TMI Blog2019 (4) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount on account of share capital and share premium was received and credited in the preceding year, no addition is warranted during the year under consideration. Accordingly, the Assessing Officer is to decide the issue afresh in terms of our above direction. - Decided in favour of revenue for statistical purposes. - ITA No. 736/JP/2018 - - - Dated:- 1-4-2019 - Shri Ramesh C Sharma, AM And Shri Vijay Pal Rao, JM For the Assessee : Shri S.L. Poddar (Adv.) For the Revenue : Shri Karni Dan (JCIT) ORDER PER: R.C. SHARMA, A.M. This is an appeal filed by revenue against the order of ld.CIT(A)-I, Jaipur dated 23/03/2018 for the A.Y.2009-10 in the matter of order passed U/s 148/144 of the Income Tax Act, 1961 (in short the Act). 2. Rival contentions have been heard and record perused. 3. In this appeal, the revenue is aggrieved by the order of the ld. CIT(A) deleting the addition of ₹ 73,50,000/- made by the Assessing Officer on account of share premium. 4. The facts in brief are that the assessee is a private limited company and is engaged in the business of trading of clothes. Original return was filed on 29.09.2009 declaring loss of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the appellant company in the form of share premium attached to the share capital. It was also observed by the AO that there was no justification for premium of ₹ 490 per equity share. It was also held by the AO that the appellant company has failed to prove the identity, creditworthiness of the share applicants and the genuineness of the transaction. (ii) It is to be noted that though the AO has discussed the provisions of section 56 of the Act but did not invoke these provisions but has made addition u/s 68 of the Act. It appears that the AO was confused whether the provisions of section 56 or 68 are applicable to the facts of the instant case under consideration. It is strange that the AO has accepted the share capital but did not accept the share premium though the same were received together. I fail to understand that how the creditworthiness, identity of the share applicants and genuineness of the transactions could be accepted by the AO for share capital but not for the share premium, though the transactions were composite one. It appears that the AO has invoked the provisions of section 56(2) of the Act in the guise of section 68 of the Act as only share pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be taxable as income as per clause (viib) of section 56(2) of the Act. The CBDT vide Circular No. 3 of 2012 dated 12.06.2012 has also mentioned that provisions of section 56(2) (viib) will be applicable from A.Y. 2013-14 onwards. It would be appropriate to reproduce the relevant portion of above referred CBDT Circular as under:- Share premium in excess of fair market value to be treated as income In the Finance Bill, 2012, it had been proposed [section 56(2), as sub-clause [(viib]] that in case of a company, not being a company in which the public are substantially interested, which receives, in any previous year, from any person being a resident, any consideration for issue of shares and the consideration received for issue of such shares exceeds the face value of such shares, then the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be chargeable to income tax. An exemption was provided in a case where the consideration for issue of shares is received by a venture capital undertaking from a vent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant, towards share application and share premium could have been taxed as income u/s 68 of the Act in the previous year in which such sum has been received by the appellant. It is noted that in its written submissions, it has been claimed by the appellant that the share capital as well as share premium was received by it during the FY 2007-08 relevant to the AY 2008-09 and not in the instant year under consideration. It may be mentioned that during the assessment proceedings, it was stated by the appellant that the share capital was received during the FY 2007- 08 relevant to AY 2008-09 and the shares were issued during the FY 2008-09 relevant to AY 2009-10 as is evident from para No. 8(d) on page No. 13 of the assessment order. However, it appears that the same was ignored by the AO. It is to be noted that during the appellate proceedings, the appellant has filed a number of documents as additional evidences including share applications, bank statement of the appellant etc., relating to the issue under consideration, which along with written submission of the appellant were forwarded to the AO for its comments and for making necessary enquiries, if any. However, it a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that as per section 68, there should be cash credits of previous year. The section provides for a deeming fiction of treating the sum found credited in the books of on assessee maintained for any previous year, being charged to income-tax as the income of the assessee of that previous year, provided (i) the assessee offers no explanation as to the nature and source of the credits, or (ii) the explanation offered by the assessee is not, in the opinion of the assessing officer, satisfactory. The crux of the issue, therefore is, there have to be credits of any sum in the books of an assessee maintained for any previous year, only then the sum so credited can be brought to tax as the income of the assessee of that previous year; in other words, first of all, there have to be credits in a previous year and only in the assessment relatable to that previous year, namely, year of credit, the sum can be brought to tax. In CIT v. Usha Stud Agricultural Farms Ltd. [2008] 301 ITR 384/[2009] 183 Taxman 277 (Delhi), it was held that since it is a finding of fact recorded by the Commissioner (Appeals) that the credit balance appearing in the accounts of assessee, did not pertain to the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to AY 2009-10. The provisions of sec. 68 are clear inasmuch as they refer to sum found credited in the books of account of an assessee maintained for any previous year . Since the credit entries in question do not relate to previous year relevant to AY 2009-10, the same cannot be brought to tax u/s. 68 of the Act. The proper course in such cases for the Revenue would be to find out the year in which the credits in question were credited in the books of account and thereafter make an enquiry in that year and make an addition in that year, if other conditions for applicability of section 68 are satisfied. (emphasis supplied.) (xv) In view of the above discussion and looking to the totality of facts and circumstances of the case, it is held that the AO was not justified in making addition of ₹ 73.50 Lac u/s 68 of the Act, during the year under consideration, as the such sum was not received by the appellant during the previous year relevant to the assessment year under consideration and hence, the addition made by the AO is hereby deleted. 6. Against the above said order of the ld. CIT(A), the revenue is in further appeal before us wherein following grounds have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the authorities below as well as the remand report called by the Assessing Officer and rejoinder filed by the assessee. From the record, we found that after reopening of the assessment, the Assessing Officer made enquiry with regard to share capital and share premium so received by the assessee. However, not satisfied with the assessee s contention and having not furnished documents required by the Assessing Officer and not appearing before the Assessing Officer, the Assessing Officer passed order U/s 144 of the Act and made addition of ₹ 73,50,000/- on account of share premium so received by the assessee. However, no addition was made on account of share capital. By the impugned order, the ld CIT(A) deleted the same by observing that the share capital and share premium was received by the assessee in the preceding year and not during the year under consideration, therefore, no addition can be made during the year under consideration. From the record, it appears that before the ld. CIT(A), the assessee has filed audited balance sheet to show that the amount of share capital and share premium was received during the preceding year and not during the current year under c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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