M/s. Tara Mercantile Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 1572/DEL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8739 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 16-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Unexplained cash credit; Additional evidence; Fair market value
• Section: 143(3); 142(1); 68; 10

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER I.T.A. NO. 1572/DEL/2017 A.Y. : 2011-12 M/S TARA MERCANTILE PVT. LTD. 314-315, PP TOWER, NETAJI SUBHASH PLACE, PITAMPURA, NEW DELHI 34 (PAN: AAACT2680C) VS. DCIT, CIRCLE 16(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. GAUTAM JAIN, ADV. DEPARTMENT BY : SH. S.S. RANA, CIT(DR) ORDER PER H.S. SIDHU : JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE IMPUG NED ORDER DATED 19.1.2017 PASSED BY THE LD. CIT(A)-9, NEW DELH I ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) ERRED IN FACT AND IN LAW CONFIRMING TH E ADDITION OF RS. 1,12,17,750/- ON ACCOUNT OF SHARE PREMIUM BEING IN EXCESS OF NAV AS UNEXPLAINED CREDIT U/S. 68 OF THE INCOME TAX ACT, 1961. 2. THAT THE LD. CIT(A) ERRED IN FACT AND IN LAW IN CONFI RMING THE ACTION OF THE AO IN INVOKING THE PROVISION OF SECTION 56(2)(VIIB) WHICH IS NOT ONLY ILLEGAL BUT VOID AB IN ITIO AS THE AMENDMENT IS EFFECTIVE FROM 1.4.2013. 2 3. THE ASSESSEE COMPANY HAS CRAVED ITS INDULGENCE TO ALTER, AMEND, DELETE OR TO MAKE ANY ADDITIONAL GROUNDS OF A PPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPA NY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 29.9 .2011 AT DECLARING TOTAL INCOME OF RS. 33,93,309/-. THE CASE OF THE ASSESSEE WAS TAKEN UP UNDER SCRUTINY AND STATUTORY NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) WAS ISSUED TO THE ASSESSEE COMPANY ON 26.9. 2012 AND SERVED UPON THE ASSESSEE COMPANY. LATER ON DETAILED QUEST IONNAIRE DATED 29.10.2013 WAS SENT TO THE ASSESSEE COMPANY ALONGWITH NOTI CE U/S. 142(1) OF THE ACT. IN RESPONSE TO THE SAME THE ASSESSEES AR ATTEN DED THE PROCEEDINGS FROM TIME TO TIME. DURING THE YEAR THE A SSESSEE COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF CHEMICALS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THA T THE ASSESSEE COMPANY HAS RECEIVED A SHARE APPLICATION MONEY OF RS. 1, 25,00,000/-. SUCH SHARE APPLICATION MONEY WAS RECEIVED FOR THE ALLOTM ENT OF 12500 EQUITY SHARE OF RS. 10/- EACH AT A PREMIUM OF 990/-. A O VIDE NOTICE DATED 26.3.2014, ASKED THE ASSESSEE TO ESTABLISH THE CREDIT WORTH INESS AND GENUINENESS OF TRANSACTIONS OF SHARE APPLICATION MONEY F AILING WHICH IT WOULD BE ADDED AS UNEXPLAINED CREDIT. THE