case of AEPPL and, therefore, their arguments in that case hold good. We find that during the year under consideration, there was credit of ₹ 6,99,60,000/- in respect of share capital from the following parties :- (i) M/s Adhyay Equipref Pvt.Ltd. ₹ 6,00,00,000/- (ii) M/s Rupali S .....

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