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TMI Blog2020 (11) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... r these circumstances, we do not find any reason to interfere with the order of Ld.CIT(A), which otherwise appears to be quite reasoned and correct. - Decided in favour of assessee. - ITA No. 3268/Mum/2017 - - - Dated:- 10-7-2020 - Shri Rajesh Kumar, Accountant Member And Shri Ram Lal Negi, Judicial Member For the Appellant : Shri D.G.Pansari, Shri Chaudhary Arun Kumar Singh For the Respondent : Shri Kiran Mehta Shri Ravi Dasija ORDER PER RAJESH KUMAR, A.M: This appeal filed by the Revenue is directed against the order of the CIT(A)-10, Mumbai, dated 16-01-2017. 2. The Revenue has raised the following Grounds: 1 i) Whether on the facts and circumstances of the case and in the law, has the Ld.CIT(A) justified in deleting the quantum addition of ₹ 2,15,00,000/- made by the AO without going into the source of income of share applicant s and its credibility? ii) The ld.CIT(A) also erred in not taking cognizance of nature of profit projection shown by the assessee business earlier and future while deciding the issue of share premium receipts. 2. The appellant prays that the order of the Ld.CIT(Appeals) be set aside and the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling of compliances with ROC. The AO finally held that the said shares were issued by the assessee-company at higher than the market value of the assessee and therefore assessed the entire share application money and share premium u/s.56(1) of the Act as income from other sources by making the assessment u/s.143(3) of the Act, vide order dt.28- 03-2015. Without prejudice to the same, the AO also observed and recorded that since the assessee has failed to prove the genuineness of the investors, the provision of Section 68 of the Act could also be invoked. 6. In the appellate proceedings, the Ld.CIT(A) allowed the appeal of assessee, after considering the reply of assessee and various case law relied upon, by observing as under: 5.2. I have carefully considered the facts of the case and submissions of the ld.AR. I have also gone through the decisions relied on by the AO and the ld.AR. First of all let me point out the taxability of share premium in the hands of the assessee It has been held in several decisions including the decision in the Vodafone India Services Pvt. Ltd that the share premium is the balance sheet entry and is capital in nature. No capital receipt is tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted then all capital gains whether chargeable under section 45 or not, would come within the definition of the word income under section2(24). Further, under section 2(24)(vi) the Legislature has not stated that any capital gains will be covered under the word income. On the contrary, the Legislature has advisedly stated that only capital gains which are chargeable under Section 45 of the Act could he treated as income. In other words, capital gains not chargeable to tax under section 45 fall outside the definition of the word 'income in section 2(24) of the Act. It is true that section 2(24) of the Act is an inclusive definition. However, in this case, we are required to ascertain the scope of Section 2(24)(i) and for that purpose we have to read the sub section strictly. We cannot widen the scope of sub section by saying that the definition as a whole is inclusive and not exhaustive. In the present case, the words chargeable under section 45' are very important. They are not being re ad by the Department. These words cannot be omitted. In fact, the prior history shows that capital gai ns we re not chargeable before 1946. They were not chargeable between 1948 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking shall have the meanings respectively assigned to them in clause (a), clause (b) and clause (c) of [Explanation] to clause (23FB) of section 10;] 5.2.2. It was also held by ITAT Mumbai in the case of Green Infra Ltd. 145 lTD 240 that No doubt a nonest company or a zero balance company asking for a share premium of ₹ 490/- per share defies all commercial prudence but at the same time we cannot ignore the fact t hat is the prerogative of the Board of Directors of a company t o decide the premium amount and it is the wisdom of the share holder whether they want to subscribe t o such a heavy premium. The revenue authorities cannot question of charging of such huge premium without any bar from any legislated law of the land............. Accordingly relief was given to the assessee by the Honorable ITAT in this case by following above decision in the case of Vodafone India Services Pvt. Ltd. 5.2.3 In view of the above discussion it is evident that share premium in the instant case is not taxable for the assessment year under consideration since it is a capital receipt. However, the same can be brought to tax as deemed receipt u/s 68 if there is a credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from other source are not applicable. If at all, only the deemed provisions of sec.68 will apply wherein if the appellant fails to give any explanation to the satisfaction of the AO on the credits found in the books of account with regard to identity, creditworthiness of the creditors and genuineness of the transaction, the AC can make disallowance as these are deemed provisions. Since, the appellant has furnished all the details like confirmation letters, copies of ITR copies of audited accounts and bank statements of all the five parties who have contributed to the share capital of the company. and return of allotment filed with ROC and the Board resolution of the company for issue and allotment of shares, in my considered opinion the appellant has fulfilled this condition also. Thus, the disallowance is not called for in either of the provision. 5.2.5. To sum up, as the investment is not from any bogus concerns and as the provisions of section 56(1)(viib) are not applicable to the appellant for the year under consideration and as the appellant has fulfilled the requirements of section 68 of the Act, in my considered view the disallowance of investment in shares by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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