ASSESSEE HAS INVITED SHARE APPLICATION AT A PREMIUM OF RS. 990/- AND WAS ASKED TO JUSTIFY TH E REASONS FOR SUCH A HIGH PREMIUM AS NAV COMES TO RS. 20.58. IN RESPONSE TO T HE SAME, THE ASSESSEE HAS SUBMITTED THAT THE DECISION OF THE PREMIUM AMO UNT WHILE 3 ISSUING SHARES IS A PREROGATIVE OF THE BOARD OF DIRECTORS OF THE COMPANY AND SUBSCRIPTION OF SHARES AT A PREMIUM IS THE WISDOM OF THE INVESTORS OF THE SHARE CAPITAL OF THE COMPANY. IT IS A COMMERCIAL DECISION WHICH DOES NOT REQUIRE ANY JUSTIFICATION UNDER ANY LAW. THE BOARD OF DIRECTORS WHILE DECIDING THE PREMIUM AMOUNT CONSIDERED THE PRESENT BUSIN ESS STATUS OF THE COMPANY, FUTURE PROSPECTS OF THE COMPANY AND THE INVESTOR S WERE CONVINCED WITH THE FUTURE POTENTIAL OF THE COMPANY BASED ON WH ICH THE INVESTORS INVESTED IN THE COMPANY. AO AFTER CONSIDERING THE SAME, OBSERVED THAT AFTER INTRODUCTION OF THE PROVISIONS TO SECTION 68 W.E.F. 1.4 .2013, IF CREDIT IN THE BOOKS OF THE COMPANY BY WAY OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY OTHER AMOUNT BY WHATEVER NAME CA LLED THE COMPANY HAS NOT ONLY TO PROVE THE NATURE BUT HAS TO PROVE THE SOURCE OF SUCH CREDIT THE SOURCE OF SUCH SUM. THEREFORE, NOT ONLY THE CREDIT IS TO BE PROVED BUT THE SOURCE OF SUCH CREDIT HAS ALSO BE PROVED. WHETHER THE WORD SOURCE WILL INCLUDE SOURCE OF SOURCE AND WHETHER THE AO CAN GO BEYOND THE SOURCE OF SOURCE AND PROCEED TO THIRD, FOURTH OR FIFTH LAYER WILL AGAIN BE A QUESTION TO BE DECIDED BY THE COURT. BUT THE PROVISO, THOUGH ADDED W.E.F. 1.4.2013 YET THE SAME BEING PROCEDURAL WILL APPLY TO ALL PENDI NG PROCEEDINGS. HENCE, THE AO BY RELYING UPON THE DECISION OF THE HONBLE DE LHI HIGH COURT IN THE CASE OF NOVA PROMOTERS & FINLEASE (P) LTD. ON 15.2.2012 AND HAVING REGARD TO LEGISLATIVE INTENT ESPECIALLY IN LIGHT OF THE FAC T THAT THE ASSESSEE COMPANY ISSUED SHARES AT A PREMIUM OF RS. 900/- PER SHARE, HAS A DDED THE SUM OF 4 RS. 1,21,17,750/- U/S. 68 OF THE ACT VIDE ORDER DATED 31.3.2014 PASSED U/S. 143(3) OF THE ACT. AGAINST THE ASSESSMENT ORDER, THE A SSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER D ATED 19.1.2017 HAS DISMISSED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE ACTIO N OF THE AO. AGGRIEVED WITH THE IMPUGNED ORDER DATED 19.1.2017 A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSESSEE STATED THAT THE SOLITARY ISSUE INVOLVED IN THE INSTANT APPEAL IS REGARD ING AN ADDITION OF RS. 1,21,17,750/- U/S. 68 OF THE ACT AND STATED THAT DURIN G THE YEAR UNDER CONSIDERATION ASSESSEE RAISED SHARE APPLICATION MONEY OF RS. 1,25,00,000/- WHICH WOULD BE EVIDENT FORM PAGE 7-9 OF THE