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TMI Blog2018 (11) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the assessee-company during the year under consideration except making some investment in land and Bank, the Assessing Officer proceeded to examine the claim of the assessee for huge share premium. In this regard, he issued notices directly to the concerned shareholders and in reply to the said notices, the concerned shareholder companies furnished the details and documents required by the Assessing Officer. The Assessing Officer, however, found that the replies received from the shareholder companies were almost identical in style and some of their Directors and addresses of the Registered Office were common. He, therefore, issued summons under section 131 to the assessee-company requiring it to produce the Directors of the shareholder companies for examination. The assessee-company, however, failed to produce the Directors of the shareholder companies for verification before the Assessing Officer. Keeping in view this failure of the assessee-company, the Assessing Officer held that the creditworthiness of the concerned creditors could not be corroborated by the assessee-company and even the high value of share premium could not be justified by it. He accordingly treated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k account. All the transactions had made through bank. It had also filed Form-2 for allotment of shares during the year and had also given allotment advice & share certificates to the investors. It had also submitted all the details & documents as per notices u/s. 143(2) & 142(1). Surplus Fund out of money raised through share issue was kept in Company's bank account till finalization of other property related business transactions. The turnover of the company for the financial year 2011-12 is Rs. 348815/- which is from Job Work/Commission and profit before tax of the company is Rs. 13429/- during that year. The company is a fast moving company. It is having good reputation and goodwill in the market. The investors had also complied with all the notices sent by the department and submitted all the relevant details & documents as per the notices sent to them u/s 133(6). The appellant had also clarified all the grounds on which the Ld. Assessing Officer had added to the total income for the Assessment Year, the Share Premium amounting to Rs. 1,00,80,000/- received during the year treating it as cash credit. The Appellant pleaded that the Net Asset Value of the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicants had enough money on date of purchase of its shares, since share applicants were identified and they had submitted their bank statements, cash extracts and returns filing receipts, impugned addition was not justified. c) In CIT, Udaipur vs. Bhaval Synthetics [2013] 35 taxmann.com 83 (Rajasthan), the Assessing Officer made addition to assessee's income on account of unexplained share capital on ground that assessee did not furnish confirmation from shareholders. However, Commissioner (Appeals) noticed that transactions were made through banking channel and existence of persons in whose names shares had been issued was proved and deleted said addition. The Hon'ble Court has held that the Commissioner (Appeals) did not commit error of law in deleting said addition. d) Recently, the Mumbai Bench of the Income Tax Appellate Tribunal (the Tribunal) in the case of Green Infra Ltd. had an occasion to deal with taxability of premium received on issue of shares. The Tribunal held that share premium realized from the issue of shares is capitalized in nature and forms part of the share capital of the company and therefore cannot be taxed as revenue receipt. The Tribunal al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y cogent material to negate the arguments and justification filed by the appellant in course of assessment proceedings with regard to the issue of share premium. I find that the appellant had furnished all the details as required to establish the genuineness of the issue of shares at premium of Rs. 240/- per share such as copy of Bank Statements of BSNL Commercial Private Limited, Copy of ITR Acknowledgement for the assessment Year 2012-13, copy of Certificate of Allotment Advise. Copy of Allotment letter. Copy of Annual Report including copy of Bank statements and copy of PAN Card of Investor Companies such as Devsant Commercial Private Limited, Sanmati Synfab Private Limited & Shlok Fashions Private Limited and copy of PAN of Directors of Investor Companies. In such event, I find that the issue of shares at a premium of Rs. 240/- per share seems to be justifiable when all the details & documents as mentioned above filed before the AO only go to show the genuineness of transactions of share premium including face values, identities and creditworthiness of the shareholders of the company for justification of investments in the appellant company. 4.9. Therefore, considering the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t claimed to be received by the assessee-company from the concerned shareholders was required to be seen to ascertain the genuineness of the huge share premium amount claimed to be received by the assessee, but the ld. CIT(Appeals) completely overlooked this vital aspect while deleting the addition made by the Assessing Officer on account of share premium amount by treating the same as unexplained cash credit. 6. The ld. Counsel for the assessee, on the other hand, contended that all the relevant aspects of the issue have been duly considered by the ld. CIT(Appeals) and after taking into consideration the relevant documentary evidence placed on record by the assessee-company, creditworthiness of the concerned shareholders has been accepted by the ld. CIT(Appeals). He contended that even the share premium charged by the assessee-company was duly justified by it by furnishing the relevant facts and figures. He contended that the share capital amount received from the shareholders was accepted by the Assessing Officer and only the share premium amount received from them was treated by him as unexplained, which was not justified. He contended that in the similar facts and circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO. We find that the assessee in the instant case had duly complied with by furnishing the complete details of share subscribers to prove their identity, genuineness of the transaction and creditworthiness of share subscribers beyond doubt. These are duly supported by the documentary evidences which are enclosed in the paper book. The ld. AO had not found any falsity or any adverse inference of the said documents. We find that the Ld. CIT(A) had placed heavy reliance on these documents and had granted relief to the assessee. All the share subscribers are duly assessed to income tax and the transaction with the assessee company are duly routed through banking channels and are duly reflected in their respective audited balance sheets which are also placed on record before us. In any case, once the receipt of share capital has been accepted as genuine within the ken of section 68 of the Act, there is no reason for the ld. AO to doubt the share premium component received from the very same shareholders as bogus. We held that all the three necessary ingredients of section 68 had been duly complied with by the assessee with proper documentary evidences. We find that notices issued u/s 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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