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TMI Blog2018 (1) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... f appeal raised above at the time of the hearing. 3. The brief facts of the case are that the assessee filed its e-Return on 30.9.2009 declaring total income of Rs. 2,53,39,950/-. The return was processed u/s. 143(1) of the Income Act, 1961 (hereinafter referred as the Act). The case of the assessee was selected for scrutiny under CASS. Notice u/s. 143(2) of the Act was issued on 20.8.2010 which was duly served upon the assessee. Subsequently a notice u/s. 142(1) of the Act alongwith detailed questionnaire was issued on 15.7.2011 and duly served upon the assessee. In response to these notices, the Assessee's AR attended the proceedings from time to time and filed the books of accounts and the relevant details as required by the AO. In this case the assessee company was engaged in the business of construction of warehouses and other structures as civil contractor. During the year under consideration, the assessee company has received fresh share capital of 31,32,000/- alongwith the share premium of Rs. 4,07,16,000/- from a company namely Tarun Vanizya & Co., Kolkata. AO observed that this company was not having sufficient sources of income, therefore, the share capital as well as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not required to produce Directors. As regards merits of the case the Ld. AR submitted that Assessee had substantial investments to the tune of Rs. 4.59 crores which were liquidated and out of funds of such investments the investee had invested in the assessee company. In this respect our attention was invited to paper book page no. 52 where copy of the balance sheet depicting investments during the earlier year and present year were placed. As regards the profitability of the investee company was concerned the Ld. AR submitted that the ITAT, Delhi in the case of ACIT vs. Bahubali Dyes Ltd. reported (2014) 34 ITR (Trib) 487 (ITAT-Del), has held that even if there was low profits but investee company had sufficient funds addition u/s. 68 cannot be made. As regards case laws relied on by the Ld. DR is concerned, the Ld. AR submitted that these are distinguishable on facts. 6. We have heard both the parties and perused the relevant records, especially the impugned and the Paper Book filed by the Assessee. With regard to ground no. 1 relating to deletion of addition of Rs. 4,38,48,000/- made u/s. 68 of the Act is concerned, we find that assessee company has received share capital of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s DRS Roof-tech & Infrastructure Pvt. Ltd. during the F.Y. 2008-09. The assessee has also placed the copy of the return of income of M/s Tarun Vanizya Pvt. Ltd. for A Y 2009-10 filed with Incorfie Tax Department. The assessee has also filed conformation of M/s Tarun Vanizya Pvt. Ltd. for having paid money for share capital and share premium during F.Y. 2008-09 to the appellant company. By filing these evidences, the assessee has discharged its burden cast upon it u/s 68 of the IT Act. It is seen from the assessment order that AO kept on harping on the income declared by the assessee company and did not see the sources of the investment declared in the balance sheet by the investor company. Nothing adverse has been brought on record by the AO, which can prove that money received from M/s Tarun Vanizya Pvt. Ltd. was not its own money and that same was received as accommodation entry. The assessee has filed its copy of bank account where from the money was transferred to the appellant company. From the said bank account, the assessing officer has not proved that the money transferred was received through accommodation entry and it was asssessee's own money. The documentary evidences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the observations made by the AO in the assessment order are not correct and no credence should be given to such observations. In the absence of any specific directions or summons for producing the directors of the investor company, the assessee cannot be held responsible or faulted for not doing so and therefore no adverse view can be taken against the assessee. 6.3 After having detailed discussions, as aforesaid, we are of the considered view that in this case the 03 ingredients required to be established u/s. 68 of the Act are identity of the lenders, genuineness of the lenders and genuineness of the transactions. As regards identity of the lenders is concerned, the Lender is a Private Limited Company incorporated under the Companies Act, 1956 and is having its Permanent Account Number which proves the identity of the lender. As far as the genuineness of the lenders is concerned, we find from the Balance Sheet of the Lender placed at Paper Book of Page no. 48-53 that this Company had its own funds to the tune of Rs. 4.61 crores, out of which the amount invested in the assessee company is to the tune of Rs. 4,38,50,000/-. These facts are verifiable from Paper Book page No. 50. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which indicated their share capital as well as share premium. That merely because they have substantial share capital or substantial share premium, would be no ground to doubt either their identity or their creditworthiness. On the other hand, substantial share capital / share premium would only support the case of the assessee that these companies have substantial worth to invest the shares of the assessee company." 6.3.1 In view of the facts and circumstances as explained above, the creditworthiness of the lender company is proved. 6.3.2 Now coming to the genuineness of the transaction of having issued shares at a premium of Rs. 130/- per share. In this respect, we find that assessee company is an existing company engaged into infrastructure activities and its net profit during the year before taxation was Rs. 2,46,79,833/- and which fact is verifiable from Paper Book Page No. 9 where the copy of profit and loss account is of the assessee company is placed. The assesee had filed its income of return declaring the taxable income Rs. 2,53,39,948/- which fact is verifiable from the assessment order itself. The assessee company has share capital to the tune of Rs. 41.09 lacs and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the Schedule-17 of the P&L Account filed at page 15 of the paper book, that interest payment in F.Y. 2007-08 relevant to A.Y. 2008-09 was just Rs. 1,05,542/- which was related to Vehicle loan taken by the assessee and there was no interest payment on account of other loans taken. We further find from the details filed by the assessee that assessee has taken a Cash Credit facility of Rs. 8 crore on 16.07.2008 from Axis Bank. Similarly the assesee has taken a term loan of Rs. 1 crore on 11.02.2009 from Axis Bank. The copy of the bank statement of Axis Bank is filed at page 75 and 76 of the paper book. The above facts prove that prior to 16.07.2008 there were no interest bearing funds taken by the assessee except vehicle loans taken in earlier years. This goes to establish that if any investment or advance was made prior to that date, the same was given out of from the assessee's own funds or out of non interest bearing funds, except the amount of Rs. 5 lacs given to Mr. Mahadev Prasad (mentioned at page no. 24 of the impugned order), this amount of loan was given to him on 21.7.2008 and it was given out of interest bearing funds, hence, proportionate interest for eight months @ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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