TMI Blog2022 (5) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... BOMBAY HIGH COURT] and we hold that the said amendment to Section 68 cannot be said to be retrospective in nature and it has to be prospective i.e. from AY 2013-14. The judgements of the Hon ble Apex Court in the case of G. S. Homes Hotels Pvt. Ltd. [ 2016 (8) TMI 613 - SC ORDER] and case of Apeak Infotech [ 2017 (9) TMI 1590 - BOMBAY HIGH COURT] read with Vodafone India Services P. Ltd. [ 2014 (10) TMI 278 - BOMBAY HIGH COURT] are quite apt to the issue that share capital and share premium are on capital account and cannot be considered as income of the assessee. Accordingly, the addition as made by the Assessing Officer and confirmed by the CIT(A) deserves to be deleted and as such, we delete the addition made u/s. 68 - Decided in favour of assessee. - I.T.A. No. 213/Asr/2017 - - - Dated:- 23-12-2021 - Sh. Mahavir Prasad, Judicial Member And Dr. M. L. Meena, Accountant Member For the Appellant : Sh. Sudhir Sehgal, Adv. For the Respondent : Sh. S. M. Surendranath, D. R. ORDER PER DR. M. L. MEENA, AM: This appeal of the assessee is directed against the order of Ld. CIT(A), Bathinda dated 16.03.2017 in respect of A.Y. 2012-13. 2. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground of receipt of large share premium . The AO noticed that the appellant company, during the year under consideration, increased its share capital by Rs. 2,58,00,000/- by way of share capital and share premium to five private companies and two individuals as under: Sr. No. Name Share capital Share premium Total 1 M/s Nachiketa Agrotech (P) Ltd. 2,02,000/- 98,98,000/- 1,01,00,000/- 2 M/s Domain Enterprises Pvt. Ltd. 38,000/- 18,62,000/- 19,00,000/- 3 M/s Legacy Mercantile Pvt. Ltd. 80,000/- 39,20,000/- 40,00,000/- 4 M/s Kabir Enterprises Pvt. Ltd. 1,14,000/- 55,86,000/- 57,00,000/- 5 Directy Mercantile Co. Pvt. Ltd. 80,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income exigible to tax under the provisions of section 68 of the Act. All the grounds of appeal pertaining to this issue are, thus, rejected. It is ordered accordingly. 6. The ld. Counsel for the assessee has argued that all the investment in the company have been made through banking channel and the identity of all the subscribers to the Share Capital and Share Premium have been proved and further, in the balance sheet of the company, the said amount has been reflected as Share Capital and Share Premium . 7. It has been stated by the Ld. Counsel that the assessee attended the hearing before the Assessing Officer and produced audited books of accounts which were examined by the Assessing Officer and the return was filed on the basis of the audited books of accounts and no defects have been pointed out by him. During the course of assessment proceedings, the counsel of the assessee further argued that the Assessing Officer required the assessee to prove the identity, capacity and genuineness of the transactions as required u/s 68 of the Income Tax Act, 1961. The Assessing Officer also mentioned in the assessment order that as per the report of the Investigation Win ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmation of the amount contributed as Share Capital and Share Premium in the form of letter addressed to the AO along with the audit report as on 31.03.2012 with all the annexures. M/s. Legacy Mercantile Pvt. Ltd. 71 to 96 Confirmation of the amount contributed as Share Capital and Share Premium in the form of letter addressed to the AO along with the audit report as on 31.03.2012 with all the annexures. 9. It was argued by the Ld. Counsel that before the CIT(A), submissions were made, which has been reproduced at page no. 2 to 5 of the order of the CIT(A) and the CIT(A) has given his findings from, para 5 to para 8, of his order and confirmed the addition, on the basis of general arguments mentioning that, though the dominant view of the judiciary is that in the case of bogus share capital, action has to be taken in the case of share subscribers and not against the company, whose shares have been subscribed, but then CIT(A) has referred to the amendment to the Section 68 of the Income Tax Act, 1961 which was inserted by the Finance Act, 2012 w.e.f. 01.04.2013 i.e. from Assessment Year 2013-14 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by rendered by the Hon ble High (CLPB-II, Pg. 114). 