2013 (3) TMI 11 - HC - Income Tax

Unaccounted share application money - addition u/s 68 - Held that - As decided in Jaya Securities Ltd. v. Commissioner of Income Tax 2007 (5) TMI 552 - HIGH COURT OF ALLAHABAD no addition under section 68 could be made in respect of the subscription amount towards the share capital of a company limited by shares whether it is private or public relying on case of CIT v. Steller Investment Ltd. 1991 (4) TMI 100 - DELHI HIGH COURT upheld by the Apex Court in the case of CIT v. Steller Investment Ltd. 2000 (7) TMI 76 - SUPREME COURT - in favour of assessee.

Summary

Issues: Appeal under Section 260-A of the Income Tax Act against the order of the Income Tax Appellate Tribunal for the assessment year 2004-05. Substantial questions of law regarding addition of Rs.1,30,50,000 under Section 68 of the Act, treatment of the amount as share application money, and lack of finding by the Tribunal as the last fact-finding authority.

Analysis:

The appeal before the Allahabad High Court was filed under Section 260-A of the Income Tax Act challenging the order of the Income Tax Appellate Tribunal for the assessment year 2004-05. The substantial questions of law raised in the memo of appeal included whether the Tribunal was justified in law in deleting the addition of Rs.1,30,50,000 made by the Assessing Officer under Section 68 of the Act. The Tribunal had treated the amount as share application money, despite concerns raised in a report by ADIT (Inv), Kolkata regarding the nature of the parties providing the funds. Additionally, the Tribunal did not provide any finding despite being the final fact-finding authority after the decisions of the Assessing Officer and the CIT (A).

During the proceedings, the appellant's counsel relied on a judgment of the Delhi High Court in Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd., arguing that it distinguished the decision of the Apex Court cited by the Tribunal. On the other hand, the respondent's counsel referred to a Division Bench decision of the Allahabad High Court in a separate case. The Tribunal's decision to delete the addition was based on the precedent set by the Apex Court in Commissioner of Income Tax v. Lovely Exports (P) Ltd., where similar issues were addressed.

The High Court noted that the controversy in the present appeal had already been settled by a Division Bench of the Court in the case of Jaya Securities Ltd. v. Commissioner of Income Tax, ruling against the department. Consequently, the Court found no merit in the appeal and dismissed it summarily, upholding the Tribunal's decision to delete the addition of Rs.1,30,50,000 as share application money.