PAPER BO OK FROM FOUR SHARES HOLDERS AND THE SHARES WERE ALLOTTED ON 31.3.2012 WHIC H WOULD BE EVIDENT FROM ANNUAL RETURN AT PAGE NO. 90-94 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT THE SAID ALLOTMENT WAS MADE BY ISSUING SHA RES AT RS. 10/- PER SHARE AND SHARE PREMIUM AT RS. 990/- PER SHARE. HE FURTHER SUBMITTED THAT THE AO HAD MADE THE ADDITION OF RS. 1,21,17,750 /- AND HAS ACCEPTED THE SHARE CAPITAL AND PART SHARE PREMIUM AND WHILE ARR IVING TO THE SAID CONCLUSION HE HELD THAT THE NET ASSET VALUE AS PER EQUIT Y SHARE OF ASSESSEE WAS RS. 30.58 PER SHARE AND, THEREFORE, BALANCE SUM WAS B ROUGHT AS INCOME U/S. 68 OF THE ACT. HE FURTHER SUBMITTED THAT THE AO HAS INVOKED PROVISION TO SECTION 68 AND SECTION 56(2)(VIIA) AND (VIIB) OF TH E ACT. BUT NONE OF THE PROVISIONS ARE APPLICABLE TO THE INSTANT YEAR AND INFA CT THEY ARE APPLICABLE 5 ONLY FOR THE ASSESSMENT YEAR 2013-14. HE FURTHER SUBMIT TED THAT IN IDENTICAL SITUATION THE ITAT, MUMBAI IN THE CASE OF AC IT VS. GOLDMOHUR DESIGN & APPAREL PARK LTD. REPORTED IN 96 TAXMANN.COM 375 HAS DELETED THE ADDITION. HE FURTHER SUBMITTED THAT ASSESSEE ALSO SEEK TO RELY UPON VARIOUS JUDGMENTS VIZ. ACIT VS. SPECTRUM COAL AND POW ER LTD. 62 ITR (TRIB) 184 (DEL.); 54 CCH 0156 (MUM) DCIT VS. VARSITY EDUCATI ON MANAGEMENT (P) LTD.; ITA NO. 2924/MUM/2017 DATED 16.5.2019 DCI T VS. M/S GLADIOUS PROPERTY & INV. (P) LTD.; 176 ITD 15 (MUM) DATED 28 .2.2019 M/S JAYNEER INFRAPOWER AND MULTIVENTURES (P) LTD. VS. DCIT IN WH ICH ON IDENTICAL SITUATION THE ADDITION WAS DELETED BY THE HIGHER COUR TS. IN VIEW OF ABOVE, IT IS SUBMITTED THAT THE ADDITION ON ACCOUNT OF PART SHARE PREMIUM U/S. 68 OF THE ACT IS NOT IN ACCORDANCE WITH LAW AND THEREFORE, THE SAME MAY BE DELETED. 4. ON THE CONTRARY, LD. CIT(DR) HAS STATED THAT THE A SSESSEE ISSUED SHARES OF RS. 10 AT A PREMIUM OF RS. 990 AND AS PER NAV , VALUE OF SHARES COME TO RS. 30.58 AND ASSESEE FAILED TO GIVE ANY JUSTIF ICATION FOR ISSUE OF SHARES AT SUCH A PREMIUM. THEREFORE, THE AO MADE THE A DDITION U/S. 68 OF THE ACT ON THE GROUND THAT THE GENUINENESS OF THE TRAN SACTION WAS NOT PROVE, HE RELIED UPON PROVISO TO SECTION 68. HE FURTHE R SUBMITTED THAT LD. CIT(A) CONFIRMED THE ADDITION AFTER GIVING DETAILED FINDING IN PARA 2.2 TO 2.10 OF THE ORDER BY RELYING UP THE JUDGMENT IN THE CASE OF CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD. (18 TAXMANN.COM 217) OF THE HONBLE DELHI 6 HIGH COURT; CIT VS. GLOBUS SECURITIES & FINANCE (P) LTD. (2014) 41 TAXMANN.COM 465 (DELHI); ITO VS. SBS PROPERTIES AND FI NVEST PVT. LTD. IN ITA NO. 2164/DEL/2008. HE FURTHER