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TMI Blog2019 (1) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantial business activity carried on by the assessee, the assessee company cannot command huge share premium. Accordingly he sought to verify the veracity of the share capital and share premium raised by the assessee. The assessee submitted that it is engaged in the business of investment in shares of limited companies. The assessee raised share capital and share premium from 4 corporate entities as under:- Amanat Ventures P Ltd Rs. 18,00,000/- Bhagwati Nirman P Ltd Rs. 1,58,00,000/- Happy Bagans P Ltd Rs. 80,00,000/- Subhphal Suppliers P Ltd Rs. 15,00,000/- Total Rs. 2,71,00,000/- Out of total sum of Rs. 2,71,00,000/- a sum of Rs. 54,200/- was attributed towards share capital and remaining sum of Rs. 2,70,45,800/- was attributed towards share premium. Notice u/s 133(6) of the Act were issued to all the share holders which were duly replied by them directly before the ld. AO. The ld. AO observed that reply sent by the share holders were almost identical in style and submitted almost at the same point of time. Even address of the registered office of some of the companies were same with common directors. Accordingly, the ld. AO alleged on the connivance of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmations together with explanation with regard to immediate source of payment of share application monies were also furnished before the ld. AO. It was pleaded that the assessee also placed on record the following details of investible funds available with the share subscriber companies to make the investment in the assessee company. Name of the Company Investible Funds available as per Financials Amount Invested in the appellant company Amanat Ventures (P) Ltd. 26,95,60,993/- 18,00,000/- Bhagwati Nirman (P) Ltd. 1,26,33,281/- 1,58,00,000/- Happy Bagans (P) Ltd. 37,55,20,051/- 80,00,000/- Subhphal Suppliers (P) Ltd. 25,78,62,327/- 15,00,000/- 2,71,00,000/- 4.1. It was submitted that from the aforesaid documents and evidences, the identity and creditworthiness of the share subscribers stand conclusively proved together with the genuineness of the transaction. It was submitted that the share subscribers had even established the source of source of funds in the instant case. No lacuna, infirmity, falsity or defect was established or proved in the evidences placed on record nor was the ld. AO able to prove any falsity in the explanation furnished by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to assessment year 2012- 13. Submissions were also made with specific reference to a proviso inserted by the Finance Act, 2012 w.e.f. 01.04.2013 in section 68 which reads as under: "[Provided that where the assessee is a company ( not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless - (a) The person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) Such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:" 5. The Ld. CIT(A) observed that the ld. AO had adjudicated the issue with a predetermined state of mind that the share premium received by the assessee is not genuine. He also observed that the ld. AO held that the shareholders did not exist and the transactions were accordingly an eye wash only for bringing the black money of the assessee only into the company in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emain undisputed before us by either of the parties and hence the same are not reiterated for the sake of brevity. At the outset, we find that the assessee had received share capital of Rs. 54,200/- from 4 corporate entities and Rs. 2,70,45,800/- from the very same shareholders towards share premium. The share capital received by the assessee has been duly accepted by the ld. AO within the ken of section 68 of the Act. However, share premium component has been doubted by the ld. AO. We find that the assessee in the instant case had duly complied with by furnishing the complete details of share subscribers to prove their identity, genuineness of the transaction and creditworthiness of share subscribers beyond doubt. These are duly supported by the documentary evidences which are enclosed in the paper book. The ld. AO had not found any falsity or any adverse inference of the said documents. We find that the Ld. CIT(A) had placed heavy reliance on these documents and had granted relief to the assessee. All the share subscribers are duly assessed to income tax and the transaction with the assessee company are duly routed through banking channels and are duly reflected in their respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to bring to tax the share premium received under section 68 of the Act. We find that the issue of bringing the share premium to tax under section 68 of the Act was not an issue which was urged by the appellant Revenue before the Tribunal. The only issue which was urged before the Tribunal as recorded in para 11 of the impugned order is the addition of share capital and share application money in the hands of the assessee as income under section 28(iv) of the Act. We find that the Commissioner of Income-tax (Appeals) did consider the issue of applicability of section 68 of the Act and concluded that it does not apply. The Revenue seems to have accepted the same and did not urge this issue before the Tribunal. Mr. Bhoot, learned counsel appearing for the Revenue also fairly states that the issue of applicability of section 68 of the Act was not urged by the Revenue before the Tribunal. (b) It is a settled position in law as held by this court in CIT v. Tata Chemicals Ltd. [2002] 122 Taxman 643/256 ITR 395 (Bom.) that in an appeal under section 260A of the Act, the High Court can only decide a question if it had been raised before the Tribunal even if not determined by the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s conclusion was reached by the impugned order following the decision of this court in Vodafone India Services (P.) Ltd. (supra) and of the apex court in G. S. Homes and Hotel (P.) Ltd. (supra). In both the above cases the court has held that the amount received on issue of share capital including premium are on capital account and cannot be considered to be income. (b) It is further pertinent to note that the definition of income as provided under section 2(24) of the Act at the relevant time did not define as income any consideration received for issue of share in excess of its fair market value. This came into the statute only with effect from April 1, 2013 and thus, would have, no application to the share premium received by the respondentâEUR"assessee in the previous year relevant to the assessment year 2012-13. 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. It may be pointed out that this court in CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 taxmann.com 272/247 Taxman 245/394 ITR 680 (Bom.) has while refusing to entertain a quest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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