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TMI Blog2019 (9) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 5,09,04,876 made by the Assessing Officer (AO). 3. The aforesaid addition was made by the AO under the following facts and circumstances. The assessee is a company engaged in the business of commercial training of computer gaming, art and animation. In the course of assessment proceedings u/s. 143(3) of the Income-Tax Act, 1961 ["the Act"] for the AY 2015-16, the AO noticed from the audited financials of the assessee that assessee has shown a sum of Rs. 5,09,04,876 under the head 'Other current liability' - "Share application money received (Amount received in excess of authorized capital - Note 1.1)". In the Notes to the Accounts in Note 1.11, it was mentioned as follows:- "1.11 Share application money received towards allotment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & (ii) receipt of share application money is liable to be taxed as income from other sources u/s. 56(2)(viib) of the Act. The provisions of sec.56(2)(viib) of the Act, reads as follows:- Income from other sources. 56. (1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head "Income from other sources", if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E. (2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head "Income from other sources", namely :- (i) ............. ............. (viib) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed out that- (i) the provisions of section 56(2)(viib) applies only to issue of shares. Since the assessee has received only share application money, those provisions are not attracted; (ii) the aforesaid provisions are applicable only when shares are issued for a consideration which exceeds face value in such shares. Since there was no premium charged by the assessee, there is no question of invoking the aforesaid provisions; and (iii) the aforesaid provisions are applicable only for receipt of consideration for issue of shares by a person, who is a resident and since the persons from whom the assessee received share application money were non-residents, the aforesaid provisions are not applicable. 8. The assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived crossed the limits of Authorized Share Capital on 04/01/2008. 11.1.3. No evidence is produced that the money is kept separately in bank account. 11.1.4. The entire money is utilized in the business. 11.1.5. No effort is made to increase the Authorized Share Capital till the date of this assessment order. 11.2. Further, the only reason quoted by the assessee for not increasing the Authorized Share Capital and allotment of shares is 'the lack of awareness which would be rectified in the due course by the company' is not acceptable from a corporate entity more particularly when the default is for 10 years. 11.3. The AR's submission that the money received is towards 'equity contribution' is not acceptabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that during the previous year relevant to AY 2015-16, the assessee received share application money only to the tune of Rs. 35 lakhs and therefore addition of Rs. 5,09,04,876 made by the revenue authorities cannot be sustained. 12. The ld. DR relied on the order of the CIT(Appeals). 13. We have considered the rival submissions. The details of receipt of share application money on various dates given in page 50 of assessee's PB is enclosed as Annexure-I to this order. The assessee had applied to the Registrar of Companies for increase in authorized share capital of 32,90,000 equity shares and application money received from various share applicants was converted into equity shares under Board Resolution allotting shares to the variou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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