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TMI Blog2019 (5) TMI 1855X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued in lieu of shares of some companies. 2. Whether on the basis facts and circumstances of the case and in law the ld. CIT(A), Kolkata erred in deleting the addition of Rs. 2,17,00,000/- u/s 68 of the I.T. Act, holding the view of double taxation in the hands of assessee company as well as in the hands of five paper companies in the light of decision of the Hon'ble Calcutta High Court in case of Trinetra Commerce & Trade (P) Ltd., 75 taxmann. Com 70 (dt. of order 15.09.2016) 3. That the Department craves leave to add, modify or alter any of the grounds of appeal and /or adduce additional evidence at the time of hearing of the case. 3. The brief facts qua the issue are that the assessee company, M/s Pansu Commercial Pvt. Ltd, filed the return of income under section 139(4) of the Act on 25.12.2012, declaring total loss to the tune of Rs. 16,772/-. The assessee company was incorporated on 09.09.2011. During the year under consideration, as total of Rs. 2,17,00,000/- (Rs. 1,43,200 + Rs. 2,15,56,800) was credited in the books of accounts of the assessee company, consisting share capital at Rs. 1,43,200/- and share premium at Rs. 2,15,56,800/-. The assessee was asked to produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year assessee claimed to have issued 4320 shares to one M/s Gajavani Merchandise Pvt. Ltd on face value Rs. 10 on a premium of Rs. 4,990. Thus, against share capital of Rs. 43,200 assessee claim to have received share premium of Rs. 2,15,56,800/-. Assessee claimed that there was no monetary transaction with Gajvani Merchandise Pvt. Ltd. on the issue of share capital, as it is claimed that value is set-off against purchase value of shares of four unlisted company held by the share applicant as its investment. In the appellate order Ld. CIT(A) has not gone into merit on the case and dealt with the legal issue of section 68 of the IT Act, whether any addition can be made u/s 68 where no sum of money has been transacted. Ld. CIT(A) in his order (in page no. 6 para 1.11) observed that: "The A.O. has glossed over the fact that the assessee company did not receive any money by way of share capital from Gajvani Merchandise Pvt. Ltd. or others. The A.O. has made the addition u/s 68 of the I.T. Act, which applies only when any sum of money or cash is credited in the books of accounts and there is no satisfactory explanation from the assessee against the said credit about thenature and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies) Having gone through the above journal entry, one can conclude that effect of this journal entry would be that investments in shares will be debited and the share capital and premium will be credited. The result of this journal entry clearly shows that there is no cash credit in the books of accounts i.e. there is no any sum crediting in the year under consideration and it is kind of a barter transaction, where one thing is being exchanged with other thing, hence the provisions of section 68 do not apply. 8. Now, coming to the assessee`s facts, we note that shares by the assessee to Gajvani Merchandise Pvt. Ltd. were allotted in exchange of shares of 4 (four) private companies being (i) M/s Aqua Vinimay P Ltd.,(ii) M/s Citron Commosale P Ltd.,(iii) M/s Ebony Deal trade P Ltd, (iv) M/s Positive Merchants P Ltd.(vide pb-33). A copy of share purchase agreement is produced by the assesseewhich demonstrates that Gajvani Merchandise Pvt. Ltd. sold or handed over its shares in the said four private companies and in return for the said shares so acquired, the assessee allotted 4320 shares having face value of Rs. 10/- at a premium of Rs. 4,990/- per share. The assessee produced cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have perused the assessment order carefully. We find that cash did not pass at any stage though entries were made in the cash book showing payments and receipts; but since the entries made a complete round, no passing of cash was necessary for the purpose of making the entries. That there was no passing of cash is also admitted by the Income-tax Officer himself. We have already extracted the observation of the Income-tax Officer in paragraph 14 of his assessment order. The Income-tax Officer has clearly opined that all the respective parties did not receive cash nor did pay cash as none had any cash for the purpose. The only point in the assessment order is that the entries not involving the passing of cash should not have found a place in the cash book, but in the ledger account through journal entries. There is another self-contradiction in the Income-tax Officer's finding that, if there was no real cash entry on the credit side of the cash book, but merely a notional or fictitious cash entry, as admitted by him, there is no real credit of cash to its cash book ; the question of inclusion of the amount of the entry as unexplained cash credit cannot arise. One of the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, allowed and the judgment and order of the Tribunal is set aside, for the reasons discussed above. Additions under section 68 are also set aside. [Para 27 11. On similar facts, the Co-ordinate Bench of ITAT Kolkata in the case of ITO vs. Sunglow Telecom Pvt. Ltd. in I.T.A. No. 2178/Kol/2016, dated 16.11.2018, held as follows: "4. The undisputed fact in this case is that the allotment of shares were for consideration other than by way of cash. The four companies which applied for allotment of shares, have sold their investment to the assessee company and the assessee company, has as consideration for the purchase of those shares had allotted shares at a premium. It is a case of swapping of shares. The shares were allotted for consideration other than cash. The question is whether under these facts and circumstances Section 68 of the Act, would be attracted. 12.The undisputed fact, in the assessee`s case is that shares were issued at a premium, as consideration for the purchase of shares from the share applicant companies. This issue is squarely covered by the decision of the Coordinate Bench of Kolkata in the case of ITO vs. M/s. Anand Enterprises Ltd., ITA No. 1614/Kol/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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