TMI Blog2018 (12) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. This appeal by the Revenue arises out of the order of the Learned Commissioner of Income Tax(Appeals)-4, Kolkata [in short the ld CIT(A)] in Appeal No. 247/ CIT(A)- 4/Ward-10(4)/Kol/15-16 dated 26.05.2016 against the order passed by the ITO, Ward- 10(4), Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 12.03.2015 for the Assessment Year 2012-13. 2. The first issue to be decided in this appeal is as to whether the ld CITA was justified in deleting the addition made in the sum of ₹ 1,98,00,000/- towards share premium u/s 68 of the Act in the facts and circumstances of the case. 3. The brief facts of this appeal are that the assessee company filed its return for the Asst Year 2012-13 on 22.9.2012 declaring total income of ₹ 3,46,856/-. The ld. AO observed that since there was no substantial business activity except profit on sale of investment carried on by the assessee, the assessee company cannot command huge share premium. Accordingly he sought to verify the veracity of the share capital and share premium raised by the assessee. The assessee submitted that it is engaged in the business of investment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bscribers for the year ended 31.3.2012, explanation regarding the immediate source of payment of share application monies, audited financial statements and ITR acknowledgements for filing of return for Asst Year 2012-13 of the share applicants. The assessee also furnished a copy of return filed, allotment of shares in form no. 2 filed with ROC. The assessee also submitted each of the assessee subscriber company was regularly assessed to income tax and the payments towards share capital and share premium amounts were made by them to the assessee through their respective bank accounts. It was also submitted that the notice issued u/s 133(6) of the Act to the share subscribers independently were duly complied with by them before the ld. AO. It was submitted that the summons u/s 131 of the Act was issued asking the directors of the assessee company to appear before the ld AO. The director of the assessee company appeared before the ld AO for giving his deposition along with his identity proof, copy of bank statement of the assessee company supported by the bank ledger and share subscribers ledger but the ld AO did not gave him an opportunity to present his case before him. Later the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are. The assessee placed reliance on the decision of various High Courts including Hon ble Jurisdictional High Court in support of its contentions. The assessee specifically argued before the Ld. CIT(A) that the allotment of shares at a premium cannot be considered as sham or income of the assessee. It was pleaded that in the instant case, the assessee had even justified with cogent reasons for issuance of shares at premium and that the premium was charged at the same rate for all the shareholders. 5. The Ld. CIT(A) observed that the ld. AO had adjudicated the issue with a predetermined state of mind that the share premium received by the assessee is not genuine. He also observed that the ld. AO held that the shareholders did not exist and the transactions were accordingly an eye wash only for bringing the black money of the assessee only into the company in the garb of share capital and share premium. The Ld. CIT(A) gave a categorical finding that each of the share subscribers are regularly assessed to income tax and that the investments made by each of them were duly and fully reflected in their audited books of accounts as well as in their income tax returns which are part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 133(6) have been duly complied with. We find that the director of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urged before the Tribunal as recorded in para 11 of the impugned order is the addition of share capital and share application money in the hands of the assessee as income under section 28(iv) of the Act. We find that the Commissioner of Income-tax (Appeals) did consider the issue of applicability of section 68 of the Act and concluded that it does not apply. The Revenue seems to have accepted the same and did not urge this issue before the Tribunal. Mr. Bhoot, learned counsel appearing for the Revenue also fairly states that the issue of applicability of section 68 of the Act was not urged by the Revenue before the Tribunal. (b) It is a settled position in law as held by this court in CIT v. Tata Chemicals Ltd. [2002] 122 Taxman 643/256 ITR 395 (Bom.) that in an appeal under section 260A of the Act, the High Court can only decide a question if it had been raised before the Tribunal even if not determined by the Tribunal. Therefore, no occasion to consider the question as prayed for arises. (c) In any case, we may point out that the amendment to section 68 of the Act by the addition of proviso thereto took place with effect from April 1, 2013. Therefore, it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the amount received on issue of share capital including premium are on capital account and cannot be considered to be income. (b) It is further pertinent to note that the definition of income as provided under section 2(24) of the Act at the relevant time did not define as income any consideration received for issue of share in excess of its fair market value. This came into the statute only with effect from April 1, 2013 and thus, would have, no application to the share premium received by the respondent assessee in the previous year relevant to the assessment year 2012-13. Similarly, the amendment to section 68 of the Act by addition of proviso was made subsequent to previous year relevant to the subject assessment year 2012-13 and cannot be invoked. It may be pointed out that this court in CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 taxmann.com 272/247 Taxman 245/394 ITR 680 (Bom.) has while refusing to entertain a question with regard to section 68 of the Act has held that the proviso to section 68 of the Act introduced with effect from April 1, 2013 will not have retrospective effect and would be effective only from the assessment year 2013-14. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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