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2019 (4) TMI 556

not during the year under consideration - HELD THAT:- Additional evidence filed before the ld. CIT(A) was sent by him to the Assessing Officer for his comments and the Assessing Officer in his remand report stated that in compliance to the letter U/s 133(6) the assessee has furnished written reply on 12/6/2014 and in the reply, the assessee has accepted that the share premium was received during the A.Y. 2009-10 and no details has been furnished during the assessment proceedings. - The findings recorded by the CIT(A) is contrary to the observation of the Assessing Officer in his remand report. Therefore, in all the fairness, we restore the matter back to the file of the AO for deciding the issue afresh after considering the audited balance sheet of the assessee for the year under consideration as well as the balance sheet for the preceding year. If the Assessing Officer found that the 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 s .....

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itworthiness of the share applicants and the genuineness of these transactions. It was further observed by the AO that there was no justification of such a high premium charged by the appellant company vis-a-vis its financial statements. The AO has discussed the provisions of section 56(1) of the Act on page no. 15 of the assessment order, and was of the view that the instant transactions under consideration were duly covered under the provisions of section 56(1) of the Act, though a specific provision was inserted in subsection 2 of section 56 subsequently. However, the AO has made an addition of ₹ 73,50,000/- u/s 68 of the Act by observing that the receipt of share capital and share premium was part of a device of colourful transaction by way of which a sum of ₹ 73,50,000/- was introduced into the books of accounts 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 transactio .....

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eceived for such shares as exceeds the fair market value of the shares:" (v) A corresponding amendment has also been made in the definition of income u/s 2(24)of the Act w.e.f. 01.04.2013. The relevant portion reads as under:- "(xvi) any consideration received for issue of shares as exceeds the fair market value of the share referred to in clause (viib) of subsection (2) of Section 56;]" (vi) It is to be noted that to tax the income under the Act, it must come under the definition of income as provided u/s 2(24) of the I.T. Act, 1961. There were amendments in section 2(24) of the Act and in section 56(2) of the Act w.e.f. 01.04.2013, which are not applicable to A.Y. under consideration. By these amended provisions, any consideration received for issue of shares that exceeds the fair market 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 .....

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des that if any sum found credited in the books of an assessee maintained and explanation offered by the assessee is not satisfactory in the opinion of the AO, then such sum credited be charged to income-tax as the income of the assessee of that previous year. It would be appropriate to reproduce the provisions of section 68 of the Act as under:- Section 68 - Cash Credits: Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the (Assessing) Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. (x) Thus, the sum received by the 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 considera .....

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eration. It is noted from the balance sheet of the appellant as on 31.03.2008 that the appellant has shown share application money of ₹ 75 lac under the head Current Liabilities & Provisions in Schedule-E to the balance sheet which clearly establish that the amount for issue of share capital was received during the FY. 2007-08 relevant to the AY 2008-09 and not during the FY 2008-09 relevant to the AY 2009-10 i.e. the year under consideration. (xii) It may be mentioned that in the case of ITO Vs Standard Leather (P.) Ltd. [2016] 76 taxmann.com 109 (Kolkata - Trib.), the similar issue was before the Hon'ble Tribunal and it was held therein that: Similarly in the case of Dy. CIT v. Amod Petrochem (P.) Ltd. [2008] 307 ITR 265 (Guj, it 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 .....

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old, no credit has been made in so far those credits in the books of accounts in the assessment year under consideration, Sec.68cannot be applied." (xiv) In the case of Glen Williams Vs ACIT in ITA No. 1078/Bang/2014, it was held by Hon ble Tribunal that: 13. We have given a careful consideration to the rival submissions. On almost identical facts, the Hon'ble Delhi High Court in the case of Shri Vardhaman Overseas Ltd. (supra), has clearly laid down that neither section 41(1) nor section 68 of the Act can be applied. On the applicability of section 68, we are of the view that those provisions will not apply as the balances shown in the creditors account do not arise out of any transaction during the previous year relevant 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 boo .....

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he credit in the books of the assessee was in the preceding assessment years 2008-09. 8. On the other hand, the ld AR of the assessee has contended that the credit in the books of account did not arise out of any transaction entered by the assessee during the relevant assessment year 2009-10 under consideration. Since the amount was not received during the year under consideration but was already in the books of account and mere carry forward during the year under consideration, the ld. CIT(A) was justified in deleting the addition on the ground that there was no fresh credit during the year under consideration. 9. We have considered the rival contentions and carefully gone through the orders 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 passe .....

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