TMI Blog2013 (10) TMI 1509X X X X Extracts X X X X X X X X Extracts X X X X ..... made to the Assessee company. Shri N. Suryanarayana stated that the payment was made for the purpose of conversion of the land. The said cheque has been credited in the accounts of M/s. Primeslots Properties Pvt. Ltd. on 29.5.2006 and the cheque was paid out of the account of Mrs. N. Sunitha. When questioned, it was explained that Mrs. N. Sunitha received ₹ 5 crores from M/s. ECRU Builders Pvt. Ltd. in May, 2006 and out of this, a sum of ₹ 4.99 crores was advanced to M/s. Primeslots Properties Pvt. Ltd. as an advance. The Assessee claimed that this money was share application money but did not explain the nature of the transaction and the present status of the advance paid with documentary evidence. Even there had been a search at the residence of Mrs. N. Sunitha but no evidence in support of the claim of advance for the purchase of the land for ₹ 4.99 crores was found. The Assessee company stated that the sum of ₹ 4.99 crores was received towards share application money for purchase of 50,000 shares of face value ₹ 100/- of M/s. Primeslots Properties Pvt. Ltd. at a premium of ₹ 1,950/- per share. The AO on the basis of the annual report for F.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was share application money. Ultimately both goes to show that they are correct. The payee says that it was share application money. By purchase of the shares the payer becomes the majority shareholder and ultimately power of transferring the lands acquired by the firm. If the payee i.e. the assessee was not correct, she would not have gone to the extent of filing of various cases in the Courts, Company Law Board and finally agrees for allotment of shares in the assessee company as well as Group Companies and affirm before the Hon. High Court of Mumbai, Goa Bench and on the basis of the agreements a Consent Decree was passed by the Court. The claim of the appellant is that since by the order of the High Court, Mrs N Sunitha and the appellant have resolved the issues by being treated as a share holder, the said amount should be accepted as such. 14. This claim of the appellant cannot be accepted as from the evidences above and the petition raised by the creditor Mrs N Sunitha, it is clear that the amount advanced was towards some other purpose and not allotment of shares. With the evidences on record, it is clear that this was not meant to be returned but for execution of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments are in nature of public domain documents which can also be also accessed independently directly on the official site of the Ministry of Company Affairs. ii) Form 2 for the return on share allotment, form no 20 B which is a annual return of the company which indicates the share capital structure along with the other financial details Form No 23AC which has the Balance Sheet, P/L account as per the provisions of Companies Act, 1956 were also filed iii) Form No 66 was filed with Registrar of Companies which is a compliance certificate issued independently by a practicing certificate holder to certify the compliance of the provisions of the companies Act 1956. The shares were allotted to Mrs. Sunitha on 14.03.2007. Thus the shares were partly paid up as on that date. iv) On 23.07.2007 call on shares for unpaid amount was made. However the unpaid call amount was not received. Hence on 1.03.2008 the shares were determined to be forfeited. 4.i) lt is well settled legal position that share application money when forfeited and credited to Capital Reserve account is a Capital Receipt not chargeable to tax. Had the call money been received by the assessee it would have defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e premium account is also a capital receipt. Thus it is settled legal position that by charging provisions of Sec 4 5 the general liability to tax is imposed upon income but the I.T.Act does not provide that whatever is received by the person must be regarded as income chargeable to tax. In cases in which the receipt is sought to be taxed as income, burden lies upon the Dept. to prove that it is within the taxing provisions in view of the judgment of apex court in the case of Parimisetti Seetharamamma v/s CIT (1965) 57 ITR 532 (SC). The aforesaid principle was considered in the case of Prism Cement Ltd v/s JCIT -101 ITD 103 (Mum ). 4. Relying on the above and facts of our case we respectfully submit that the amount forfeited by M/S Primeslots Properties Pvt. Ltd for non payment of call money and credited to capital account is not chargeable to tax. Reliance is placed on the following. a) DCIT v/s Brijlaxmi Leasing Finance Ltd 118 ITD 546 ( Ahd ) b) Prism Cement Limited v/s JCIT 101 ITD 103 ( Mum ) c) Multan Electric Supply Co Ltd In re 13 ITR 457 ( Lah ) , d) Asiatic Oxygen Ltd v/s DCIT 49 ITD 355 ( Cal) 5. Further as stated above even though 50,00,000/- ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding consequent to petition filed by her and consent terms agreed thereupon and there was a diversion of income by overriding title. 2.2 The ld. DR, on the other hand, relied on the order of the tax authorities below. 2.3 We have carefully considered the rival submission and perused the matter on record. We noted that in this case it has not been denied by the revenue authorities that the money has been received by the Assessee company from Mrs. N. Sunitha by cheque on 26.5.2006. The claim of the Assessee is that the money has been received as share application money out of which ₹ 50 lacs was refunded to her on 10.8.2006 and balance amount of ₹ 4.49 crores was allocated towards share application as ₹ 25 lacs for share capital subscription and balance of ₹ 424 lacs towards share premium for the purchase of 50,000 shares of ₹ 50/- (partly paid up) at a share premium of ₹ 848/- for the same and the same has been recorded in the books of accounts of the company as share capital of ₹ 25 lacs and share premium of ₹ 424 lacs. It is also claim of the Assessee that the Assessee had done all statutory compliance as are to be done unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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