TMI Blog2020 (9) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Ld.CIT(A) and reject ground taken by the revenue. Addition towards share application money received u/s 68 - HELD THAT:- Assessee has received share application money through proper banking channels. The creditor has filed its financial statements and ITR acknowledgment, which clearly suggest that the creditor has enough source of income to explain the capacity to advance share application money. The other facts brought out by the Ld. AO, as well as the Ld.CIT(A) regarding change of name and subsequent closer of the company is not material to decide the issue, because what is relevant to see is whether, three ingredients provided u/s 68 has been satisfactorily explained or not. In this case, on perusal of details filed by the assessee, we find that the assessee has discharged its onus and prove the credit being share application money received from Global Emission Management Pvt.Ltd with all possible evidences. AO, as well as the Ld.CIT(A) were erred in confirmed additions made towards share application money received from Global Emission Management Pvt.Ltd. Hence, we direct the Ld. AO to delete additions made towards share application money received from Global Emission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for emulsification of micro level water droplets in Furnace Oil and other Hydro Carbon fuels. The assessee has filed its return of income for AY 2010-11 on 28/09/2010, declaring total income at Rs. Nil and current year loss at ₹ 1,58,67,531/-. The case was selected for scrutiny and the assessment has been completed u/s 143(3) of the I.T.Act, 1961 on 25/03/2013 determining the total income at ₹ 1,49,93,590/- by making additions towards disallowances of expenditure claimed under the head income from business amounting to ₹ 1,92,86,737/- and additions towards lease rental income of ₹ 2,18,588/- under the head income from other sources and also, additions towards unexplained cash credits being share application money amounting to ₹ 1,47,75,000/-. The assesse carried the matter in appeal before the first appellate authority. The Ld.CIT(A), for the detailed reasons recorded in is appellate order, dated 02/03/2016, partly allowed appeal filed by the assessee, where he has deleted additions made by the Ld. AO towards disallowances of expenditure, but allowed partial relief, in respect of additions made towards unexplained cash credit being share applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been filed before the Ld. AO. The Ld.CIT(A) after considering relevant facts has rightly deleted additions made by the Ld. AO and his findings should be upheld. 6. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. The term business set-up and commencement of business are two different situations. If the business has been set-up, even though the business has not commenced during the period, then necessary expenditure incurred in relation to said business needs to be allowed as deduction. In order to decide, whether a particular business has been set-up and has commenced needs to be examined, in light of facts of each case and nature of business undertaken by the enterprises. In this case, the assessee is in the business of manufacturing certain equipment, which are widely used as integral part of manufacturing process and also, would help in fuel savings. The equipment manufactured by the assessee namely Winfox was designed to ensure substantial savings of liquid fuels like, diesel, furnace oil, etc. The business model followed by the assesee is that it manufactures the equipments and installed said equip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Shri Foram Dattani Kapoor and from Global Emission Management Pvt.Ltd. The facts with regard to the impugned disputes are that the assessee has received share application money of ₹ 1,30,21,000/- from Shri Foram Dattani Kapoor and a further sum of ₹ 17,54,000/- from Global Emission Management Pvt.Ltd. During the course of assessment proceedings, the Ld. AO called upon the assessee to file necessary evidences, including name and address of the parties from whom, share application money has been received. In response, the assessee, vide letter dated 05/11/2012 has submitted that the name and address along with confirmation letters from the parties. In order to verify correctness of claim made by the assesee, the Ld. AO had issued notice u/s 133(6) of the I.T.Act, 1961 to both the parties. The notice issued to Global Emission Management Pvt.Ltd. has been returned unserved, however the other notice issued to Shri Foram Dattani Kapoor has been served to the party, for which the creditor has filed necessary evidences called for by the Ld. AO. The Ld. AO having taken note of evidences filed by the assesee, came to the conclusion that the assesse has failed to prove share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from the party along with financial statements, bank statements and, ITR filed for the relevant year. These are undisputed facts. The Ld.CIT(A) has accepted the claim of the assesee, insofar as share application money received from Mr.Foram Dattani Kapoor, where he had recorded categorical finding that the assesse has proved, the ingredients provided u/s 68 of the I.T.Act, 1961 and consequently, the additions towards amount received from said party is unjustified. The revenue fails to bring on record any evidences to prove that the findings of fact recorded by the Ld.CIT(A) is incorrect. Rather, the Ld. DR has relied upon plethora of judicial precedents, which are not at all applicable to the facts of present case. On the other hand, the assesee has filed complete set of documents, including confirmation letter obtained from the creditor, as per which the creditor has issued a signed confirmation letter along with name and address and PAN number. The assessee has also filed bank statements of the creditors to prove movement of funds through proper banking channels. The assessee has also filed financial statement of the creditors and income tax return acknowledgment which prove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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