2023 (9) TMI 981 - AT - Income Tax

Addition u/s 68 - income from undisclosed sources - As per DR there were multiple companies on the address of the investor Company and that was foundation of doubting the investment - CIT(A) deleted the addition - HELD THAT - Revenue can not dispute that the appellant company had filed PAN of investor, which is none other than the holding company. Documents with regard to registered address of investor company, certificate of incorporation and tax residency certificates were filed. AR has taken the Bench through the financials of the investor company, to show the source of investor company. It also comes up from the material on record that AT Holdings is tax resident of Singapore and has reported net profit of around Rs. 341 crores during the year ended 31st December, 2014. There is force in the contention of learned AR that in fact the investing company being foreign company, the source of source was not required to be established even after the amendment brought in Section 68 of the Act qua obligation to establish the source of source. AR has pointed out that for the same issue there was reopening of assessment u/s 147 for A.Y. 2012-13 and the assessment has been completed without any addition. AR has pointed out that in fact the money in the form of investment was received not in the previous year but last financial year and reference for that was made in the order of learned CIT(A) itself at page no. 20, where the remittances received from the holding company have been shown of 5.3.2014 while the relevant financial year started from 1.4.2014. Just only because there is allotment of shares in the present year invoking of provisions of Section 68 is not sustainable.Reliance in this regard has been rightly placed by the learned AR on the judgment of CIT Vs. Usha Stud Agricultural Farms Ltd. 2008 (3) TMI 91 - DELHI HIGH COURT which is also cited before learned CIT(A). - Decided against revenue.

Summary

Issues involved:
The judgment involves a challenge by the Revenue against orders passed by the Commissioner of Income Tax (Appeals) regarding the addition of income under section 68 of the Income-tax Act, 1961, related to share capital received from a holding company.

Issue 1: Addition of income under section 68 - Challenge by Revenue

The Revenue appealed against the deletion of the addition of Rs. 3,08,52,900 made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The Revenue contended that the Commissioner of Income Tax (Appeals) erred in deleting the said addition.

Issue 2: Consideration of relevant facts and circumstances

The judgment extensively discussed the facts surrounding the case. The Assessee, formerly known as Gold Resorts & Hotels Private Limited, received a substantial amount from its Singapore-based holding company, Experion Holding PTE Ltd. The Assessing Officer added this amount to the Assessee's income as income from undisclosed sources under section 68 of the IT Act. However, the Commissioner of Income Tax (Appeals) allowed the Assessee's appeal, emphasizing that the Assessee had provided complete details to establish the identity, creditworthiness, and genuineness of the transaction with the investor company. The Commissioner concluded that the addition made by the Assessing Officer was not sustainable and deleted the same.

Separate Judgment:

The judgment was delivered by Shri Anubhav Sharma, Judicial Member, and Shri Shamim Yahya, Accountant Member.

This comprehensive summary outlines the key issues and details of the legal judgment, focusing on the challenge by the Revenue regarding the addition of income under section 68 and the consideration of relevant facts and circumstances by the Commissioner of Income Tax (Appeals).