SUBMITTED THAT WITH REGARD TO ADDITION MADE U/S. 68 FOLLOWING DECISIONS MAY BE CONSIDERED VIZ. PCIT VS. NRA IRON & STEEL (P) LTD. (2019) 103 TAXMANN.COM 48 (SC); CI T VS. MAF ACADEMY (P) LTD. (361 ITR 258); CIT VS. NAVODAYA CASTE PVT. LTD. (2014) 367 ITR 306 (DELHI); NAVODAYA CASTLE PVT. LTD. VS. CIT (2015) 56 TAXMANN.COM 18 (SC); PRATHAM TELECOM INDIA PVT. LTD. VS. DCIT 2018 TIOL 1 983 HC-MUM-IT. HE FURTHER SUBMITTED THAT WITH REGARD TO SECTION 56(2)(V IIB) FOLLOWING CASES MAY BE CONSIDERED VIZ. SUNRISE ACADEMY OF MEDICAL SPECIALITIE S PVT. LTD. VS. ITO (2018) 96 TAXMANN.COM 43 (KERALA); SUNRISE ACADEMY OF MEDICAL SPECIALITIES INDIA PVT. LTD. VS. ITO (2018) 94 TAXMANN .COM 181 (KERALA) AND AGRO PORTFOLOIO (P) LTD. VS. ITO (2018) 94 TAXMANN.CO M 112 (DELHI.) IN VIEW OF ABOVE, HE REQUESTED THAT THE APPEAL OF THE ASSESSEE M AY BE DISMISSED. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECO RDS ESPECIALLY THE WRITTEN SUBMISSIONS AND THE CASE LAWS CITED THEREIN SUBMIT TED BY BOTH THE PARTIES. WE NOTE THAT THE MAIN ISSUE INVOLVED IN THIS APPEAL IS RELATING TO ADDITION OF RS. 1,21,17,750/- MADE U/S. 68 OF THE ACT AND DURING THIS YEAR ASSESSEE RAISED SHARE APPLICATION MONEY OF RS. 1,25,00,000/ - WHICH IS EVIDENT FROM PAGE 7-9 OF THE PAPER BOOK FROM FOUR SH ARES HOLDERS AND THE SHARES WERE ALLOTTED ON 31.3.2012 WHICH IS EVIDENT FRO M ANNUAL RETURN AT PAGE NO. 90-94 OF THE PAPER BOOK. THE AFORESAID AL LOTMENT WAS MADE BY 7 ISSUING SHARES AT RS. 10/- PER SHARE AND SHARE PREMIUM AT RS. 990/- PER SHARE. THE AO HAD MADE THE ADDITION OF RS. 1,21,17,7 50/- AND HAS ACCEPTED THE SHARE CAPITAL AND PART SHARE PREMIUM AND W HILE ARRIVING TO THE SAID CONCLUSION HE HELD THAT THE NET ASSET VALUE AS PER EQUITY SHARE OF ASSESSEE WAS RS. 30.58 PER SHARE AND, THEREFORE, BALANCE SUM WAS BROUGHT AS INCOME U/S. 68 OF THE ACT. WE FURTHER NOTE THAT AO HAD INVOKED PROVISION TO SECTION 68 AND SECTION 56(2)(VIIA) AND (VII B) OF THE ACT. BUT NONE OF THE PROVISIONS ARE APPLICABLE TO THE INSTANT ASSESSMENT YEAR I.E. 2011-12 AND INFACT THEY ARE APPLICABLE ONLY FOR THE A SSESSMENT YEAR 2013- 14. WE FURTHER FIND THAT ON EXACTLY IDENTICAL SITUATI ON, THE ITAT, MUMBAI IN THE CASE OF ACIT VS. GOLDMOHUR DESIGN & APPAREL PARK L TD. REPORTED IN 96 TAXMANN.COM 375 HAS DELETED THE SIMILAR ADDITION BY O BSERVING AS UNDER:- '3. THE NEXT GROUND RAISED BY THE REVENUE PERTAINS TO DELETING THE ADDITION MADE ON ACCOUNT OF ALLEGED INVESTMENT OF SHARE HOLDERS AS INCOME FROM DISCLOSED SOURCES. THE CRUX OF THE ARGUMENT IS THAT IT IS NOT A CASE OF BOGUS SHARES RATHER T HE ALLEGATIONS ARE WITH RESPECT TO EXCESS SHARE PREMIUM. IT W AS PLEADED THAT THE SOURCE IS NOT IN DOUBT AND THE PREMI UM IS MENTIONED IN THE AGREEMENT. OUR ATTENTION WAS INVITE D TO PAGE 43. 