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2023 (7) TMI 604 - AT - Income TaxAddition u/s 68 or 56 - Undisclosed income of unsecured loan - share application money receipt - as per assessee addition made by AO u/s 68 which has absolutely no application to the facts of the case and also section 56(2)(vii)(b) was applicable from assessment year 2013-14 and as CBDT Instruction No. 2/2015 dated 29-1-2015 is clear on the issue in which it has been held that premium on share issued was on account of capital account transaction and does not give rise to income - HELD THAT - Assessee had given names and address of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income tax assessee. Their index numbers were in the file of the Revenue. Hence, it appears from the record that the above concern parties had replied to the notices of the AO and made available the records as directed by the AO and the assessee made the efforts to supply the information as desired by the AO. Hence, it does not indicate that the assessee had avoided in supplying the information as to shares holding companies. Bench noted that in the case of the assessee, the share application money was received in the financial year 2011-12 and till that period neither the provision of Section 56(2)(vii)(b) was in the statute nor Rule 11U 11UA was prescribed and therefore, provisions of Section 56(2)(vii)(b) cannot be made applicable as it was brought in the statute books only w.e.f. 01-04-2013. We also take note of the decision of CIT vs Apeak Infotech 2017 (9) TMI 1590 - BOMBAY HIGH COURT Amendment to section 56(2)(vilb) of the Act by the addition of proviso thereto took place with effect from 1st April, 2013. Therefore, it was not applicable for the subject Assessment year 2012-13. So for as the pre amended Section 68 of the Act was concerned, the same cannot be invoked in this case, as evidence was led by the Respondents Assessee before the Assessing Officer with regard to identity, capacity of the investor as well as the genuineness of the investment. Therefore, admittedly, the Assessing Officer did not invoke Section 68 of the Act to bring the share premium to tax. Similarly, the CITA) an consideration of facts, found then Section 68 of the Act cannot be invoked.Similarly, the amendment to Section 68 of the Act by addition of proviso was made subsequent to previous year relevant to the subject Assessment year 2012- 13 and cannot be invoked. We find that the said sum was received in preceding A.Y. 2012- 13, provisions of Section 56(2)(vii)(b) were in applicable and it was brought in the statute books only w.e.f 01-04-2013 and thus we do not concur with the findings of the ld. CIT(A). Hence, the Ground No. 1 of the assessee is allowed. Disallowance of PF Expenses - Belated payment - HELD THAT - The issue raised is not maintainable in view of the decision of Checkmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT . Thus Ground No. 2 of the assessee is dismissed.
Issues Involved:
1. Addition of Rs. 79.90 lacs as undisclosed income of unsecured loan. 2. Disallowance of ESI Expenses of Rs. 19,732/-. 3. Disallowance of PF Expenses of Rs. 2,24,977/-. Summary: Issue 1: Addition of Rs. 79.90 lacs as undisclosed income of unsecured loan The assessee filed its return of income declaring Rs. 11,62,190/-. During scrutiny, the AO noted that the assessee received a share premium of Rs. 79.90 lacs and was required to produce details of the share premium. The AO issued notices u/s 133(6) to 19 parties but did not receive the required details, leading to the addition of Rs. 79.90 lacs u/s 68 of the Act. The AO relied on the decisions of Hon'ble Calcutta High Court in CIT vs Precision Finance and Hon'ble Delhi High Court in CIT vs Oasis Hospitalities Pvt. Ltd. The CIT(A) confirmed the AO's action, stating the assessee failed to prove the genuineness, creditworthiness, and identity of the transactions. During the appeal, the assessee argued that the share application money was received in FY 2011-12, and provisions of Section 56(2)(vii)(b) were not applicable as they were introduced w.e.f. 01-04-2013. The assessee also submitted that the share premium is a capital account transaction, supported by the decision in Vodafone India Services Pvt. Ltd. v. Union of India. The Tribunal noted that the share application money was received before the introduction of Section 56(2)(vii)(b) and ruled in favor of the assessee, allowing the ground. Issue 2: Disallowance of ESI Expenses of Rs. 19,732/- This issue was not specifically discussed in the judgment. The focus was on the primary issues of share premium and PF expenses. Issue 3: Disallowance of PF Expenses of Rs. 2,24,977/- The assessee did not provide any contrary evidence or written submission against the disallowance. The Bench referred to the decision of the Hon'ble Supreme Court in Checkmate Services Pvt. Ltd. vs CIT-1, which supports the disallowance. Consequently, the Tribunal dismissed the ground. Conclusion: The appeal was partly allowed, with the Tribunal ruling in favor of the assessee on the addition of Rs. 79.90 lacs as undisclosed income but dismissing the ground on disallowance of PF expenses. The decision was pronounced in the open court on 11/07/2023.
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