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TMI Blog2019 (3) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore the issue is no longer open before the AO and that the appeal against the same is pending before the CIT(A). Since the directions of the Tribunal to the Assessing Officer are on similar lines as given by the CIT u/s. 263 of the Act, we confirm the order of CIT and direct the CIT(A), before whom the appeal against the consequential order is pending, to examine the issue in line with our directions in assessee’s appeal for the AY. 2009-10 against the regular assessment made u/s. 143(3) of the Act. In view of the same, the appeal of assessee is dismissed. - I.T.A. No. 1050/HYD/2014 - - - Dated:- 20-2-2019 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Assessee : Shri K. Kalya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record, the Assessing Officer held that the company s rate per share at ₹ 10/- is reasonable and acceptable, but the premium amount of ₹ 1,440/- is towards receiving benefits from the then Government in the form of clearances, approvals and allotment of projects without expecting anything from the assessee-company i.e., Bharathi Cement Corporation Private Limited. Therefore, he treated the entire amount received towards share premium as income of the assessee-company u/s. 28(iv) of the Act, vide order dt. 30-12-2011. 3. Thereafter, the CIT assumed jurisdiction u/s. 263 of the Act and perused the assessment records of the assessee. He observed that the assessment order is erroneous insofar as it is prejudicial to the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of appeal: 1. Because, the Learned Commissioner of Income-tax-II, Hyderabad ( Ld. CIT ) has erred in law as well as on facts while directing addition of ₹ 50,00,00,000/- towards share application money received in Assessment Year ( AY ) 2009-10; 2. Because, the Ld. CIT has erred on facts in concluding that the Learned lower authorities have added the entire investment made in shares to income of assessee when in fact it is only share premium that has been added on the ground that it is not justified. 3. Because, even if it be assumed (without admission) that the share premium actually represents income of the assessee, the same can be brought to tax only when the shares are actually allotted and not on receipt ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions made before the authorities below, has drawn our attention to the assessment order, wherein the Assessing Officer had called for the details of share capital and share application money received by the assessee and after thorough examination of the same, has treated the share premium only as income u/s. 28(iv) of the Act. He submitted that Assessing Officer has accepted the share capital of ₹ 10/- per share as a genuine transaction and it is only the share premium, which has been doubted by the Assessing Officer. He submitted that once the Assessing Officer has examined and considered the whole of the issue, the order cannot be treated as erroneous order unless and until it is against the law. It is submitted that fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has not even commenced the business. The alleged receipt is the benefit intended to pass on to the director/shareholdes of the company. We noticed that this capital investment was received by the assessee as 0% convertible preferential shares. No doubt there is no immediate outflow to the company in terms of dividend but it is convertible in the near future as equity share capital. There are certain aspects of this investment which certainly raises eyebrows as they are not the best of investment decision like:- i) no participation in the management considering only 0.43% shares were allotted to outsiders (no controlling interest is compromised) ii) without yielding the controlling interest, investment of such huge share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances which lead to investment is not important but whether the assessee company was used as a vehicle to pass on the benefit to shareholders/directors. In this regard, we direct the AO to make the assessment as below: a) We noticed that assessee has declared loss in AY 2010-11 as per Income-tax Act, ₹ 189.76 crores and in cash flow, they are declaring decrease in cash from operating activities to the extent of ₹ 71.94 crores. On careful analysis, it can be seen that assessee received through share capital ₹ 181.99 crores and secured borrowings ₹ 334.47 cores but made investment in fixed assets to the extent of ₹ 370.75 crores. The investment in fixed assets are already covered in secured borrowings, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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