44, 47 AND 66 OF THE PAPER BOOK. IT WAS CONTENDED THAT IT IS GOVERNMENT OWNED COMPANY. ON THE OTHER HAND. THE LD. DR DEFENDED THE ADDITION MADE BY THE LD. ASSESSING OFFICER BY CONTENDING THAT THE TESTS ARC THE SAME EVEN FOR THE GOV ERNMENT COMPANY. RELIACEN WAS PLACED UPON THE DECISION PRECISION FINANCE (P) LTD. (SUPRA), VIR BHAN AND SONS (SUPRA)_ AND CIT 8 VS. JANSAMPARK ADVERTISING AND MARKETING (P) LTD. (2 015) 56 TAXMANN.COM 286/231 TAXMAN 384/375 ITR 373 (DELHI). . 3.3. IF THE AFORESAID FACTUAL MATRIX IS ANALYZED, THE NET ASSET VALUE OF SHARES AS ON 31/0312008 COMES TO RS. 33/- AS THE TOTAL ASSE T IS RS. 19.30,70,518/-, WHEREAS, THE PREMIUM CHARGED PER SH ARE IS RS. 154.72, THUS, THE EXCESS PREMIUM CHARGED COMES TO RS. 121.72 RESULTING INTO TOTAL EXCESS PREMIUM COMES TO RS. 34,89,10,380. HOWEVER, WE NOTE THAT AS PER THE PROVISI ONS OF SECTION 56(2)(VIIB), WHERE A COMPANY, NOT BEING A COMPA NY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, RECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON BEING A RESIDENT, ANY CONSIDERATION FOR ISSUE OF SHARES THAT EXCEEDS THE FACE VAL UE OF SUCH SHARES, THE AGGREGATE CONSIDERATION RECEIVE FOR SUCH SHA RE AS EXCEED THE FAIR MARKET VALUE OF SUCH SHARE WAS INSERTED BY THE FINANCE ACT, 2012, W.E.F, 0L/04/2013 AND THE PRESE NT ASSESSMENT YEAR BEFORE US IS 2009-10, THEREFORE, THE AMENDMENT MADE IN SECTION 68 IS PROSPECTIVE IN NATURE. O UR VIEW FIND SUPPORTS FROM THE DECISION IN THE CASE OF ACIT VS. GAGANDEEP INFRASTRUCTURE (P) LTD. (ITA APPEAL NO. 578 4 (MUM) OF 2011, DATED 23.4.2014), WHEREIN THE FACT ARE IDEN TICAL. THE HONBLE BOMBAY HIGH COURT IN CIT VS. GANDEEP INFRASTR UCTURE (P) LTD. (2017) 80 TAXMANN.COM 271 /247 TAXMANN 245/ 394 ITR 680 (BOM) HELD AS UNDER:- IN THE AFORESAID CASE, THE HON'BLE HIGH COURT HELD THAT THE THREE ESSENTIAL TESTS WHILE CON TINNING THE SECTION 68 LAI D DOWN BY THE COUL1 NAMELY THE GENUINENESS OF THE TRANSACTION, IDENTITY AND THE CAPACITY OF THE INVESTOR HAVE ALL BEE N EXAMINED 9 BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACT I T WAS FOUND SATISFIED. FURTHER IT WAS A SUBMISSION ON BEHALF OF THE R EVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SUSP ICION ON THE GENUINENESS (IDENTITY) OF THE SHAREHOLDERS. I. E. THEY ARE BOGUS. THE APEX COURT IN A CASE IN THIS CONTEXT TO THE P RE- AMENDED SECTION 68 HAS HELD THAT WHERE THE REVENUE URG ES THAT THE AMOUNT OF SHARE