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TMI Blog2022 (6) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... s also not proved whereas, in the present case the Assessing Officer has accepted the nature and source of funds. In our opinion, when the source of fund is not doubted by the Assessing Officer then he is not justified in making addition in terms of section 68 of the Act. Any addition for receipt of share premium having value more than the market value of the shares could be made in terms of section 56(2) of the Act and not u/s 68 of the Act. - Decided in favour of assessee. - ITA No. 7175/MUM/2018 - - - Dated:- 10-6-2022 - Shri Om Prakash Kant (Accountant Member) And Shri Rahul Chaudhary (Judicial Member) For the Revenue : Mr. Hoshang B. Irani, DR For the Assessee : Mr. Parth Navandar, AR ORDER PER OM PRAKASH KAN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instant case, the amounts which were realized by the assessee claimed to be in the nature of share capital security premium were not in the context of a public issue of share capital but essentially in the nature of a private placement? 2. Briefly stated, the facts of the case are that the assessee filed its return of income on 30.09.2012 declaring total income (-) ₹19,27,150/-. This is a company formed by IITian i.e. Mr. Puneet Kumar for developing gaming machines as a startup company along with founder of India games Mr. Vishal Gondal i.e. Sweat Blood Ventures Group. Out of 5000 shares, 4999 equity shares of ₹10/- and one equity share of ₹10/- each were allotted and fully paid to M/s Sweat Blood Ventures Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and such a huge premium was unscientific and unjustified. The Assessing Officer further observed that the share premium collected was parked in the time deposits and was not utilized for business purpose and objects of the share premium received. The Assessing Officer was of the view that accumulated profits of the assessee-company were brought back in the price of the share premium, therefore, in view of the provision of section 68 of the Income Tax Act, 1961 (in short the Act ), he treated the entire value of the share along with share premium of ₹1,99,99,816/- as unexplained cash credit u/s 68 of the Act. 4. On further appeal, the Ld. CIT(A) deleted the addition observing that the Assessing Officer has not disputed the sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. It was also contended by the assesse that the Parliament consciously has not brought to tax amount received from a non - resident for issue of shares and the capital receipt on account of share premium is not income. Section 68 is not applicable as source of credit is proved and is accepted. It is also contended by the assessee that Section 68 is not applicable as the source of credit is proved and is accepted and the amendment is wef AY 2013-14 and year under consideration is AY 12-13.The share application is by Non-resident and section 68 is applicable for resident investor only. Section 56(2Xvib) was not applicable for AY 2012-13 as the said section was introduced w.e.f A.Y 2013-14. Vide notification No. 45 / 2016 dated 14.06.2016. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n high incomes. Merely because the assessee company was a loss making company, its shares could not be sold on premium can not be a ground for making additon w/ s 68 of the Act especially when the payers of the premium are non residents and no doubt has been raised as to the credit worthiness etc. of the creditors. In the case of Major Metals Ltd. (supra) relied upon by the AO, the amount of share application money which had been received earlier as loan and then converted into share application money was added u/s 68 of the Act by the Settlement Commission, mainly on the ground that genuineness of the transaction was not proved and credit worthiness of the creditors was also not proved. However, in the present appeal, that was not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( ) genuineness of transaction ii) identity of the creditors and ill) credit worthiness of the creditors. The addition made by the AO is therefore, deleted. 7.1 We find that the Assessing Officer has mainly doubted the share premium received by the company. We observed that the company has been found by fresh IIT graduates as a startup company looking to the future potential in online gaming business. The Assessing Officer has given categorically finding that the source of fund was not doubted. The Ld. CIT(A) has also considered the decision of the Hon ble Bombay High Court in the case of Major Metal Ltd. v. UOI WP No. 397 of 2011 wherein the addition was sustained on the ground that genuineness of the transaction was not proved and cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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