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TMI Blog2017 (3) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Ltd.[2008 (2) TMI 516 - ITAT AHMEDABAD-B] - Decided against revenue - ITA No.1190/Ahd/2014 - - - Dated:- 6-3-2017 - Shri S. S. Godara, JM and Shri Manish Borad, AM. For The Appellant : Shri Prasoon Kabra, Sr.DR For The Respondent : None ORDER PER Manish Borad, Accountant Member . This appeal of Revenue for Asst. Year 2010-11 is directed against the order of ld. Commissioner of Income Tax(A)-VIII, Ahmedabad, dated 30.01.2014 vide appeal no.CIT(A)- VIII/42/AC(OSD)-1 R-4/12-13 arising out of order u/s 143(3) of the Income-tax Act, 1961 (in short the Act) framed on 20/06/2012 by ACIT(OSD)-1, Circle -4, Ahmedabad. Revenue has raised following grounds : 1. The Ld.CIT(A) has erred in law and on facts in deleting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not acceptable to the ld. Assessing Officer and he rejected the application of assessee by treating the amount of ₹ 94.80 lacs as revenue receipt by observing as follows :- 4,1 The submission of the assessee has been considered carefully. The contention of the assessee is not acceptable. The application money received by the assessee by way of issue of share warrants has been received during the normal course of business of the assessee and is the business income. The said amount is not a capital receipt as contended by the assessee since the same has been received during the course of business and is to be treated as revenue receipt only. No specific exemption is provided under the Act in respect of such receipts. The definition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered as part of the total income earned from the business activity. The AO did not accept the claim of the appellant regarding treatment of forfeiture of share application money as capital receipt. During the course of appellate proceedings the appellant has submitted that share application money which was forfeited is clearly in the nature of capital receipt and should therefore be excluded. It also placed reliance on the judgement of Ahmedabad ITAT in the case of Brijlaxmi Leasing and Finance 118 ITD 546. I have carefully examined the issue. It is a fairly settled law that forfeiture of share application money which has been duly received by the appellant in terms of prospect and credited to capital reserve account was a capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was an after-thought action of the assessee to claim it to be a capital receipt and ld. Assessing Officer, therefore, rightly treated the same as revenue receipt. However, ld. Departmental Representative could not controvert the finding and differentiate the facts from the decision of the Co-ordinate Bench in the case of DCIT (OSD) vs. Brijlaxmi Leasing Finance Ltd.(supra) followed by ld. Commissioner of Income Tax(A). 5. None appeared on behalf of the assessee. However, the case has been heard with the help of ld. Departmental Representative and perusing the available record. 6. We have heard the contentions of ld. Departmental Representative and gone through the records placed before us as well as the decision of the Co-ordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the lower authorities and the material available on record. In the instant case the assessee was to receive call money in respect of share as per the terms of prospectus and the allotment letters, but the same were not received from some of the shareholders. In this case, the share application money was forfeited as per the terms of the prospectus. The above facts are not in dispute. The short question which fall for our consideration is whether the above forfeiture amount is taxable under the provisions of Income-tax Act , 1961 or not. The learned DR vehemently placed reliance on the decision of the Hon'ble Supreme Court in the case of T.V. Sundaram Iyengar Sons Ltd. (supra) for his contention that forfeited amount is taxab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cement and it was in the process of set up of cement manufacturing plant at Satna during the impugned assessment year. In these circumstances, we are constrained to hold that the amount received by the assessee in lieu of issuance of NCDs which were forfeited later, on account of non-payment of call money assumes a character of capital receipt which earlier was shown as a loan liability in the books of account of the assessee. If we consider this receipt to be a business receipt even then it would not be taxable to tax under the provisions of section 41(1) of the Act, inasmuch as there was no allowance or deduction of this liability in the earlier years. In view of the above, respectfully following the aforesaid decision of the M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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