APPLICATION MONEY HAS BEEN RECEIVE D FROM BOGUS SHAREHOLDERS THEN IT IS FOR THE INCOME- TAX OFFIC ER TO PROCEED BY REOPENING THE ASSESSMENT OF SUCH SHAREHOLDER AND ASSESSING OFFICER TO TAX IN ACCORDANCE WITH LAW. IT DOES NO T ENTITLE THE REVENUE TO ADD THE SAME TO THE ASSESSEE'S INCO ME AS UNEXPLAINED CASH CREDIT. INCIDENTALLY IN THE CASEOF GRE EN INFRA VS. ITO (2013) 38 TAXMAN.COM 253/145 ITD 240 (MUM. - TRIB.), DECIDED IN FAVOUR OF THE ASSESSEE AND THIS ORDER WAS CONFIR MED BY HONBLE HIGH COURT IN CIT VS. GREEN INFRA LTD. (201 7) 78 TAXMANN.COM 340 392 LTR 7 (BORN.). THE RATIO LAID DO WN IN PR. CIT VS. APEAK INFOTECH (2017) 88 TAXMANN.COM 695/397 I TR 148 (BOMBAY) HIGH COURT) AND HONBLE MADRAS HIGH COURT IN CIT VS. PRANAV FOUNDATIONS LTD. (2014) 51 TAXMANN.COM 198/ 2015 229 TAXMAN 58 FURTHER SUPPORTS THE CASE OF THE ASSESSEE. TH US, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) , THUS THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 5.1 WE FURTHER NOTE THAT THE ITAT, DELHI IN THE CASE OF ACLT VS. SPECTRUM COAL AND POWER LTD. HAS HELD AS UNDER:- 39. IT MAY BE ALSO BE NOTED HERE AT A.O. HAS REFERRED TO PROVISIONS OF SECTION 56(2)(VIIB) OF THE LT. ACT IN THE ASSESSMENT ORDER BUT HE DID NOT MAKE ANY ADDITION AGAINST THE A SSESSEE UNDER THIS PROVISION BECAUSE ULTIMATELY THE ADDITION I S MADE 10 UNDER SECTION 68 OF THE LT. ACT. NO GROUND OF APPEAL HAVE ALSO BEEN RAISED BY THE REVENUE FOR INVOKING THE PROVISIO NS OF SECTION 56(2)(VIIB) OF THE LT. ACT AGAINST THE ASSESSEE. THE LD. CIT(A) ALSO DISCUSSED THIS ISSUE IN THE APPELLATE ORDER AND CORRECT LY FOUND THAT THE SAID PROVISION WAS NOTIFIED BY THE CB DT VIDE NOTIFICATION DATED 29.11.2012, THE SAID PROVISION WO ULD COME INTO EFFECT W.E.F. A.Y. 2013-2014 I.E., FROM 0L.04.2 013 FOR DEALING WITH SHARE PREMIUM. OTHERWISE, THERE WERE NO PROVISION PRIOR TO IT TO GOVERN SHARE PREMIUM. THE CBDT IN ITS CIRCULAR NO.2/15 DATED 30.01.2015 ACCEPTED THE DECISION OF BOMB AY HIGH COURT IN CASE OF VODAFONE INDIA SERVICES P. LTD., ( SUPRA) IN WHICH IT WAS HELD THAT 'PREMIUM ON SHARE ISSUE WAS ON A CCOUNT OF CAPITAL ACCOUNT TRANSACTION AND DOES NOT GIVE RISE TO I NCOME.' THEREFORE, NO INFIRMITY HAVE BEEN POINTED IN THE OR DER OF THE LD. CIT(A) WITH REFERENCE TO PROVISIONS OF SECTION 56(II)(VI IB) OF THE I.T. ACT. THE LD. D.R. HAS ALSO NOT POINTED OUT AS TO W HICH ADDITIONAL DOCUMENTS HAVE BEEN CONSIDERED BY THE LD. CI T(A) AT APPELLATE STAGE WHICH WERE NOT SUBMITTED BEFORE A.O. A T THE ASSESSMENT STAGE. IN THE ABSENCE OF ANY SUBSTANTIAL POINT T O HIGHLIGHT AS TO WHICH ADDITIONAL EVIDENCES HAVE