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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 ..... he Act'). 2. The grounds of appeal raised by the assessee read as under:- "1. That the Ld. CIT(A) has erred in facts and law by confirming the addition made by the AO u/s.68 amounting to Rs. 3,25,13,110/- received towards share capital. 2. That the Id CIT(A) wrongly relied on the incorrect observation of the AD that there is no RBI approval for issue of shares to the Cyprus based company ignoring the law that no such approval by RBI is required and also documents required by RBI were duly filed by assessee and the copies thereof were duly produced before the CIT(A) and AO. 3. That the Id CIT(A) wrongly observed that there is no approval from SEBI for the issue of such shares when no such approval is required as the assessee company is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. The additions, inter-alia, included disallowance u/s.68 of Rs. 3,25,13,110/-, adhoc disallowance of expenses- Rs. 1,03,12,486/-; out of information technology costs -Rs.66,67,771/-; and, disallowance under section 14A of the Act - Rs. 1,741. The appeal of the assessee before CIT(A) on all the aforesaid issues has also been dismissed and, accordingly, the assessee is in further appeal before us. 3. The issue manifested by the Grounds of appeal Nos.1 to 3 is with respect to an addition of Rs. 3,25,13,110/- made by the Assessing Officer by invoking section 68 of the Act. In this context, brief facts are that assessee was found to have issued 74,915 equity shares of Rs. 10/- each at a premium of Rs. 424/- per share, totalling to Rs. 3,25, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding company and that the entire amount was received in terms of the RBI regulations. At the time of hearing, our attention was invited to the respective documents placed in the Paper Book filed, which according to the appellant, clearly demonstrate 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 74915 equity shares of Rs. 10/- each at a premium of Rs. 424/- per share. The entire amount has been credited in the books of accounts as part of share capital and it has been found to be an unexplained credit by the Assessing Officer under section 68 of the Act. In our considered opinion, the material available on record clearly militates against the action of the Assessing Officer. Evidently, the appellant company had furnished Foreign Inward Remittance Certificates (FIRC) issued by the bank and it is also not disputed that contribution to the shareholder's capital is in terms of RBI regulations. It is also clear from the copies of the documents submitted by the assessee company to the RBI in connection with receipt of share capital mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 68 of the Act to make an addition of Rs. 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 Rs. 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 the course of assessment proceedings, Assessing Officer required the assessee to furnish complete details of the expenses debited in the P&L account where the expenses exceeded Rs. 5.00 lacs. In terms of the discussion in the assessment order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , assessee had made a suo-motu disallowance of Rs. 1,05,47,651/- and the same was indeed noticed by the CIT(A) in his order dated 23/02/2012, which has been relied upon by the instant CIT(A). For this purpose out attention was invited to a copy of the order of CIT(A) dated 23/2/2012, rendered in proceedings arising from the order of the Assessing Officer us/ 201(1)/201(1A) of the Act, which have been placed in the Paper Book at pages 430 to 439. In particular, attention was invited to para 7 of this order, wherein it is noted that a provision of Rs. 1,05,47,651/- was made as on 31/3/2008, which has not been claimed as deduction while computing total taxable income. It was, therefore, contended that no further disallowance as done by the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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