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DCIT, Circle 10 (1) , New Delhi Versus M/s DRS Roof-Tech And Infrastructural Pvt. Ltd. (Now Known As APM Infrastructure Pvt. Ltd.)

2018 (1) TMI 330 - ITAT DELHI

Unexplained cash credit u/s 68 - Held that:- The assessee had filed its income of return declaring the taxable income ₹ 2,53,39,948/- which fact is verifiable from the assessment order itself. The assessee company has share capital to the tune of ₹ 41.09 lacs and reserves and surpluses excluding share premium received during this year to the extent of ₹ 2,91,00,000/-. The assessee had turnover of ₹ 51.90 crores. These facts and figures depict that assessee is an existing .....

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ed by the Ld. CIT(A), which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on this issue and reject the ground no. 1 raised by the Revenue. - Disallowance of interest u/s. 36(1)(iii) - Held that:- 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 t .....

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that the proportionate disallowance of interest on the loans and advances comes to ₹ 41,750/- only u/s. 36(1)(iii) hence, the proportionate disallowance of interest charged u/s. 36(1)((iii) was rightly deleted to the extent of ₹ 69,07,310/- and ₹ 41,750/- was rightly confirmed, which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on this issue and reject the ground no. 2 raised by the Revenue. - I.T.A. No.4355/DEL/2012 - Dated:- 4 .....

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justified in deleting the addition of ₹ 4,38,48,000/- made by the AO u/s. 68 of the I.T. Act, 1961? 2. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the disallowance of interest u/s. 36(11)(iii) of the I.T. Act amounting to ₹ 69,07,310/- out of total disallowance of ₹ 69,49,060/- made by the AO? 3. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing. 3. The brief .....

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he 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 ₹ 4,07,16,000/- from a company namely T .....

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ts sister concern and relatives of the Directors and also added ₹ 10,69,202/- as expenditure pertaining to earning of exempt income. Accordingly, the AO assessed the total taxable income of ₹ 7,72,06,212/- of the assessee vide order dated 25.12.2011 passed u/s. 143(3) of the Act. Against the aforesaid assessment order, assessee appealed before the Ld. CIT(A)-XIII, New Delhi, who vide his impugned order dated 11.05.2012 has partly allowed the appeal of the assessee. Aggrieved with the .....

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er book page 47. It was further argued by the Ld. DR that the profits of the lender company were only ₹ 3376/- and the total turnover was ₹ 39624. Therefore, the amount invested by the investee company was not genuine and hence, AO had rightly made the addition. She placed the reliance on the following case laws. - CIT vs. Nova Promoters & Finlease (P) Ltd. (2012) 18 taxmann.com 217 (Delhi) (Hon ble Delhi High Court) - CIT vs. Nipun Builders and Developers (P) Ltd. (2013) 30 taxm .....

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where he had referred to show cause notice and has held that Assessee was not required to produce Directors. As regards merits of the case the Ld. AR submitted that Assessee had substantial investments to the tune of ₹ 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 pr .....

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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 ₹ 4,38,48,000/- made u/s. 68 of the Act is concerned, we find that assessee company has received share capital of ₹ 31,32,000/- alongwith share premium of ₹ 4,07,16,000/- from M/s Tarun Vainizya Pvt. Ltd. During the assessment proceedings, the AO has mentioned that company was not having its own source of income in as mu .....

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mine the genuineness of transaction made under the nomenclature of share premium vide show cause letter dated 05.12.2011. In this regard, the assessee has submitted in the submission that during the course or assessment proceedings in compliance to the directions issued by the AO, the assessee had furnished following information before the AO. 1. Confirmation of Tar un Vanijya Pvt Ltd 2. Copy of PAN Card issued of the above company 3. Copy of the IT Return of the above named shareholder for AY 2 .....

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Vanizya Pvt. Ltd. it was explained by the assessee vide its letter dated 15.12.2011 before the AO that the funds have been generated by the sale of past investments appearing in the balance sheet in schedule-IV of the said company. As per the said balance sheet the investment worth ₹ 4,58,95,000/- have been shown as on 31.03.2008, which have been realized to make investment in the share capital and share premium of the assessee company. The assessee has also filed copy of the bank stateme .....

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r 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 Vaniz .....

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share capital and share premium out of its own money which was realized from sale of its investments reflected in the balance sheet. The Assessing officer has also mentioned in the assessment order that it had issued a show cause notice vide its letter dated 05.12.2011 to the assessee company for production of Director of the investor company before him. From the reading of the order it is observed that the AO has issued two show cause notices both on same date i.e. 05.12.2011 for production of .....

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the AO asked the complete list of the Directors of M/s Tarun Vanizya Pvt. Ltd. The relevant points in the show cause notice regarding Share Capital were reproduced here under:- Pl refer to the income tax proceedings for A Y 2009-10, you are required to furnish the following: 1. The company has received a sum of ₹ 4,38,48,000 from Tarun Vanijya & Company, Kolkatta Please explain the source of this company for investing in share capital, particularly when the company does not have its ow .....

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ance. 6.2 On going through the above points of the show cause letter, it is seen that no where Assessing officer has asked about the production of the Directors of the investor company before AO. There is no other letter or summons issued by the Assessing officer for attendance of the directors of the investor company. Therefore, 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 .....

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ned, 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 ₹ 4.61 crores, out of which the amount invested in the assessee company is to the tune of ₹ 4,38,50,000/-. These facts are ver .....

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er investment and had made the investment in the assessee company. Such investments were liquidated and amounts were received through banking channels which is apparent from Paper Book page No. 46 & 47 which the copy of the bank account of the lender company wherein the credits appearing in the Bank Statements are for liquidation of investments. There is no deposit in the said bank account in cash except the cash deposits of ₹ 7 lacs and ₹ 6 lacs on 20.2.2009 and 21.2.2009. These .....

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T, Delhi decision dated 25.7.2014 in the case of ACIT vs. Bahubali Dyes Ltd. reported (2014) 34 ITR (Trib) 487 (ITAT-Del), wherein it has been held that share holder companies were having negligible profit but having huge share capital and reserves. This decision supports the case of the assessee that these companies have substantial worth to invest in the shares of the assessee company. The relevant finding of the Tribunal as contained in para no. 9 of the aforesaid decision is reproduced as un .....

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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. .....

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le income ₹ 2,53,39,948/- which fact is verifiable from the assessment order itself. The assessee company has share capital to the tune of ₹ 41.09 lacs and reserves and surpluses excluding share premium received during this year to the extent of ₹ 2,91,00,000/-. The assessee had turnover of ₹ 51.90 crores. These facts and figures depict that assessee is an existing profit making company and therefore, issuance of shares at a premium is justified. In view of the above fact .....

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hich does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on this issue and reject the ground no. 1 raised by the Revenue. 7. As regards ground no. 2 relating to deletion of disallowance of interest u/s. 36(1)(iii) of the Act amounting to ₹ 69,07,310/- out of total disallowance of ₹ 69,49,060/- made by the AO is concerned, we find that AO has disallowed proportionate interest of ₹ 69,49,060/- out of total interest payment of ₹ 87,6 .....

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008- 09. Thus, there is fresh investment during the year of ₹ 64,53,300/- only. The copy of the relevant schedule of the balance sheet of the assessee has been filed at page 12 of the paper book, which shows the investment as on 31.03.2008 and 31.03.2009. It has been further observed from the balance sheet of the assessee company that prior to 01.04.2008, there was no interest bearing loans or advances except vehicle loan of Rs.l,35,033/-taken by the assessee in the earlier years. The copy .....

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