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TMI Blog2019 (7) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute on account of part share premium u/s. 68 which is not made in accordance with law and therefore, the same is hereby deleted. - Decided in favour of assessee - I.T.A. No. 1572/DEL/2017 - - - Dated:- 12-7-2019 - Shri H.S. Sidhu, Judicial Member And Shri B.R.R. Kumar, Accountant Member For the Assessee : Sh. Gautam Jain, Adv. For the Department : S h . S.S. Rana, CIT(DR) ORDER PER H.S. SIDHU : JM This appeal by the Assessee is directed against the impugned order dated 19.1.2017 passed by the Ld. CIT(A)-9, New Delhi on the following grounds:- 1. The Ld. CIT(A) erred in fact and in law confirming the addition of ₹ 1,12,17,750/- on account of share premium being in excess of NAV as unexplained credit u/s. 68 of the Income Tax Act, 1961. 2. That the Ld. CIT(A) erred in fact and in law in confirming the action of the AO in invoking the provision of section 56(2)(viib) which is not only illegal but void ab initio as the amendment is effective from 1.4.2013. 3. The assessee company has craved it s indulgence to alter, amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the source of such credit the source of such sum. Therefore, not only the credit is to be proved but the source of such credit has also be proved. Whether the word source will include source of source and whether the AO can go beyond the source of source and proceed to third, fourth or fifth layer will again be a question to be decided by the Court. But the proviso, though added w.e.f. 1.4.2013 yet the same being procedural will apply to all pending proceedings. Hence, the AO by relying upon the decision of the Hon ble Delhi High Court in the case of Nova Promoters Finlease (P) Ltd. On 15.2.2012 and having regard to legislative intent especially in light of the fact that the assessee company issued shares at a premium of ₹ 900/- per share, has added the sum of ₹ 1,21,17,750/- u/s. 68 of the Act vide order dated 31.3.2014 passed u/s. 143(3) of the Act. Against the assessment order, the assessee appealed before the Ld. CIT(A), who vide his impugned order dated 19.1.2017 has dismissed the appeal of the assessee by upholding the action of the AO. Aggrieved with the impugned order dated 19.1.2017 assessee is in appeal before the Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground that the genuineness of the transaction was not prove, he relied upon proviso to section 68. He further submitted that Ld. CIT(A) confirmed the addition after giving detailed finding in para 2.2 to 2.10 of the order by relying up the judgment in the case of CIT vs. Nova Promoters Finlease (P) Ltd. (18 taxmann.com 217) of the Hon ble Delhi High Court; CIT vs. Globus Securities Finance (P) Ltd. (2014) 41 taxmann.com 465 (Delhi); ITO vs. SBS Properties and Finvest Pvt. Ltd. In ITA No. 2164/Del/2008. He further submitted that with regard to addition made u/s. 68 following decisions may be considered viz. PCIT vs. NRA Iron Steel (P) Ltd. (2019) 103 taxmann.com 48 (SC); CIT vs. MAF Academy (P) Ltd. (361 ITR 258); CIT vs. Navodaya Caste Pvt. Ltd. (2014) 367 ITR 306 (Delhi); Navodaya Castle Pvt. Ltd. Vs. CIT (2015) 56 taxmann.com 18 (SC); Pratham Telecom India Pvt. Ltd. Vs. DCIT 2018 TIOL 1983 HC-Mum-IT. He further submitted that with regard to section 56(2)(viib) following cases may be considered viz. Sunrise Academy of Medical Specialities Pvt. Ltd. Vs. ITO (2018) 96 taxmann.com 43 (Kerala); Sunrise Academy of Medical Specialities India Pvt. Ltd. Vs. ITO (2018) 94 taxmann. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision Finance (P) Ltd. (supra), Vir Bhan and Sons (Supra)_ and CIT vs. Jansampark Advertising and Marketing (P) Ltd. (2015) 56 taxmann.com 286/231 Taxman 384/375 ITR 373 (Delhi) .. 3.3 . If the aforesaid factual matrix is analyzed, the net asset value of shares as on 31/0312008 comes to ₹ 33/- as the total asset is ₹ 19.30,70,518/-, whereas, the premium charged per share is ₹ 154.72, thus, the excess premium charged comes to ₹ 121.72 resulting into total excess premium comes to ₹ 34,89,10,380. However, we note that as per the provisions of section 56(2)(viib), where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration receive for such share as exceed the fair market value of such share was inserted by the Finance Act, 2012, w.e.f, 0l/04/2013 and the present assessment year before us is 2009-10, therefore, the amendment made in section 68 is prospective in nature. Our view find supports from the decision in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 56(2)(viib) of the LT. Act against the assessee. The Ld. CIT(A) also discussed this issue in the appellate order and correctly found that the said provision was notified by the CBDT vide notification dated 29.11.2012, the said provision would come into effect w.e.f. A.Y. 2013-2014 i.e., from 0l.04.2013 for dealing with share premium. Otherwise, there were no provision prior to it to govern share premium. The CBDT in its Circular No.2/15 dated 30.01.2015 accepted the decision of Bombay High Court in case of Vodafone India Services P. Ltd., (supra) in which it was held that premium on share issue was on account of capital account transaction and does not give rise to income. Therefore, no infirmity have been pointed in the order of the Ld. CIT(A) with reference to provisions of section 56(ii)(viib) of the I.T. Act. The Ld. D.R. has also not pointed out as to which additional documents have been considered by the Ld. CIT(A) at appellate stage which were not submitted before A.O. at the assessment stage. In the absence of any substantial point to highlight as to which additional evidences have been considered at appellate stage, we do not find if there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shares only applies from Assessment Year 2013-14. Hence, Section 56(2)(viib) of the Act cannot be resorted to in the instant assessment year 2012-13 under consideration. Therefore, share premium is not chargeable to tax. Even if the share premium is excessive, the same cannot be taxed under the provisions of section 68 during the A.Y. 2012-13 under consideration, since the nature and source of the same stands fully explained. This contention is duly supported by the decision of the Mumbai Tribunal in the case of DCTT V s. Varsity Education Management Pvt. Ltd. [ITA 6991/Mum/2016]. Accordingly, we direct the Assessing Officer to delete the addition made on account of share premium received by the assessee amounting to ₹ 34,99,65,000/-. 6. We further note that the other judicial decisions relied upon by the representatives of both the sides have been duly considered. In our considered view, we do not find any parity in the facts of the decisions relied upon with the peculiar facts of the case in hand. 7. Keeping in view of the facts and circumstances of the case and respectfully following the aforesaid precedents including the ITAT, Mumbai d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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