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TMI Blog2019 (9) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... d credited a sum of Rs. 7,02,00,0001- as share application money from M/s Neon healthcare & Research Institute Ltd. The AO found that the appellant claimed to have received Rs. 68,50,0001- by cheque, Rs. 6 crores for supplying Medical Equipments and Rs. 33,35,0001- on account of pathological tests conducted by the said concern. The AO issued notice u/s 131 which was duly served but was not complied with. The AO issued show cause notice dated 11.03.2013 to the assessee informing that the notice u/s 131 was not complied with and to explain the said credit. The appellant filed a reply on 19.03.2013 explaining the share capital credits of Neon Health care & Research Institute Ltd., submitted the copy of the bills for purchase of machineries from the said concern. The AO rejected the explanation of the appellant on the ground that the party did not comply with the summons and further on enquiry from the Registrar of Companies, it was informed by ROC that the name of such company was not available in MCA base. The AO, therefore, added back the sum of Rs. 7,02,00,0001- as unexplained cash credit. 4.1. At the appellate stage, the AR of the appellant argued on the matter and filed written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er concern was filed along with the copy of its balance sheet. The data downloaded from MCA site are also filed which showed that the said sister concern have been regularly complying with the statutory requirements of the ROC and the information available with R was not correct. Moreover the AO has duly accepted the said purchase of equipments as well as the credits for pathological test bills raised by the sister concern for which the details were filed and after going through the same, depreciation on the said equipments have been allowed. The notice u/s. 133(6) and 131 were served which proved the existence of the sister concern. Out of the amount of Rs. 7,02,20,000/-, shares were allotted to the extent of Rs. 4 Crores and balance Rs. 3,02,00,0001- was outstanding as at the end of the year the figures of which tally with the balance sheet of the said shareholder. The assessee duly explained the receipt after the show cause notice was issued by the AO. The AO, as it appears, have not properly looked into the MCA sites. In fact, the name of the company was Neon Health Care and Research Institute Limited which was changed to Desun Healthcare & Research Institute Ltd. on 12.9.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making any further corroborative enquiry in this regard or in the alternative rejecting the explanation submitted by the appellant with cogent material evidences with regard to the identity and creditworthiness of the shareholder company. In view of the foregoing facts and circumstances, it is my considered opinion that the appellant had duly discharged its onus to prove the impugned credit. The AO has not come up with any convincing material or proposition that the impugned credit came within the purview of section 68 which would warrant the addition. On considering the material facts on record, I am unable to endorse the action of the AO in making the impugned addition of Rs. 7,02,00,000/- which is therefore directed to be deleted. The AO is directed accordingly. " 3. We have given our thoughtful consideration to rival contentions. Learned CIT/DR vehemently contends during the course of hearing that the CIT(A) has erred in law and on facts in deleting the impugned unexplained share application money addition rightly made in the course of assessment since the assessee failed to satisfy the three relevant parameters of identity, genuineness and creditworthiness of thereof. 4. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a legal issue. Hence we dispose off the appeal on merits. We find that the assessee has filed before the Assessing Officer, details of share capital raised during the Financial Year 2012-13 along with Form No. 3 and list of allottees of shares. He filed the details giving the names of the share applicants, addresses, PAN Nos., number of shares issued, amount adjusted against share capital, amount adjusted against share premium and the total amount adjusted. 25,39,997 number of shares were raised during the year. Out of this for the Financial Year 2012-13 only 3,00,000 shares were issued for consideration in cash and 22,39,997 number of shares were issued for consideration other than cash. Notices u/s 133(6) of the Act, were issued by the Assessing Officer, to all the share applicants. These were duly replied by them, enclosing therewith with all the requisite information, directly to the Income tax Officer. These are placed from pages 81 to 171 of the paper book filed by the assessee. 6. On these facts, we find that the issue in question which is to be adjudicated is whether the addition can be made u/s 68 of the Act be made where there was allotment of shares other than by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done in such case laws, which have evolved on this issue, call for concerted actions on the part of the AO pinpointing utilization of unexplained/unaccounted/untaxed money and the players and the beneficiaries effectively using the weblike scheme to plunder black money. For example introduction and use of black money in the present case may be at a different point of time and in different hands. The AO's action in the present case cannot be upheld in law. I, therefore, delete the additions and grounds of appeal Nos. 3 & 4 are allowed." 4.1. We find that the Hon 'ble Allahabad High Court in the case of CIT vs. Sohanlal Singhania reported in 235 ITR 616 (All) had held in the context of allowability of donation as deduction u/s 80G of the Act that the expression 'any sum paid' used in the said section denotes' sum of money paid' . Hence if certain shares were donated by a person, then the same would not fall eligible for deduction u/s 80G of the Act. We also find that the Hon 'ble jurisdictional High Court in the case of Jatia Investment Company {Co.] vs. CIT reported in 206 ITR 718 (Cal) also supports the case of the assessee herein, wherein it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entries and not cash entries. He urged that the purported motive of the entries being the reduction of loans of the three limited companies does not explain the whole matter, because the entries are cash entries. The fact remains that, at every stage, the parties showed the payments and receipts of cash even when there was no cash available for such entries. This quite justifies the addition as sustained by the Tribunal. We have perused the assessment order carefully. We find that cash did not pass at any stage though entries were made in the cash book showing payments and receipts; but since the entries made a complete round, no passing of cash was necessary for the purpose of making the entries. That there was no passing of cash is also admitted by the Income- tax Officer himself. We have already extracted the observation of the Income- tax Officer in paragraph 14 of his assessment order. The Income- tax Officer has clearly opined that all the respective parties did not receive cash nor did pay cash as none had any cash for the purpose. The only point in the assessment order is that the entries not involving the passing of cash should not have found a place in the cash book, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. ACIT reported in 52 ITD 412 (Pune Trib.] also supports the case of the assessee. 4.3. In view of the aforesaid observations, in the facts and circumstances of the case and respectfully following the aforesaid judicial precedents relied upon hereinabove. we hold that the Id. AD had erroneously invoked the provisions of section 68 of the Act to the facts of the instant case, which, in our considered opinion, are not at all applicable herein. This is a simple case of acquiring shares of certain companies from certain shareholders without paying any cash consideration and instead the consideration was settled through issuance of shares to the respective parties. Moreover, in the balance sheet of the assessee company in the schedule to share capital, it is very clearly mentioned by way of note that the fresh share capital was raised during the year for consideration other than cash. Hence we hold that provision of section 68 of the Act are not applicable in the instant case and accordingly the entire addition deserves to be deleted which has rightly been done by the Id. CIT(A) which does not require any interference. Accordingly, grounds raised by the revenue are dismissed." 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in this section shall apply to any change in the shareholding of an Indian company which is a subsidiary of a foreign company as a result of amalgamation or demerger of a foreign company subject to the condition that fifty one percent shareholders of the amalgamating or demerged foreign company continue to be the shareholders of the amalgamated or the resulting foreign company." It was submitted that if 51 % of the shareholder continues to be the same in the year in which the loss was incurred and in the year of set off then the loss is be allowed set off. It was submitted that the loss being depreciation loss was for the assessment year 2009-10 when more than 51% of the shares of the company were held by XL Enterprises (27.34% and Neon Health Care (47.73%) and that in the assessment year 2010- 11 these two shareholders held 26.02% and 53.87% of the shares leaving aside other shareholder who also continued to be shareholders in the company. Therefore both in the year of loss and in the assessment year in question same shareholder held more than 51 % of the shares. It was submitted that this fact was brought to the notice of the AO vide letter filed on 19.3.2013. It was ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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