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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 ..... d 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 lakh comprising 10,000 equity shares of Rs. 10 each and during the year issued 5,81,180 shares with face value of Rs. 10 each at a premium of Rs. 490 thereby increasing the paid up capital by Rs. 58,11,800 and share premium by Rs. 27,98,10,000/-. According to the AO these transactions were suspicious and unnatural and accordingly called upon the assessee to prove the identity, creditworthiness and genuineness of the transactions. The assessee filed before the AO the necessary evidences in the form of names and addresses of the shareholders, mode of payment by way of cheques, investments transferred to the assessee from the investors in c lieu of allotment of shares and conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttracted 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 at a premium and therefore the provisions of section 68 are not applicable. We have also examined the case laws stated by the assessee in defence of his arguments and the relevant portions of the case laws cited by the Ld. A.R. are reproduced as under: "1. 1TO vs. Bhagwat Marcom (P) Ltd. (supra) "No addition could be made under section 68 where assessee company issued its shares at premium to certain companies in lieu of shares held by said companies and there was no inflow of cash. " "Section 68 of the I. T. Act, 1961 - Cash Credit (Share Application Money) - A.Y. 2012-13 - During year under consideration, assessee-company issued its shares at premium to certain compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otocopies 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 share subscribing companies. It is a simple case of shares being allotted in lieu of shares held by the share subscribers. That is, it is just swapping of shares, i.e. shares are exchanged from another shares, therefore, section 68 does not attract in the assessee's case under consideration. " 7. Access Global Limited vs. ITO (supra) We note that LdCIT(A), without properly appreciating the facts and evidences filed before him confirmed the addition made by AO. Whereas no share were issued during the year either by the assessee company or the companies amalgamated with it. The increase in share premium was nothing but the addition of share premium account of the amalgamating companies with the corresponding fig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the case on hand, we delete the addition in question made u/s 68 of the Act. " 10. ITO vs. Sunglow Dealcom Private Limited (supra) "The assessee is a company and is in the business of investment. An addition of unexplained cash credit u/s 68 of the Act, were made by the Assessing Officer on the ground that the assessee failed to explain the sources of funds for the share capital received by it at a premium. On appeal the Id. First Appellate Authority, held that the allotment of shares in this case was a non-cash transactions and that they were subscribed through book entries. He held that Section 68 of the Act, does not apply as the assessee has proved the identity, creditworthiness and genuineness of the transactions. He gave a factual finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 pre-existing liability of assessee to said company, since no cash was involved in transaction of said allotment of shares, conversion of these liabilities into share capital and share premium could not be treated as unexplained cash credits under section 68. " ''Section 68 of the Income-tax Act, 1961 - Cash credit (Share capital) - Assessment year 2012-13 - Assessee-company allotted share to one VR in settlement of preexisting liability of assessee to said company -Assessing Officer treated value of shares allotted as unexplained cash credits under section 68 - High Court by impugned order held that cash credits towards share capital were only by way of book adjustment and not actual receipts, thus, same could not be treated as receipts towards share subscription money - It further held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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