TMI Blog2018 (11) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... ified before the ld. CIT(Appeals) by furnishing the relevant facts and figures - Decided in favour of assessee. - I.T.A. No. 686/KOL/2017 - - - Dated:- 22-11-2018 - Shri P.M. Jagtap, Vice-President (KZ) And Shri Satbeer Singh Godara, Judicial Member For the Appellant : Shri Sankar Halder, JCIT, Sr. D.R., For the Respondent : Shri S.L. Kochar, A.R. Shri Anil Kochar, Advocate ORDER PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ):- This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals)-4, Kolkata dated 03.02.2017 and the solitary issue involved therein relates to the deletion by the ld. CIT(Appeals) of the addition of ₹ 1,00,80,000/- made by the Assessing Officer on account of share premium. 2. The assessee in the present case is a Company, which filed its return of income for the year under consideration on 21.09.2012 declaring total income of ₹ 13,429/-. As noticed by the Assessing Officer, the assessee-company during the year under consideration had raised share capital at a huge share premium of ₹ 1,00,80,000/-. Keeping in view that there was no substantial business activity carried on by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance Sheet and Profit Loss Account of the financial year 2011-12 that it had already started dealing in properties from the financial year 2011-12 as it had purchased Land amounting to ₹ 2202490/- during the year 2011-12 which is also showing in its Inventories as on 31/03/2012. It wanted to expand its business of dealing in properties and for this fund was required. So, the directors (Debasis Sanyal Santwana Bagchi) of the Company convinced the investors about its planning and expected return (10% to 15%) from investment in the company and had issued 42000 shares @ ₹ 250/Share (Face value - ₹ 10/Share Share Premium - ₹ 240/Share) to 4 investors and thereby raised ₹ 1,05,00,000/- from the issue of shares. Out of the above fund raised, ₹ 55,00,000/- was received from M/s. Devsant Commercial Private Limited, one of the group companies of M/s. BSNL Commercial Pvt Ltd. So, it can be said that more than 50% of the fund raised is the management's own fund being raised from the group company. Moreover, all the required compliances for raising money through issue of shares were made by the company. The company had received all the money r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited Shlok Fashions Private Limited and copy of PAN of Directors of Investor Companies. So, issue of shares at premium of ₹ 240/- share is justified and all the details documents mentioned above also prove the genuineness of transactions of share premium including face values, identities and creditworthiness of the shareholders of the company for justification of investment in the company. There are a number of decisions of Hon'ble Courts on the issue, which are favourable to the assessee. Some of these are summarized as under: a) In the case of Commissioner of Income-tax v. Gangeshwari Metal (P.) Ltd., [2013J 30 taxmann.com 328 (Delhi), it has been held that where the assessee in support of transaction of receipt of share application money, brought on record various documents such as names and addresses of share applicants, their confirmatory letters, copies of bank statements etc., said transaction was to be regarded as genuine and, consequently, no addition could be made in respect of same under section 68. b) In CIT, Meerut vs. Nav Bharat Duplex Ltd. [2013J 35 taxmann.com 289 (Allahabad), it has been held that where Assessing Officer made addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-13. 8. Copy of PAN of Investor Companies with Copy of PAN of Director of Investor Companies. 9. Copy of Financial Statements of the Investor Companies for the year ended 31.03.2012. 10. Copy of Acknowledgement of ITR for the Assessment Year 2012-13. We hope that the above details documents and clarification is sufficient to serve your purpose and also justify the issue of shares at premium by the company . 4. The ld. CIT(Appeals) found merit in the submissions made on behalf of the assessee-company and deleted the addition made by the Assessing Officer by treating the share premium amount as unexplained cash credit under section 68 for the following reasons given in paragraph no. 4.8 4.9 of his impugned order:- 4.8. I find that the appellant had explained before the AO that the Net Asset Value of the assessee's share was ₹ 203/- per share as on 31.03.2012 and that it has issued the equity shares @ ₹ 250/ shares, which is very much near to its NAV. It was also explained by the AR that considering the boom phase of Construction Industry at that time, the pricing of shares were not too high to be categorised as huge and unjustif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by AO is based on extraneous parameters not germane for deciding the issue. The AO had not dealt with the issue judiciously and consistently with the evidence adduced during the course of the assessment proceedings by the appellant and the replies of the share applicants in respect of the share capital do not warrant the inference that such share application monies received is unaccounted cash credit. Hence, I am inclined to accept the arguments tendered by the AR of the appellant in this respect. In view of the above, I have no hesitation to hold that the impugned addition made by invoking the provisions of s. 68 by the AO is not justified in the circumstances. In view of the foregoing, the addition of ₹ 1,00,80,000/- made on this account by the AO is, therefore, directed to be deleted. Thus, this ground is allowed . Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal. 5. The ld. D.R. strongly relied on the order of the Assessing Officer in support of the Revenue s case on the issue involved in this case. He contended that the creditworthiness of the concerned shareholders was not established by the assessee-compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors of the shareholder companies for examination. He, however, accepted the share capital amount received from the concerned shareholder companies and treated mainly the share premium amount paid by them as unexplained. As pointed out by the ld. Counsel for the assessee, the share premium charged by the assessee-company was duly justified before the ld. CIT(Appeals) by furnishing the relevant facts and figures. It is observed that in the similar facts and circumstances involved in the case of M/s. Trend Infra Developers Pvt. Limited (supra), similar addition made by the Assessing Officer only on account of share premium by treating the same as unexplained was deleted by the ld. CIT(Appeals) and the Tribunal upheld the order of the ld. CIT(Appeals) for the following reasons given in paragraph no. 3.3 of its order:- 3.3. We have heard the rival submissions. The fact stated hereinabove remain undisputed before us by either of the parties and hence the same are not reiterated forthe sake of brevity. At the outset, we find that the assessee had received share capital of ₹ 57,900/- from six shareholders and ₹ 2,88,92,100/- from the very same shareholders towards sha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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