12. The Ld. Counsel further relied upon the decision of the Bombay Bench of the ITAT in the case of Arogya Bharti Health Park Pvt. Ltd. , reported in ITA NO. 2943/Mum/2014 (Mumbai), (CLPB. Pg. 89 to 109) and in that judgment, on the same issue of the share capital, where the addition was made u/s 68 on the basis that amendment in Section 68 by Finance Act, 2012 had a retrospective in nature for the year involved was Assessment Year 2010-11 wherein after considering each every aspect in detail and at length it was held in para 17, page 104 to 105, that provisions of Section 68, as amended by Finance Act, 2012 is to be considered prospective in nature and applicable to Assessment Year 2013- 14 only and while giving this judgment, they have relied upon the earlier decision of the Bombay High Court in the case of the CIT vs. Gagandeep Infrastructure Ltd. reported in 394 ITR 680 (Bombay). The judgment of the Gagandeep Infrastructure Ltd. (CLPB, Pg. 1 to 5), in which, it has been held that no addition could be made in the hands of the assessee but addition, if any, could be made only in the hands of the subscribers of such sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of PCIT vs. Krishna Devi reported in 431 ITR 361, copy placed at paper book 49 to 57, in which, similar facts are there and rather the facts in the case of the assessee were strong in the sense that enquiries u/s 133(6) were made, which were replied by the respective subscribers to the Share Capital/Share Capital and, thus, the confirmation of addition by the CIT(A) on the preponderance of the surrounding facts was not proper and he prayed for the deletion of the addition. 17. The Ld. DR relied upon the findings of the Assessing Officer and the CIT(A) and stated that the provision of Section 68 were retrospective in nature and the genuineness of the Share Capital/Share Premium and the capacity of the subscribers to the share capital and the premium have not been proved and therefore, sought the confirmation of the addition. 18. We have heard both the sides, carefully gone through the order of the Assessing Officer, CIT(A), the arguments, brief synopsis of the Ld. Counsel of the assessee and various case laws relied upon. It is an undisputed fact that parties to the Share Capital/Share Premium had responded to the enquiries made by the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income as per clause (xvi) of Section 2(24) of the Income Tax Act, 1961 which was also amended from 01.04.2013. Thus, all these sections were amended from 01.04.2013 and which have been analyzed at length by the Bombay Bench of ITAT in the case of Arogya Bharti Health Park P. Ltd. (supra) , copy placed at CLPB, pages 81 to 109 and this issue of Section 68, 56(2)(viib) and Section 2(24) has been threadbare discussed and also analyzed the provisions of Section 68 r.w.s. 56(2)(viib) along with the amendment to Section 2(24) of the Act and it was held in para 18 19 of that judgment, that all these three sections were amended w.e.f. 01.04.2013 i.e. AY 2013- 14 and for that purposes, the relevant paras of the judgment is being reproduced as under: 18. Coming to another aspect of the matter. The Ld.AR for the assessee submitted that the amount received on account of share application money is capital in nature and could not be taxed u/s 68, if the explanation offered by the assessee of the nature and source is not satisfactory, in the opinion of the AO. We find that the issue of taxability of share premium has been considered by the Hon ble Bombay High Court in the case of Vod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the public is substantially interested, would be treated as Income from other sources , as seen from section 56(2)(viib) of the Act, which we do not think can be controlled by the provisions of section 68 of the Act. We have gone through the case law relied upon by the Ld. DR in the light of facts of the present case and find that the case laws relied upon by the Ld. DR has no application as in the case considered by the Hon ble Kerala High Court, there is no clarity whether the decision pertains to the position of law as enumerated in pre-amended or post amended provisions, therefore, the same cannot be applied to the facts of the present case because the issue involved in this case clearly fall within the ambit of pre-amended provisions of section 68 and section 56(2)(viib) of the Income-tax Act, 1961. 21. Following the judgment of the Hon ble Bombay High Court in case of Gagandeep Infrastructure , and Paradise Inland Shipping Pvt. Ltd. (supra) and we hold that the said amendment to Section 68 cannot be said to be retrospective in nature and it has to be prospective i.e. from AY 2013-14. The judgements of the Hon ble Apex Court in the case of G. S. Homes Hotels Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
