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TMI Blog2025 (2) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... of investment held by these 9 subscribers under an "Agreement for allotment of shares in consideration of shares of other companies''. The ld. AR has submitted no cash / cheque consideration was received by the assessee on issue of shares as it is case of swapping / exchange of shares. Ld. AO passed impugned assessment order adding entire share capital of Rs. 4.99 crores under section 68 of the Act on the ground that assessee has introduced its own unaccounted money through book entries by using the above companies as a conduit. 3. The same has been deleted by the Ld. CIT(A) with following observations and conclusions; i. ld. AO had issued notices u/s 133(6) of the Act to all the 9 parties which were duly replied by them and desired Information along with audited accounts were submitted by them. All these details submitted showed that there was no cash payment for acquisition of the aforesaid shares and they had sufficient Investment to give to the assessee company In consideration of shares allotted to them for consideration other than cash. ii. No evidence was brought on record by the ld. AO that funds of the appellant company was recycled/rotated by the appellant and intro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t "Sum" u/s 68 of the Act, denotes the money brought into the account books by way of cash / cheque / draft. Since there is no inflow of cash, section 68 of the Act has no application. In this context ld. AR relied numerous decisions of ITO vs. V.R. Global Energy (P) Ltd. 113 taxmann.com 31 (Supreme Court); V.R. Global Energy (P) Ltd. vs. ITO 96 taxmann.com 647 (Madras HC); Jatia Investment vs. CIT Ltd. 206 ITR 718 (Calcutta HC); ITO vs Vital Communication Ltd. (ITA No. 2448/Del/2007) [Delhi ITAT];ITO vs Zexus Air Services (P.) Ltd. [2021] 127 taxmann.com 119 [Delhi ITAT];ITO vs Elatlve Building Solutions Pvt. Ltd. (ITA No. 2498/Del/2017) [Delhi ITAT];ACIT vs. Paras Healthcare P. Ltd. (ITA 2207/Dei/2012 (Delhi Trib) [Delhi ITAT];Frohar Trading Pvt. Ltd. vs ITO (ITA No. 543/Mum/2018) [Mumbai ITAT];ITO vs. Bhagwat Markcom (P) Ltd. 109 taxmann.com 330 [Kolkata ITAT];ITO vs. Saffron Comtrade Pvt. Ltd.ITA 2029 /Kol/2016 (Kolkata ITAT]; ITO vs. Kaner Investments Ltd. ITA 2095/Kol/2017 [Kolkata ITAT];ITO. vs. Aryvarat Construction Pvt. Ltd. ITA 2203/Kol/2017 [Kolkata ITAT];ITO vs. Sarviok Vanijya Pvt. Ltd. ITA 501/Kol/2017 [Kolkata ITAT]; ITO vs. Vishwadham Traders P. Ltd. ITA 803/ Kol/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lieu of the shares issues at premium. Which though may be effecting the value of liquid assets held by assessee at the end of year and increase in capital, but same cannot be equated with 'cash credits' and 'sum' permitted to be taxed as deemed income u/s 68 of the Act. As for the purpose of section 68 of the Act, it is imperative for the Revenue that there was cash involved in the transaction. Then Hon'ble Madras High Court in the case of VR Global Energy Pvt. Ltd. ITO, 407 ITR 145 (Madras) has held that where the assessee allotted shares to a company in settlement of pre-existing liability of assessee to the said company by way of adjustment and 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 credit u/s 68 of the Act. It was held that since the cash credits towards share capital were only by way of book adjustment and not actual receipts, therefore, the same could not be treated as receipt towards share subscription money. Since no cash was involved in transaction of said allotment of shares, conversion of these liabilities into share capital and sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. Copy of ITR of subscribers, copies made available at pages 57 to pages 138 of Paper book ii. Copy of PAN Card of Subscribers, copies made available at pages 57 to pages 138 of Paper book iii. Notice under section 133(6) of the Act was duly served to the subscribers and copies made available at pages 139 to pages 149 of Paper book. iv. Reply to notice under section 133(6) of the Act was duly filed by the subscribers and the copies made available at pages 150 to pages 287 of paper book. v. Master Data as available on Ministry of Corporate Affairs website of all the subscribers Pages 447 to Pages 455 of Paper book vi. Copy of Audited Financial Statements of subscriber made available at pages 150 to pages 287 of Paper book vii. Copy of Allotment Letter in the favor of subscribers of shares swapped by the Subscriber in exchange of assessee's share capital evidencing source of receipt copies made available at pages 150 to pages 287 of Paper book viii. Copy of Form 2, 'Return of Allotment' evidencing receipt of shares swapped by Subscriber in exchange of assessee's share capital evidencing source of receipt, copies made available at pages 291 to pages 422 of Paper b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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