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TMI Blog2016 (12) TMI 1541X X X X Extracts X X X X X X X X Extracts X X X X ..... iled before us, assessee has placed copies of the three FIRCs issued by HDFC Bank, which clearly evidence that a sum of ₹ 3,25,13,110/- has been received during the previous year relevant to the assessment year under consideration. In the Paper Book assessee has also placed copies of the share certificates issued to the holding company M/s. Becrux Trade & Invest Ltd., Cyprus and also other documents filed with the Registrar of Companies in connection with the issue of share capital. In fact, assessee company has also placed on record the financial statements of holding company Becrux Trade & Invest Ltd., Cyprus at pages 46 to 81 of the Paper Book, which clearly depicts investment made in the assessee company. Thus we find no reason for the Assessing Officer to invoke the provisions of section 68 - Decided in favour of assessee Disallowance under section 40(a)(ia) - non deduction of tds - non issue of show cause notice - Held that:- The order of the CIT(A), clearly reveal that no show casue notice was issued to the assessee for disallowing a sum of ₹ 1,04,36,195/- by invoking the provisions of section 40(a)(ia) of the Act. Quite clearly, the issue relating to invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10436195 especially when the assessee has suo-moto made the disallowance amounting to ₹ 10292587 u/s 40(a)(ia) and ₹ 29450537 u/s 40(a)(i) in the return of income as per finding of auditor in the Tax Audit Report. 7. The learned CIT(A) has erred in law and facts in confirming the addition ofRs.1741 u/s 14A read with rule 8D of Income Tax. 2. In brief, the relevant facts are that the assessee is a company incorporated under the provisions of Companies Act, 1956 and, is interalia, engaged in the business of providing enterprise/content information and solutions namely, marketing campaigns, sales linked promotions,market research, CRM projects, SMS competition /polls / voting,alerts,etc. The assessee also provides content management and content development services. For the assessment year under consideration, it filed a return of income declaring a loss of ₹ 3,15,22,658/- which was subject to scrutiny assessment, wherein the total income has been assessed at ₹ 1,79,67,450/- after making certain disallowances/additions. The additions, inter-alia, included disallowance u/s.68 of ₹ 3,25,13,110/-, adhoc disallowance of expenses- ₹ 1,03,12,48 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trate the nature and source of the impugned credits. Ld. Representative for the assessee has also made a statement at Bar that similar subscription towards share capital made by the holding company in the earlier assessment year has been accepted by the Revenue and there was no justification not to treat the impugned subscription to the share capital as an unexplained transaction. 5. On the other hand, Ld. Departmental Representative has primarily relied upon the orders of the authorities below in support of the case of the Revenue. 6. We have carefully considered the rival submissions. In the present case, the controversy is with respect to invoking of section 68 of the Act by the Assessing Officer in order to treat the addition in the share capital as unexplained credit. No doubt, section 68 puts the burden on the assessee to establish satisfactorily the nature and source of a sum credited in its books of account, and it is a well- settled proposition that such burden requires the assessee to prove the identity, creditworthiness of creditor and genuineness of the transaction. Section 68 of the Act empowers the Assessing Officer to charge to income-tax any sum found credited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Invest Ltd., Cyprus and also other documents filed with the Registrar of Companies in connection with the issue of share capital. In fact, assessee company has also placed on record the financial statements of holding company Becrux Trade Invest Ltd., Cyprus at pages 46 to 81 of the Paper Book, which clearly depicts investment made in the assessee company. On the basis of all the aforesaid material, which was very much before the lower authorities, it clearly emerges that the assessee had not only demonstrated the source but also explained the nature of impugned credits. Therefore, in view of such fact-situation, we find no reason for the Assessing Officer to invoke the provisions of section 68 of the Act to make an addition of ₹ 3,23,13,110/-. As a consequence, the order of the CIT(A) is set-aside and the Assessing Officer is directed to delete the addition. Thus, in so far as Ground of appeal No.1 to 3 are concerned, the same are allowed. 7. In so far as Ground of appeal No.4 to 6 are concerned, the same relate to a disallowance of ₹ 1,04,36,195/-, which has been made by the CIT(A) under section 40(a)(ia) of the Act. In this context, brief facts are that in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed as deduction while computing total taxable income. It was, therefore, contended that no further disallowance as done by the CIT(A), was required to be made. Apart therefrom the Ld. Representative for the assessee pointed out that the issue of any disallowance under section 40(a)(ia) of the Act was not before the CIT(A) as no such disallowance was made by the Assessing Officer. It was pointed out that the CIT(A) did not show cause the assessee on this aspect at all before making the disallowance of ₹ 1,04,36,195/- and even on this count disallowance is unwarranted. 7.3 Ld. Departmental Representative has not controverted the factual matrix brought out by the Ld. Representative for the assessee, but relied upon the order of the CIT(A). 7.4 We have carefully considered the rival submissions. The discussion in Paras 5.1 to 5.9 of the order of the CIT(A), clearly reveal that no show casue notice was issued to the assessee for disallowing a sum of ₹ 1,04,36,195/- by invoking the provisions of section 40(a)(ia) of the Act. Quite clearly, the issue relating to invoking of section 40(a)(ia) was not before the Assessing Officer at all and in this background, it was im ..... X X X X Extracts X X X X X X X X Extracts X X X X
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