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TMI Blog2022 (12) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... und in order and there is no deficiency in supporting evidence. The remand report of AO is loud and clear that the source of share capital and share premium has been successfully explained to the best possible extent by the assessee furnishing all evidences and none of them were found to be incorrect and no defect has been pointed out. We fail to find any justification in the finding of ld. CIT(A) confirming the action of the AO making addition u/s 68 - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... on the alleged sum received in the form of share capital and share premium and accordingly made an addition u/s 68 of the Act at Rs.1,06,00,000/- thereby assessing the income at Rs.1,05,99,860/-. 4. Aggrieved, the assessee preferred appeal before the ld. CIT(A). The assessee filed various other details and evidences to explain the alleged sum. Remand report was called for by the ld. CIT(A) and the same was received vide letter dated 28.03.2017. Considering the remand report and thereafter referring to various decisions including that of Rajmandir Estate Pvt. Ltd. v. PCIT in GA No.509 of 2016 as well as decision of this Tribunal in the case of ITO vs. M/s Blessings Commercial Pvt. Ltd. in ITA No.271/Kol/2014 confirmed the addition observing as follows: "The Hon'ble ITAT has discussed the issue in detail in the case of ITO, Ward-5(3), Kolkata vs. M/s Blessings Commercial Pvt. Ltd. in ITA No.271/Kol/2014 for A.Y 2010-11. In this case Rs.10/- share has been issued at a premium of Rs.990/- for which there is no valid explanation given. On this question, the assessee has not even attempted to justify the amount of share premium. A perusal of the audited statement of accounts of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are shell companies which provides bogus share capital and share premium and the alleged sum are in the nature of accommodation entries and the investing companies do not have sufficient creditworthiness to invest such huge amount that too at a premium of Rs.990/- on the equity share of face value of Rs.10/-. 7. We have heard rival contentions and perused the records placed before us. Through these appeals, the assessee has challenged the findings of the CIT(A) confirming an addition of Rs.1,05,00,000/- made u/s 68 of the Act for unexplained share capital and share premium. On going through the assessment order, we find that the ld. AO made the addition for Rs.1,06,00,000/- which included share capital of Rs.2,05,000/- and share premium of Rs.1,03,95,000/-, but on perusal of the details, we find that figure of share capital is Rs.1,05,000/- and not Rs.2,05,000/- and therefore, correct figure of disallowance is Rs.1,05,00,000/-. We notice that during the year, the assessee received share capital and share premium totalling to Rs.1,05,00,000/- from following four investor companies: Sl. Name of the share applicants No. of shares allotted Share capital (Rs.) Share premium (Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund v) Share application form vi) Allotment advice vii) Explanation regarding the investment in equity shares at premium viii) Board Resolution B) Trilokpati Commodities Pvt. Ltd. i) ITR Acknowledgement and Final Accounts ii) Bank statement iii) Reply filed on 27.02.2015 iv) Statement showing the source of fund v) Share application form vi) Explanation regarding the investment in equity shares at premium vii) Board Resolution C) Footflash Vanijya Pvt. Ltd. i) ITR Acknowledgement and Final Accounts ii) Bank statement iii) Reply filed on 24.02.2015 iv) Statement showing the source of fund v) Share application form vi) Allotment advice vii) Explanation regarding the investment in equity shares at premium viii) Board Resolution D) Khandeshwar Vinimay Pvt. Ltd. i) ITR Acknowledgement and Final Accounts ii) Bank statement iii) Certificate explaining the source of investment iv) Share application form v) Allotment advice vi) Explanation regarding the investment in equity shares at premium vii) Board Resolution 10. On perusal of the above details, we find that all the investor companies are regularly assessed to tax, payments are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 105000 number of shares was Rs. 10395000/-. Figures verified with information contained in paper book and no difference could be noticed. Directors of assessee company and investors companies were examined and they confirm the investment made in M/s. Devghar Suppliers Private Limited during FY 201l-12. On query, director said that company is duly registered with ROC, equity shares were authorized by ROC, company regularly filed report to ROC, separate bank account maintained, books of accounts maintained and audited by registered CA, it has separate rented office, hence it is not a paper/shell company. Company had sufficient fund and decision of investment was made by Board of Directors. Statement of directors verified with information contained in paper book and respective assessment folder and found no difference. Transactions and credit of capital including premium reported by assessee company against the issue of equity share during FY 2011-12 was basically found in order. Deficiency of supporting evidences also could not be noticed nor highlighted in assessment order." 12. The observation of the AO almost brings an end to this litigation as it clearly proves that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso. ii) PCIT vs. Chain House International (P) Ltd. 98 taxmann.com 47 wherein Madhya Pradesh High Court held that "The question raised by the revenue in regard to issuing the share at a premium is purely a question of fact. It is a prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe to shares at such a premium or not and moreover the section 68 does not envisages any law on share premium it only requirement is to identity of the investors, the genuineness of the transaction and the creditworthiness of the share applicants which same has been discharged by the respondent authority and the HIGH COURT OF M.P. BENCH AT INDORE Pg. No.--58-- (ITA No.112/2018 & Other connected matters) same has been accepted by the appellate authorities thus, the same cannot be reconsidered in these appeals as it is a pure question of fact." SLP preferred by revenue was dismissed by Hon'ble Supreme Court and the same is reported in 103 taxmann.com 435(SC). iii) CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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