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TMI Blog2021 (4) TMI 1396X X X X Extracts X X X X X X X X Extracts X X X X ..... en preferred by two different assessees against the orders even dated 03.04.2017 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2012-13. Since the issues raised in both the appeals are common, therefore these are being disposed off together for the sake of brevity and convenience. First we shall take up ITA No. 543/M/2018. The ground raised by the assessee are as under: "1. On the facts and circumstances of the case and in law, the learned CIT(A) erred in adding the share capital money of Rs. 27,98,10,900/- u/s 68 of the Income Tax Act 1961, without considering the facts of the case." 2. The only issue raised by the assessee is against the order of Ld. CIT(A) confirming the addition of Rs. 27,98,10,900/- as made by the AO towards share capital money under section 68 of the Act. 3. The facts in brief are that the assessee filed return of income on 19.02.2013 showing an income of Rs. 1050/- which was processed under section 143(1) of the Act. The case of the assessee was selected for scrutiny and statutory notices were duly issued and served upon the assessee. The AO observed that assessee had share capital of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ro Centre & Research Ltd. ITA 1383/Kol/2015 (Kolkata Trbi) 12. ITO vs. DSR Impex Pvt. Ltd. ITA 2087/Kol/2017 (Kolkata Trbi) 13. Jatia Investment vs. CIT Ltd. 206 ITR 718 (Cal-HC) 14. ITO vs. V.R. Global Energy (P) Ltd. 113 taxmann.com 31 (SC) 15. V.R. Global Energy (P) Ltd. vs. ITO 96 taxmann.com 647 (Madras HC) 16. ACIT vs. Paras Healthcare P. Ltd. ITA 2207/Del/2012 (Delhi Trib) 6. The Ld. D.R., on the other hand, relied heavily on the order of authorities below. 7. We have heard the rival submissions of both the parties and perused the material on record. The primary contention of the Ld. A.R. before us was that the provisions of section 68 of the Act are not attracted to the present case as the shares were not issued for a consideration which was discharged in terms of money. The consideration was discharged by accepting the investments in the hands of the investors which were duly shown in their hands of the investors prior to the date of said transfer to the assessee company and thereafter duly shown in the balance sheet of the assessee. The Ld. A.R. submitted that this is a barter system of giving investments to the assessee company in lieu of allotment of shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nandi in ITA No. 774/Kol/2012 and the Hon 'ble Calcutta High Court in the case of Jatia Investment Co. Vs. CIT 206 ITR 718 and other cases. We note that in this case, the shares subscribers have given shares in exchange of the shares of the assessee and no sum of money has been transferred to the assessee on this score. In similar case, the Tribunal in the case of Anand Enterprises Ltd. in ITA No. 1614/Kol/2016 dated 26.09.2018 wherein in similar issue arose. 5. ITO vs. Sarvlok VanijyaPvt Ltd. (supra) "We note that assessee company allotted 25,800 equity shares to 3 applicant companies for Rs. 1,29,00,000/- in consideration for purchase of equity shares held by these applicant companies. Photocopies of the agreements entered in this regard are enclosed in paper book. We note that the shares were allotted against consideration for purchase of equity shares held by these applicant companies; hence it is a barter system therefore, provisions of section 68 does not apply. " 6. ITO vs. Vishwadham Traders P. Ltd. (supra) "Section 68 of the Act is not applicable on the facts of the assessee's case, since no money transaction took place between assessee and shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned by way of note that the fresh share capital was raised during the year for consideration other than cash. Hence we hold that provision of section 68 of the Act are not applicable in the instant case and accordingly the entire addition deserves to be deleted which has rightly been done by the Id. CIT (A) which does not require any interference. Accordingly, grounds raised by the revenue are dismissed. " 9. ABA Earthline Communications Ltd vs. ITO (supra) "The Id. Counsel for the assessee submitted that, in this case, the asses see has allotted shares at a premium, as purchase consideration for purchase of shares in the share applicant companies. Shares were purchased from the companies who had applied for shares in the assessee company and got allotted the same. He submitted that the shares were allotted for consideration other than cash and hence Section 68 of the Act, does not apply. He relied on the order of the 'C' Bench of this 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." "Applying the proposition of law laid down in the case-law cited above, to the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s partners JM, which was invested in purchase of shares - ITO found that GB had no cash balance to advance said amount to assessee - He, thus, concluded that source of funds for purchase of shares by assessee was not explained, and consequently, assessed that amount as income from undisclosed sources -- It was contended by assessee that notional cash entries were made to reduce indebtedness of three companies of 'J' Group to GB in order to comply with certain directions of RBI -- Assessee-firm substituted three companies of 'J' Group as debtor to GB - It was further stated that question of cash credit did not arise, there being no actual passing or receipt of cash but transactions were mere book entries - Whether, in aforesaid circumstances, effect and import of transaction was that assessee took over liability of aforesaid three companies to 'GB' in exchange for shares and, therefore, amount of loan in question could not be treated as assessee 's income from undisclosed sources - Held, yes." 14. ITO vs. V.R. Global Energy (P) Ltd (supra) SLP dismissed against High Court ruling that where assessee allotted shares to a company in settlement of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , though had not mentioned under which provision the additions are being made. It appears that the said additions have been made u/s 68 of the Act because it is the only section under which any sum found credited in the books of account can be added back. In the case of Jaffa Investment Co. in 206 ITR 718 at page 725, it is held that in case no cash has been received by the assessee, then no addition can be made u/s 68 of the Act. Similarly, the Pune Bench of the Tribunal also held so in the case of KantiLal& Bros. vs. ACIT in 52 ITD 412" 8. Thus, it is clear from the above that section 68 is not to be invoked where consideration is discharged by way of barter system and not by paying any sum of money. We, therefore, respectfully following the aforesaid decisions, set aside the order of Ld. CIT(A) and direct the AO to delete the disallowance. 9. Appeal of the assessee allowed. ITA No. 544/M/2018 10. The issue involved in the present appeal is identical to the one as stated above in ITA No. 543/M/2018 for A.Y. 2012-13. Therefore, our finding in ITA No. 543/M/2018 for A.Y. 2012-13 would, mutatis mutandis, apply to this appeal as well. Accordingly, the appeal of the assessee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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