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2018 (11) TMI 1416 - ITAT MUMBAIUnexplained cash credit u/s 68 - share premium receipts - Held that:- The assessee filed sufficient evidences viz, return of income, share allotment, annual return, details including name, address and PAN of the shareholder which are not negated by the AO. AO in the present case has himself assessed the preference shareholder for the assessment year under consideration and after scrutiny has passed the order u/s 143(3) around the same date and has neither made any addition nor made any adverse remarks. AO has not questioned the preference share capital to the extent of the face value but has only questioned the share premium. By this action of the AO himself, the 'nature' of transaction as that of 'preference share allotment' is proved beyond doubt and merely because he feels that the share premium is high the genuineness of the transaction cannot be doubted for the purpose of section 68 of the Act. As evident from a parallel amendment in section 56(2) which brings in its ambit so much of the share premium as charged by a company, not being a company in which the public are substantially interested, as it exceeds the fair market value of the shares. If one accepts the Ld CIT-DR's contentions that section 68 of the Act can he applied where the transaction is proved to be that of a share allotment that here the valuation for charging premium is not justified, it will make the provisions of section 56(2)(viib) redundant and nugatory. This cannot be the intention of the Legislature especially when the amendments in the two sections are brought in at the same time. As explained that it is a settled law that where two views are possible, the view favorable to the assessee should be adopted as held in case of CIT Vs. Vegetable Products Ltd.[1973 (1) TMI 1 - SUPREME COURT]. We are of the view that the assessee has discharged its onus by adequately disclosing the transaction in its books of accounts, filing statutory forms as regards allotment of shares, providing name, address and PAN of the shareholders, etc. the assessee has sufficiently discharged the onus cast upon it for the purpose of section 68 and no addition can be made on this account. Hence, we are of the view that the CIT(A) has rightly deleted the addition and we confirm the same. - Decided against revenue. Disallowance of expenses relatable to exempt income made by the AO by invoking the provisions of section 14A of the Act read with Rule 8D - Held that:- CIT(A) deleted the disallowance only on the premises that the assessee has not earned any exempt income and hence following the Delhi High court decision in the case of Cheminvest Limited vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT), deleted the disallowance only on the premises that the assessee has not earned any exempt income and the only grievances of the department is that the provisions of section 14A read with Rule 8D of the Rules are to be applied even where the investment has not yield in exempt income. We find that this legal position is now settled that the provisions of section of 14A of the Act cannot be applied in the absence of any exempt income earned in a particular year by the assessee. CIT(A) has rightly deleted the addition and we confirm the same. Disallowance of expenses being interest under section 36(1)(iii) - diversion of interest bearing funds as interest free advances to Nariman Infrastructure LLP wherein the assessee company has 50% of stake through its 100% subsidiary of Piramal Commercial Estates LLP and there is commercial expediency in the transaction for advancing this interest free loan - Held that:- The advance of interest free loan have been made only for the purposes of assessee’s business and according to its corporate strategy. We find that the assessee is engaged in the business of real estate and its development. For this purpose it has this amount of ₹ 0.83 crores to Nariman Infrastructure LLP as it has a stake of 50% in Nariman Infrastructure LLP through its 100% subsidiary Piramal Commercial Estates LLP. CIT(A) has clearly observed that this transaction is on account of principle of commercial expediency, which was never contested by Revenue. Hence, we confirm the order of CIT(A) and dismiss this issue of Revenue’s appeal.
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