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TMI Blog2019 (8) TMI 1665X X X X Extracts X X X X X X X X Extracts X X X X ..... ED. [ 2018 (11) TMI 1821 - ITAT KOLKATA] and M/S ANAND ENTERPRISES LTD. [ 2018 (9) TMI 1779 - ITAT KOLKATA . AO 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. That is, section 68 of I.T. Act, 1961 does not apply to cases of purchase of share assets and allotment of shares by the appellant when purchase and allotment are under a barter system. - Decided against revenue. - ITA No.2029/Kol/2016 - - - Dated:- 28-8-2019 - SHRI A. T. VARKEY AND DR. A.L.SAINI, JJ. Appellant by : Shri Robin Choudhury, Addl. CIT Sr. DR Respondent by : Shri Rajeeva Kumar, AR ORDER Dr. A. L. Saini, J. The captioned appeal filed by the Revenue, pertaining to assessment year 2012-13, is directed against the order passed by the Commissioner of Income Tax (Appeal)-4, Kolkata, which in turn arises out of an assessment order passed by the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by issue of shares of ₹ 10/- each at a premium price of ₹ 1990/- each. The share subscribing company, namely, M/s Jyotika Commercial Pvt. Ltd, who agreed to subscribe 15325 shares of ₹ 10/- each at a premium of ₹ 1990/- each. As per terms of agreement the assessee company agreed to allot 15325 shares of ₹ 10/- with premium of ₹ 1990/- each to Jyotika commercial Pvt. Ltd. against handing over its investments in other companies as detailed below: - Name of Company Number of Shares Total value Leo Distributors Pvt. Ltd. 3000 ₹ 60,00,000/- Mayank Vintrade Pvt. Ltd. 7175 ₹ 1,43,50,000/- Tanishk Marketing Pvt. Ltd. 20600 ₹ 1,03,00,000/- Total Rs. 3,06,50,000/- The assessee also filed copy of agreement with Jyotika Commercial Pvt Ltd for transfer of its share holdings in three other companies as the consideration for allotment of 15325 shares. 5. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that any sum means sum of money . We find that ld. CIT(A) had deleted the addition by observing as under: 6. On consideration of the AR s submission, especially the portion reproduced above, it is seen that section 68 of I.T. Act, 1961 does not apply to cases of purchase of share assets and allotment of shares by the appellant when purchase and allotment are under a barter system. The AO has not refuted the appellant s claim that shares were allotted in exchange for acquisition of shares by the appellant from the companies which surrendered such shares to the appellant. Though as per the AO to apply section 68 to make the said addition in the appellant s hand. Transactions purportedly executed by entry operators involve multiple layers and other complexities, introducing delays in introduction of unaccounted cash/money and multiple players being incorporated entities. Measures taken by the AO in the course of the assessment proceeding falls much short of what is required to be 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the transactions are above board. No outsider is involved. The entries were made in the books of the concerns of the same group. The shares in question were also of the companies of the group. There was no attempt at hiding the transactions. Nor is it the case of any of the parties to the transaction that there was any passing of cash. Every party unequivocally stated that the transactions were carried into effect merely by way of adjustments of the said loans and the share transfers. Shri A. C. Moitra, the learned advocate for the Revenue, reiterated the grounds on which the Tribunal has affirmed the addition of the amount of ₹ 11.20 lakhs as unexplained cash credit. He particularly emphasised that the assessee's contention that the entries are only adjustment entries is not acceptable, because the adjustment entries are not made through the cash book. It is an accepted principle of accounting that book adjustments and the entries in effecting them are made by journal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said direction. Moreover, the direction of the Reserve Bank is a public document within the meaning of section 74 of the Evidence Act, 1872. Documents of a public nature and public authority are generally admissible in evidence subject to the mode of proving them as laid down in sections 76 and 78 of the Evidence Act. In our view, the effect and import of the transactions is that the assessee took over the liability of the aforesaid non-financial companies to GB and Co. in exchange for the shares as aforesaid. In the premises, we answer all the questions, in the affirmative and in favour of the assessee and against the Revenue. 4.2. It would be pertinent to note that in the instant case, the ld. AO had not doubted the investment made in shares by the assessee company. There is no dispute raised by the ld. AO with regard to number of shares; value thereon invested by the assessee company. We also find that the Co-ordinate Bench decision of Pune Tribunal in the case of Kantilal and Bros. vs. 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer to the notice issued u/s 133(6) of the Act. He further pointed out that the ld. CIT(A) called for a remand report the Assessing Officer had not disputed the identity, creditworthiness of the share subscribers as well as the genuineness of the transactions. He relied on the order of the ld. CIT(A). 4.2. The undisputed fact is that shares were issued at a premium, as consideration for the purchase of shares from the share applicant companies. This issue is squarely covered by the decision of the Kolkata C Bench of the Tribunal in the case of ITO vs. M/s. Anand Enterprises Ltd., ITA No. 1614/Kol/2016 C.O. No.56/Kol/2016; dt. 26/09/2018, wherein under identical circumstances, at para 4.3. it was held as follows:- 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. AO 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 shareho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of book adjustments and no actual cash was received towards share subscription money held as follows:- 25. However, the second question is answered in favour of the assessee and against the Revenue by the judgment of the Division Bench of this Court in Electro Polychem Ltd., (supra) and Steller Investment Ltd., (supra). 26. This case is distinguishable from the case of CIT v. Lovely Export (P.) Ltd. [2008] 216 CTR 195 (SC) in that the transactions were only book transactions, and there was no cash receipt. The decisions in (i) CIT v. Focus Exports (P.) Ltd. [2014] 51 taxmann.com 46/228 Taxman 88 (Delhi) (Mag.); (ii) CIT v. Globus Securities Finance Pvt. Ltd. [2014] 41 taxmann.com 465/224 Taxman 237 (Delhi); (iii) Onassis Axles (P.) Ltd. v. CIT [2014] 364 ITR 53/224 Taxman 80 (Mag.)/44 taxmann.com 408 (Delhi); (iv) Olwin Tiles India (P.) Ltd. v. Dy. CIT [2016] 382 ITR 291/237 Taxman 342/66 taxmann.com 8 (Guj.); (v) B.R. Petrochem (P.) Ltd. v. ITO [2017] 81 taxmann.com 424 (Mad.); and (vi) Rajmandir Estates (P.) Ltd. v. Pr. CIT [2016] 386 ITR 162/240 Taxman 306/70 taxmann.com 124 (Cal.), cited on behalf of the respondent are distinguishable, in that the cash credi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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