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TMI Blog2019 (10) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue has raised the following Grounds of appeal :- (i) The Ld. CIT(A) has erred on facts and in law in deleting the addition unexplained cash credits of ₹ 1851,91,30,000/-without properly appreciating the factual and legal matrix as clearly brought out by the Assessing Officer in the assessment order. (ii) The Ld. CIT(A) has erred on facts and in law in deleting the addition made u/s.68 of the Income Tax Act, 1961 holding that the power of the AO to lift the corporate veil is not in question without appreciating the fact that on lifting the corporate veil it is clear that Biometrix has been created as a mere camouflage or shell or sham company deliberately created by the persons exercising control over the same for the purpose of avoiding liability. (iii) The Ld. CIT(A) has erred on facts and in law in deleting the addition made u/s. 68 of the Income Tax Act, 1961 holding that Non submission of most crucial documents like Loan account of Biometrix and OCBC account of Biometrix is not necessary without appreciating that It clearly confirms the doubts raised by the AO regarding the nature and, genuineness of the transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- as subscription received from M/s. Biometrix Marketing Private Limited, Singapore (in short BMPL ) towards 185191300 Compulsory Convertible Preference Shares of ₹ 10/- each at a premium of ₹ 20/- each, aggregating to ₹ 100/- each. BMPL was a non-resident investor and it was noticed that said concern had also similarly invested in other group concerns, namely, M/s. Reliance Gas Transportation Infrastructure Pvt. Ltd., M/s. Reliance Ports and Terminals Ltd. and M/s. Reliance Utilities Pvt. Ltd. The Assessing Officer treated the sum of ₹ 1851,91,30,000/- as unexplained cash credit under Section 68 of the Act, as according to him, the nature and genuineness of the transaction of investment by BMPL in Preference Shares issued by the assessee was not established. This stand of the Assessing Officer was consistent with the stand of the assessing authority in other group concerns referred above. It is in this background, it was a common point between the parties that the facts and circumstances of the dispute in the instant case are similar to those in the case of M/s. Reliance Utilities Pvt. Ltd. (supra) and M/s. Reliance Ports and Terminals Ltd. (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in section 68 of the Act stands fulfilled and therefore the order of assessment making additions on account of this transaction needs to be set aside. 8.32 The facts of this case is identical to that of other cases of Reliance group as discussed above. The A.O during the appellate proceeding also submitted that the facts in these cases are identical to the case of Reliance Utilities Ltd. Considering the aforesaid detailed discussion in earlier paragraphs as above, the identity of the creditors M/s Biometrix and nature, source and genuineness of the transaction is established and therefore I direct that the addition made by invoking Section 68 of the Act be deleted. Ground no 3 and 4 are allowed. 6. We have carefully considered the rival submissions and perused the material on record. As conceded by both the sides, the facts are exactly identical as in the appeal of Reliance Ports Terminals Ltd. in ITA No.223/M/2016 for the assessment year 2008-09, wherein this Bench has held as under:- 28. Now the transaction under question is an investment of ₹ 700 crores by Biometrix into the assessee Company in the form of Compulso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture Pvt Ltd. 31,28,44,149 31,28,44,14,900 4. M/ s Relogistics Infrastructure Ltd 18,51,91,300 18,51,91,30,000 29. We also find that the DDIT(lnv)-Unit 11(1), Mumbai conducted enquiries in this case and vide his report dated 10.07.2012 he has given the following findings: The investment in shares (CCPS) in India, through FDI route was not out of equity capital of M/s Biometrix Marketing P Ltd., but was out of loan of USD 1700 million from ICICI Bank, Singapore, which was secured with options agreement to sell the shares to M/s. Ekansha, a group company of M/s. Reliance Industries Limited (RIL). (page 702 of the paper book) (emphasis supplied) We find that ICICI Bank Singapore has disbursed a loan of USD 1.7 billion to Biometrix. As per information received from FT TR division, the IRAS has provided swift messages showing that loan proceeds have been remitted to the Overseas Chinese Banking Corporation, Singapore, SG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the swift messages are forming part of this Appellate order the details of which can found in pages 76 to 81.- 30. To sum up the whole issue in the present appeal by Revenue, is about the source, nature and genuineness of the transaction to determine whether the addition made by the AO under section 68 of the Act is sustainable. Admittedly, in this case, is no dispute that the assessee issued Compulsory Convertible Preference Shares (CCPS) and the same was subscribed by Biometrix Marketing Private limited, Singapore (Biometrix). It is also not in dispute that for making this investment Biometrix borrowed the money from ICICI Bank, Singapore. All the documents relating to Biometrix were procured by the AO from Inland Revenue Authority of Singapore and ICICI Bank. At every stage, the conclusions reached by the Revenue and CIT(A) are based on these materials on record. We are now required to re-appreciate the very same materials on record. The authenticity of these materials on record is not in dispute before us. No new materials were relied upon either by the Revenue or by the assessee before us. The assessee argued before us and filed detailed submissions and bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered view, that that this issue is not at all relevant for the purpose of section 68 of the Act in the facts and circumstances of the case, since it is abundantly clear from the materials on record that Biometrix was to be an SPV. Next, we will deal with the fifth and sixth ground of appeal by the Revenue. It concerns as to how Biometrix sold the CCPS at lower than the market value disclosed by them to ICICI Bank. The CIT(A) has dealt with these and observed that the debt-cover ratio at all times was more than that prescribed in the Facility Agreement based on the higher of two different valuation reports furnished using different methods of valuation and that the loan has been repaid by Biometrix to ICICI Bank and hence these issues are not relevant for the purpose of section 68 of the Act. We are unable to fathom as to how these events that relate to periods post the investment are relevant for ascertaining the source nature and genuineness of the investment transaction under section 68 of the Act and hence concur with the finding of the CIT(A). 7. In view of the above, taking a consistent view, we confirm the order CIT(A) in this appeal also, and the appeal o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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