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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 ..... t in deleting the addition of Rs. 2098.25 crores made under Section 68 of the I.T. Act, 1961?" 2. Brief facts are as under:- 3.1 Respondent assessee, M/s. Aditya Birla Telecom Ltd is a registered company and is engaged in providing telecommunication services. While assessing the company's return of income for the assessment year 2009-10, the Assessing Officer noticed that the assessee company had issued 19,25,000 preference shares, each of the face value of Rs. 10/- to one P5 Asia Holding Investment (Mauritius) Ltd (hereinafter referred to as "P5AHIML") at Rs. 10,890/- per share. Through allotment of these shares, thus, the company had received the share amount of Rs. 1,92,50,000/- and total premium of Rs. 2096.32 crores (round ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 Rs. 7.31 crores received from P5AHIML for its own operation, the balance amount was transferred to Idea Cellular Ltd (holding company) or to Idea Cellular Infrastructure Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duce additional documents which could not be produced earlier, he had called for remand report. In his concluding remark in the appellate order, he stated as under:- ".... As the documents furnished by appellant are under investigation and verification which was stated in remand report of A.O. Under these circumstances, I uphold the order of the A.O. These grounds of appeal are dismissed. Appeal order was passed to comply with Hon'ble Bombay High Court direction." The assessee thereupon approached the Tribunal. The Tribunal, by the impugned detailed judgment, allowed the assessee's appeal. 3. We will take note of the contents of the order of the Tribunal at a later stage. We may, however, record that the Tribunal in the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , justified in invoking Section 68 of the Act. Learned counsel relied on the decision of the Supreme Court in the case of Pr. CIT Vs. NRA Iron & Steel (P) Ltd. [2019] 103 taxmann.com 48 (SC) to contend that even in the context of share application money, the genuineness to the transaction is alway open to the inquiry by the Assessing Officer. 6. Learned counsel Mr. Mistri appearing for the assessee submitted that the Assessing Officer had proceeded on entirely erroneous basis. The respondent assessee was awarded cellular licence for providing telecommunication services in Bihar and Jharkhand blocks. The assessee company, therefore, required sufficient funds. The investment was made by the leading US based company Providence Equity Partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessary 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Merely because multiple corporate bodies may have been involved in the entire process ..... X X X X Extracts X X X X X X X X Extracts X X X X
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