News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
From the Courts »
  Tej Lal Bharti A-101, Sahara Apartments, Sector-VI, Dwarka, New Delhi. vs. ITO Ward-67(4), Civic Centre, New Delhi.
 Tej Lal Bharti A-101, Sahara Apartments, Sector-VI, Dwarka, New Delhi. vs. ITO Ward-67(4), Civic Centre, New Delhi.
 Umesh Kumar Tyagi C/o Kapil Goel, Adv. F-26/124, Sector-7, Rohini, New Delhi. vs. ITO Ward-2(1), Ghaziabad.
 Devki Nandan Bindal C/o Kapil Goel, Adv., F-26/124, Sector-7, Rohini, New Delhi. vs. ITO Ward-46(3), New Delhi.
 Sanjay Mittra G-25, Green Park, New Delhi vs. DCIT Central Circle-26 New Delhi
 Ratan Pal Kein Akhilesh Kumar, Advocate, Chamber No. 206-207, Ansal Satyam, RDC Raj Nagar, Ghaziabad vs. Income Tax Officer Ward 2 (2) Ghaziabad
 Jhabua Power Investments Ltd. Thapar House, 124 Janpath New Delhi vs. Income Tax Officer Ward 13 (3) New Delhi
 The Income Tax officer (E), Ward-1(3), E-2 Block, Room No.2419, 24th Floor, Pratyaksh Kar Bhawan, Civic Centre, Jawahar Lal Nehru Marg, New Delhi PIN 110 002. vs. DLF Qutab Elclave Complex Medical Charitable Trust, 9th Floor, DLF Centre, Sansad Marg, New Delhi – 110 001.
 V. K. Kapoor & Associates Pvt. Ltd. 17, Netaji Subhash Marg, Darya Ganj, vs. ITO Ward-26(1) C.R. Building, New Delhi
 Sant Singh Ram Lal 3963-B, Naya Bazar, Delhi. PIN: 110006 vs. ITO Ward-47(1) New Delhi
 Amendment of Form No 108 of the Income-tax Rules, 1962- Draft notification for inputs from stakeholders and the general public

CIT vs. Gagandeep Infrastructure Pvt. Ltd (Bombay High Court)
April, 14th 2017

Bogus share capital/ premium: The proviso to s. 68 (which creates an obligation on the issuing Co to explain the source of share capital & premium) has been introduced by the Finance Act 2012 with effect from 01.04.2013 and does not have retrospective effect. Prior thereto, as per Lovely Exports 317 ITR 218 (SC), if the AO regards the share premium as bogus, he has to assess the shareholders but cannot assess the same as the issuing company's unexplained cash credit

During the previous relevant to the subject Assessment Year the assessee had increased its share capital from Rs.2,50,000/to Rs.83.75 lakhs. During the assessment proceedings, the Assessing Officer noticed that the respondent had collected share premium to the extent of Rs.6.69 crores. Consequently he called upon the respondent to justify the charging of share premium at Rs.190/per share. The respondent furnished the list of its shareholders, copy of the share application form, copy of share certificate and Form no.2 filed with the Registrar of Companies. The justification for charging share premium was on the basis of the future prospects of the business of the assessee. The Assessing Officer did not accept the explanation/justification of the respondent and invoked Section 68 of the Act to treat the amount of Rs.7.53 crores i.e. the aggregate of the issue price and the premium on the shares issued as unexplained cash credit within the meaning of Section 68 of the Act. This addition was deleted by the CIT(A) and the Tribunal. Before the High Court, the department contended that the proviso to Section 68 of the Act which was introduced with effect from 1st April, 2013 would apply in the facts of the present case even for A.Y. 2008-09. The basis of the above submission was that the de hors the proviso also the requirements as set out therein would have to be satisfied. HELD by the High Court dismissing the appeal:

(i) We find that the proviso to Section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced “for removal of doubts” or that it is “declaratory”. Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to 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. In any view of the matter the three essential tests while confirming the pre proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied.

(ii) Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in CIT v/s. Lovely Exports (P)Ltd. 317 ITR 218 in the context to the preamended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee’s income as unexplained cash credit.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2019 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Desktop Application Development Outsourcing Desktop Application Development Offshore Desk

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions