TMI Blog2022 (6) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as receipt towards share subscription money. Since no cash was involved in transaction of said allotment of shares, conversion of these liabilities into share capital and share premium could not be treated as unexplained cash credits u/s 68. - Decided in favour of assessee. Allowable expenditure u/s 37(1) - HELD THAT:- As there is no matter on record to suggest that the expenses were examined on the basis of actual expenditure corroborated by evidence. Therefore the issue in regard to the disallowance of expenses is restored to the files of the ld AO with a direction to evaluate the genuineness of the expenses on actual expenditure basis and then pass fresh assessment order. Accordingly ground allowed in favour of the Assessee for statistical purposes. - ITA No. 6646/Del/2018 And ITA No. 6595/Del/2018 - - - Dated:- 15-6-2022 - Shri G.S. Pannu, Hon ble President And Shri Anubhav Sharma, Judicial Member For the Assessee : Shri Kapil Goel, Adv For the Revenue : Ms. Garima Sharma, Sr. DR ORDER PER ANUBHAV SHARMA, J. M.: 1. The appeals have been preferred by the Assessee and the revenue against the order dated 17.08.2018 of Ld Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n would be admissible. It was further held that in absence of any business activity, which is an admitted fact, he claim of business expenses cannot be allowed. The ld AO referred to the provisions of section 2(13) and section 14 and observed that that there was no activity on which income had been earned from income under the head Profit and gains of business or profession . Hence, expenditure claimed by the assessee, except bank charges and audit fee, amounting to Rs.41,61/481/-, were held to be inadmissible and were disallowed. 4. However, in appeal the ld CIT(A) had set aside the addition made u/s 68 f the Act by finding as under:- 6.1.3. I have considered the assessment order, the submissions of the appellant and also the remand report called for in tire matter. As has been submitted by the appellant, the principal amount was received by the company and was shown in the books of account, which is evidenced by the financial statements in past years. From details submitted it is seen that the said amounts were received from financial year 2007-08 onwards and are duly reflected in the Balance Sheets of the respective years. Hence, it can be said that the amount which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as established and ready to commence. In view of this the disallowance made by the AO is upheld. Ground of appeal no. 3 is dismissed. 6. Now the revenue is in appeal vide ITA No. 6646/Del/2018 raising following grounds of appeal :- 1. The ld CIT(A) has erred in deleting the addition of Rs. 6,72,04,400/- on account of unexplained share capital and share premium which was entered in to books of accounts during FY 2013-14 relevant to Assessment Year 2014-15, by holding that the said amount was received and credited during the previous year and provisions of section 68 are not applicable. 7. The Assessee is in appeal vide ITA No. 6595/Del/2018 raising following grounds of appeal as under:- Ground No. 1 That on the facts and circumstances of the case, the assessment order partially confirmed by the Ld. CIT(A) under section 250 of the Income-tax Act is bad in law. Ground No. 2 The Ld. C1T (Appeals) has erred in suggesting the Ld. AO to invoke the provisions of section 68 of the Act for the AY 2008-09 without appreciating the fact that source of funds received in earlier year also stands proved. Ground No. 3 That the Ld. CIT (A) has erred in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts. As for the purpose of invoking Section 68 of the Act, Hon ble Madras High Court in the case of VR Global Energy Pvt. Ltd. ITO, 407 ITR 145 (Madras) has held that where the assessee allotted shares to a company in settlement of pre-existing liability of assessee to the said company by way of adjustment and since no cash was involved in transaction of said allotment of shares, conversion of these liabilities into share capital and share premium could not be treated as unexplained cash credit u/s 68 of the Act. It was held that since the cash credits towards share capital were only by way of book adjustment and not actual receipts, therefore, the same could not be treated as receipt towards share subscription money. Since no cash was involved in transaction of said allotment of shares, conversion of these liabilities into share capital and share premium could not be treated as unexplained cash credits u/s 68 of the IT Act. The Revenue challenged this decision of the Hon ble Madras High Court before the Hon ble Supreme Court and the Hon ble Supreme Court dismissed the SLP filed by the Revenue reported in 268 taxmann.com 392. The same has also been relied by Co-ordinate Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rates and taxes 59479 11500 Legal and professional 1510531 778386 Auditors remuneration (as auditors (excluding service tax) 500000 150000 Advance written off 220600 Insurance 9210 Site Expenses 89105 241890 Bank charges 26986 13834 Miscellaneous expenses 81082 22287 4688467 2064907 13. This bench is of considered view that there are two kinds of provisions under the Act, one in respect of what is allowable and other in respect of what is not allowable, i.e., they override t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed the claim of various expenses incurred by the assessee to keep the corporate status and the expenses were allowed as deduction under section 37(1) of the I.T. Act, 1961. The Coordinate Bench sustaining the contentions had held; 8. I have considered the rival arguments made by both the sides, perused the orders of the A.O. and the Ld. CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the A.O. in the instant case disallowed expenses of 12 ITA.No.404/Del./2020 Dhanyata Enterprises Private Limited, Delhi. Rs.9,94,872/- on the ground that assessee has not carried out any business activity and no business income has been declared and the assessee failed to produce the complete books of account, bills and vouchers etc. I find the Ld. CIT(A) upheld the action of the A.O, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the Learned Counsel for the Assessee that it has not stopped its business and is maintaining an office and there is simply lull in the business activity. It is also his submission that due to less number of students the assessee though ..... X X X X Extracts X X X X X X X X Extracts X X X X
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