TMI Blog2018 (11) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... ly converted the unsecured loans with interest into equity share capital in part in the facts of the instant case. Out of total 8 loan creditors, the assessee had received loans from 6 parties in the earlier years and were carried over as opening balances during the year under appeal. Even the sum of ₹ 15 lacs was received from 2 parties during the year were from existing loan creditors only and not new loan creditors. Hence the test of identity, creditworthiness of loan creditors and genuineness of transactions had already been tested and accepted by the revenue in the earlier year. - Decided in favour of assessee. - I.T.A No. 1519/Kol/2017 - - - Dated:- 12-10-2018 - Shri A.T. Varkey, JM Shri M.Balaganesh, AM For the Appellant : Shri A.K. Tibrewal, FCA Shri Amil Agarwal, Advocate For the Respondent : Shri Altaf Hussain, Addl. CIT Sr. DR ORDER PER M.BALAGANESH, AM 1. This appeal by the assessee arises out of the order of the Learned Commissioner of Income Tax(Appeals)-9, Kolkata [in short the ld CIT(A)] in Appeal No.141/CIT(A)- 9/Cir-1(1)/2016-17/Kol dated 29.03.2017 against the order passed by the DCIT, Circle-1(1), Kolkata [ in short the ld AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jiwandeep Commercial (P) Ltd. 10,66,304.07 0.00 10,00,000.00 68,471.00 6,847.00 1,27,928.07 Rose Merry Marketing (P) Ltd. 14,96,245.40 0.00 12,00,000.00 1,08,239.00 10,824.00 3,93,660.40 Dhanya commosales (P) Ltd. 16,66,553.70 0.00 15,00,000.00 1,10,781.00 11,078.00 2,66,256.70 Paramatama Invest Advisory Services (P) Ltd. 3,86,060.00 0.00 3,00,000.00 28,503.00 2,850.00 1,11,713.00 Sharda Films (P) Ltd. 12,22,636.00 0.00 12,00,000.00 75,315.00 7,531.00 90,420.00 Total 86,00,000.00 6,15,474.00 61,546.00 3.2. The assessee also stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld AO finally observed that due to complete noncompliance to the summons from the part of the assessee, the entire credit in the form of share capital along with premium raised by the assessee to the tune of ₹ 86,00,000/- during the year under consideration was to be treated as unexplained cash credit u/s 68 of the Act. 5. The ld CITA obtained remand reports from the ld AO wherein the ld AO observed that no fresh documents were furnished by the assessee and all the documents furnished in the remand proceedings were already on record before the file of the ld AO while framing the original assessment itself. Accordingly, the ld AO in the remand report vehemently supported the original assessment order and the addition made thereon in the sum of ₹ 86,00,000/- u/s 68 of the Act. The ld CITA accordingly upheld the action of the ld AO. Aggrieved, the assessee is in appeal before us. 6. We have heard the rival submissions and perused the materials available on record including the paper book filed by the authorized representative of the assessee comprising of pages 1 to 109 of the Paper Book. At the outset, we find from the aforesaid tables, that the assessee company had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aka High Court in the case of CIT vs Sridev Enterprises reported in 192 ITR 165 (Kar) . We find that the reliance placed on the decision of Hon ble Gujarat High Court in the case of DCIT vs Rohini Builders reported in 256 ITR 360 (Guj) is very well founded. We also find that the Hon ble Jurisdictional High Court in the case of CIT vs J.J.Development (P) Ltd reported in 2016 (6) TMI 804 Calcutta High Court in ITA No. 519/2008 dated 16.6.2016 had adjudicated the very same issue under dispute before us. The questions raised before the Hon ble Jurisidictional High Court are as under:- (a) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding out of ₹ 95,00,000/-, ₹ 76,98,000/- constituted of old loans being converted into share application money and since ther was no fresh infusion of credit, section 68 of the Income Tax Act, 1961 is not applicable ? (b) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in uphgolding the order of the Commissioner of Income Tax (Appeals) to the extent that the amount of ₹ 76,98,000/- could not come und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served. All the other share applicants confirmed that they had applied for the shares of the company. It is submitted that just because one of the applicants of the shares chose to go back on his commitment, the issuance of shares in his favour cannot become bad. But that, in any case, is a matter of dispute between the assessee and M/s Ramsay International with which the revenue is not concerned. We have considered the submissions advanced by Ms.Banerjee and are of the opinion that there is some force in her submission. In that view of the matter, we are of the opinion that question (c ) is not germane for the purpose of deciding the applicability of section 68. We are not called upon to decide the matter between the assesee and Ramsay International. Any observation if passed by us may adversely affect Ramsay International who is not present before us. We therefore refrain from answering question (c ). In the result, the appeal fails and is dismissed. 6.2. We also find that the co-ordinate bench decision of this tribunal in the case of ITO vs Jellotic Supply Pvt Ltd in ITA No. 1972/Kol/2016 dated 5.7.2018 had held in favour of the assessee in similar circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and that the same were not received during the year under appeal. This fact remain uncontroverted by the ld DR before us. Hence the provisions of section 68 of the Act cannot be applied at all for the year under appeal before us. Hence we hold that the ld CITA had rightly deleted the addition thereon which does not require any interference. Accordingly, the Ground No. 1 raised by the revenue is dismissed. 6.4. At the cost of repetition, we would like to state that the interest paid on unsecured loans to all the loan creditors till the date of conversion of part of the amounts of the same into equity share capital were duly allowed as deduction by the ld AO. Hence there is no scope for treating the loan creditors / shareholders as ingenuine. We hold that the assesee had furnished all the required documents to prove that the identity of the creditors, creditworthiness of the creditors and the genuineness of transactions within the meaning of section 68 of the Act in the instant case. All the creditors had duly filed confirmations before the ld AO . Merely because the summons issued seeking their personal appearance is not complied with, the entire transactions cannot be t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
