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TMI Blog2019 (6) TMI 1651X X X X Extracts X X X X X X X X Extracts X X X X ..... ects has arbitrarily without giving any reason by a cryptic order has added the entire share premium which was also given by the very same four corporate entities u/s 68 of the Act. The Ld. AR brought to our notice that the similar additions were made by the same very AO in five cases wherein the AO accepted the share capital but added the share premium which action of the AO was not upheld by the Tribunal. As share premium cannot be added in the hands of the assessee u/s. 68 of the Act since the proviso was inserted u/s 68 of the Act only from AY 2013-14 and similar additions made only on share premium was directed to be deleted and which action has been upheld by the Hon ble Bombay High Court in Pr. CIT Vs. Apeak Infotech [ 2017 (9) TMI 1590 - BOMBAY HIGH COURT ]- Decided in favour of assessee. - I.T.A. No. 285/Kol/2017 - - - Dated:- 14-6-2019 - Shri A.T. Varkey, JM And Dr. A. L. Saini, AM For the Appellant : Shri Manish Tiwari, FCA. For the Assessee : Shri C. J. Singh, JCIT, Sr. DR. ORDER Per Shri A.T. Varkey, JM This appeal preferred by the assessee is against the order of Ld. CIT(A)-13, Kolkata dated 29.11.2016 AY 2012-13. 2. The brief fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tworthiness. The Ld. DR further submitted that in K.M. Sadhukhan and Sons Pvt. Ltd. Vs CIT (1999) 239 ITR 77 (Cal) it has been held that burden lies upon the assessee to prove the noted three conditions. In CIT vs. Precision Finance Pvt. Ltd. (1994) 208 ITR 465 (Cal) the Hon ble High Court held that it is for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. Mere furnishing of the particulars is not enough . The Ld. DR also submitted that in CIT vs. Nipun Builders and Developers Pvt. Ltd. (2013) 350 ITR 407 (Del) the Hon ble Court while deciding the issue in favour of revenue has reiterated that - 29 in .. in case of private limited companies generally persons known to the directors or shareholders, directly or indirectly, buy or subscribe to shares upon receipt of money, the share subscribers do not lose touch and become incommunicado. Call monies, dividends, warrants etc. have to be sent and the relationship is a continuing one. In such cases therefore the assessee cannot simply furnish details and remain quiet even when summons issued to the shareholders u/s.131 ... 30 . .. what we pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Ltd. and M/s.Ruby Traders and Exporters Ltd. 8. When the issue arose regarding taxability of share premium which is a capital receipt, the ITAT Kolkata clarified in the case of M/s. Subhalakshmi Vanijya Pvt. Ltd. vs. CIT, 155 ITD 171, that the question being addressed is not whether share premium is chargeable to tax but about the taxability or otherwise of such share capital I premium in terms of sec.68. 9. Further Reliance was also placed by the Ld. DR on the following decisions: (i) CIT vs. N. R. Portfolio Pvt. Ltd. (2014) 222 Taxmann 157 (Del) para 24 25. (ii) CIT vs. N. Tarika Properties Investments ITA NO.2080 of2010 Delhi High Court dtd.21.11.13. (iii) CIT vs. Nova Promoters and Finlease Pvt. Ltd. (2012) 342 ITR 169 (Del). (iv) Visakha Sales Pvt. Ltd. vs. CIT (2014) 52 taxmann.com 305. Citing the aforesaid judicial precedents, the ld DR want us to confirm the impugned order of ld CIT(A). 10. Coming to the instant case we note that the assessee company has raised share capital to the tune of ₹ 1,27,50,000/- during the AY 2012-13. The share capital was raised by issuing shares at a premium where securities premium amount is & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies reveal that the shareholders possessed sufficient capital and reserves out of which share subscription amounts were paid through account payee cheques. The chart is given below to better understand the fund position of each share applicant: On perusal of the aforesaid chart it reveals that the net owned funds of each share applicant were several times more than the investment made in equity of the assessee. It is evident that each share applicant had substantial resources of their own compared with the total investible funds available with each share applicants and that investment made in the equity shares and the assessee company was not significant. We note that the AO did not point out any defect or infirmity in the documents placed on record by the assessee as well as the share subscribers. Thus the creditworthiness of the aforesaid share subscribers cannot be disputed. 12. We note that the assessee had produced the aforesaid documents to explain the nature and source of the share capital along with share premium of the four corporate shareholders. We note that the AO had accepted the share capital subscribed by these nine corporate entities. However, withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AO within the ken of section 68 of the Act. However, share premium component has been doubted by the ld. AO. We find that the assessee in the instant case had duly complied with by furnishing the complete details of share subscribers to prove their identity, genuineness of the transaction and creditworthiness of share subscribers beyond doubt. These are duly supported by the documentary evidences which are enclosed in the paper book. The ld. AO had not found any falsity or any adverse inference of the said documents. We find that the Ld. CIT(A) had placed heavy reliance on these documents and had granted relief to the assessee. All the share subscribers are duly assessed to income tax and the transaction with the assessee company are duly routed through banking channels and are duly reflected in their respective audited balance sheets which are also placed on record before us. In any case, once the receipt of share capital has been accepted as genuine within the ken of section 68 of the Act, there is no reason for the ld. AO to doubt the share premium component received from the very same shareholders as bogus. We held that all the three necessary ingredients of section 68 had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of share capital and share application money in the hands of the assessee as income under section 28(iv) of the Act. We find that the Commissioner of Income-tax (Appeals) did consider the issue of applicability of section 68 of the Act and concluded that it does not apply. The Revenue seems to have accepted the same and did not urge this issue before the Tribunal. Mr. Bhoot, learned counsel appearing for the Revenue also fairly states that the issue of applicability of section 68 of the Act was not urged by the Revenue before the Tribunal. (b) It is a settled position in law as held by this court in CIT v. Tata Chemicals Ltd. [2002] 122 Taxman 643/256 ITR 395 (Bom.) that in an appeal under section 260A of the Act, the High Court can only decide a question if it had been raised before the Tribunal even if not determined by the Tribunal. Therefore, no occasion to consider the question as prayed for arises. (c) In any case, we may point out that the amendment to section 68 of the Act by the addition of proviso thereto took place with effect from April 1, 2013. Therefore, it is not applicable for the subject assessment year 2012-13. So for as the pre-amended section 68 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and cannot be considered to be income. (b) It is further pertinent to note that the definition of income as provided under section 2(24) of the Act at the relevant time did not define as income any consideration received for issue of share in excess of its fair market value. This came into the statute only with effect from April 1, 2013 and thus, would have, no application to the share premium received by the respondent assessee in the previous year relevant to the assessment year 2012-13. Similarly, the amendment to section 68 of the Act by addition of proviso was made subsequent to previous year relevant to the subject assessment year 2012-13 and cannot be invoked. It may be pointed out that this court in CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 taxmann.com 272/247 Taxman 245/394 ITR 680 (Bom.) has while refusing to entertain a question with regard to section 68 of the Act has held that the proviso to section 68 of the Act introduced with effect from April 1, 2013 will not have retrospective effect and would be effective only from the assessment year 2013-14. (c) In view of the above, question No. B as proposed also does not give rise to any substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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