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TMI Blog2019 (4) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... vesting huge amount which may prima facie appear to be without adequate possible returns, may be fully justified. However, when all the relevant factors are properly explained, including the fact that the payment of dividend was not the sole attraction for the investor and that the investor could expect a fair return on the investment, of course, subject to vagaries of the any business decision, the Assessing Officer had to advert to all such materials on record in proper perspective. As noted by the Tribunal, all necessary permissions and clearances were granted by the Government of India and other government authorities for such investment. The source of the funds in the hands of P5AHIML was also verified. The Assessing Officer himself was also prima facie of the belief that the materials on record prove genuineness and financial capacity of the persons making investment. Tribunal carried out the detailed inquiry into all aspects of the matter and noticed no suspicious movement of the funds. Merely because the investment was considerably large and as noted, several corporate structures were either created or came into play in routing the investment in the assessee through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 68 of the Income Tax Act, 1961 ( the Act for short). The Assessing Officer, therefore, called upon the assesee to prove the identity of the investor, its capacity to make such investment and the genuineness of the transaction. In furtherance of the same, the Assessing Officer asked the assessee to provide various details such as the proof of identity, financial capacity of P5AHIML, copy of the annual report, assessment orders and financial statements of P5AHIML for the last two years, justification for such huge premium charged etc. 3.3 The assessee supplied the desired documents and made submissions why according to the assessee, the transaction being genuine, Section 68 of the Act had no applicability. 3.4 Rejecting the submissions of the assessee, the Assessing Officer passed the order of assessment holding that the assessee had failed to prove the genuineness of the transaction of the receipt of funds amounting to ₹ 2908.25 crores from P5AHIML. He, therefore, invoked Section 68 of the Act and made addition of the said sum in the hands of the assessee. In the process, he relied on following factors:- (i) The assessee had used only a sum of ₹ 7.31 cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record that the Tribunal in the said judgment concluded as under:- 29. After analyzing the above documents we can safely conclude that P5 Asia is a company belonging to the Providence Equity Partners ( PEP ), a global private investment group specializing in media, entertainment, communication and information companies, managing funds of USD 22 billion and having investments in over 100 companies spread over 20 countries. P5 Asia has registered itself as a Foreign Venture Capital Investor ( FVCI ) with Securities and Exchange Board of India ( SEBI ). Approvals were also taken from the Foreign Investment Promotion Board ( FIPB ). The investment in CCPS of the assessee was made after PS Asia registered as a FVCI with SEBI and the assessee obtained the necessary approvals from the FIPB. In connection with the issue of CCPS, the assessee submitted all the relevant details in the course of the assessment proceedings. Accordingly, all the three ingredients of section 68 of the Act i.e. identity, genuineness and creditworthiness of investor are duly established. 4. It is against this judgment of the Tribunal that the Revenue has filed this appeal. 5. Appearing for the Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the impugned judgment of the Tribunal more minutely. 8. In its decision, the Tribunal noted that the investment made by P5AHIML was done registering itself with SEBI and after obtaining necessary approvals from Ministry of Finance. The application made to the Ministry of Finance contained full details of the investment, the background of the transaction, the terms of the agreement, identity of the investor and the investor group. The Tribunal noted that P5AHIML was an investment arm of Providence Equity Partners and the Tribunal had perused the financial statements which disclosed the flow of funds in the said P5AHIML. The Tribunal further recorded that while making such investment, the investor not only looks for dividend or interest but also expects return on such investment as capital appreciation, when the investment finally gets converted into equity shares. The Tribunal found that this was the reason why P5AHIML had made the investment in assessee company. In the opinion of the Tribunal merely because there were multiple entities involved in such investment process, would not enable the Assessing Officer to draw an adverse inference on the financial capacity of P5AHIML. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by him on 27.5.2013. In such report, his remarks were as under:- 7. On going through the documentary evidence, prima facie it appears that the identify of P5 Asia Holdings is established through residency certificate issued by the Mauritius Government. Assessee has filed documentary evidence of funds transfer vide letter dated 27th May 2013 by filing of copy of bank extracts. Copies of the said letter along with annexures are enclosed. Prima facie these prove the genuineness and the financial capacity of the persons making investment in preference shares. (Zerox Copy of the said reference enclsoed as Annexure -E). 11. Thus, the Assessing Officer himself was also prima facie of the belief that the materials on record prove genuineness and financial capacity of the persons making investment. The Commissioner (Appeals) was under the directive of the High Court of Bombay to dispose of the appeal within a short time. It was for this reason that in his appellate order, he had recorded that further investigation into the additional documents was pending and therefore, in compliance with the order of the High Court, he was disposing of the appeal. Thus, the order of the Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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