BEEN CONSIDERED AT APPELLATE STAGE, WE DO NOT FIND IF THERE IS ANY VI OLATION OF RULE 46A OF THE LT. RULES IN THE MATTER. THE DECISIONS RELIE D UPON BY LD. D.R. WOULD NOT SUPPORT THE CASE OF THE REVENUE WHI CH ARE DISTINGUISHABLE ON FACTS AND IN VIEW OF THE FACT THAT NO ENQUIRY HAVE BEEN CONDUCTED BY THE A.O. IN THIS CASE TO DISPUTE T HE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE. THE LD. CLT(A ) DISCUSSED ALL CASE LAWS RELIED ON BY A.O. THE MATERIAL ON RECORD CLEARLY SUPPORT THE EXPLANATION OF ASSESSEE THAT NOT ONL Y IN ASSESSMENT YEAR UNDER APPEAL BUT IN EARLIER YEARS ALSO, MIS. STL 11 MADE INVESTMENT IN ASSESSEE COMPANY THROUGH BANKING CHANN EL SUPPORTED BY THE DOCUMENTARY EVIDENCE. THE LD. CLT(A) ON PROPER APPRECIATION OF THE EVIDENCE BEFORE HIM, CORRECT LY DELETED THE ADDITION. THEREFORE, NO INTERFERENCE IS REQUIRED IN THE FINDING OF FACT RECORDED BY THE LD. CIT(A). THE DEPARTMENTAL APPEAL HAS NO MERIT. SAME IS ACCORDINGLY DISMISSED. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED. 5.2 WE FURTHER NOTE THAT ITAT, MUMBAI IN THE CASE OF DCIT VS. VARSITY EDUCATION MANAGEMENT (P) LTD. 54 CCH 0156 (MUM) HAS OBSERVED AS UNDER:- 40. THE AMENDMENT BROUGHT IN SEC.68 OF THE ACT W.E.F. 1.4.2013 HAS BEEN HELD TO BE APPLICABLE FROM AY 2013-14 ONWARD S BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF GAGANDEEP INFRASTRUCTURE P LTD (SUPRA). EVEN OTHERWISE, THE AMEN DMENT WILL NOT APPLY TO THE ASSESSEE HEREIN AS THE INVESTOR IS A SEBI REGISTERED VENTURE CAPITAL FUND. THE AMENDMENT BROUG HT IN SEC. 2(24) AND SEC.56(2)(VII) OF THE ACT RELATING TO ASSESSING OF EXCESS SHARE PREMIUM AS INCOME, HAS BEEN HELD TO BE APPLICA BLE FROM A Y 2013-14 ONWARDS AS HELD BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF APEAK INFOTECH (SUPRA).WE HAVE SEE N THAT THE AO HIMSELF HAS ACCEPTED THE QUANTUM OF SHARE PREMI UM IN A Y 2014-15 AND FURTHER THE ACTUAL FINANCIAL RESULTS HAVE FAR EXCEEDED THE FINANCIAL PROJECTIONS III) ITA NO. 29241MUM/2017 DATED 16.5.2019 DCIT VS. MIS GLADIOUS ` PROPERTY & INV. (P) LTD. (PAGES 240-260 OF JPB) 12 ANOTHER ASPECT OF THIS IS THAT THE PROVISIONS OF SECTION 56(2)(VIIB) WERE APPLICABLE ONLY WITH EFFECT FROM 01/ 04/2013 AND THE SAME WERE NOT APPLICABLE DURING IMPUGNED A Y. IV) 176 LTD 15 (MUM) DATED 28.2.2019 M/S JAYNEER LN FRAPOWER & MULTIVENTURES (P). LTD. VS. DCIT SECTION 56(2)(VIIB) OF THE ACT WHICH SEEKS TO TAX AMOU NT RECEIVED IN EXCESS OF FAIR MARKET VALUE OF SHARES ONLY A PPLIES FROM ASSESSMENT YEAR 2013-14. HENCE, SECTION 56(2)(VIIB) O F THE ACT CANNOT BE RESORTED TO IN THE INSTANT ASSESSMENT YE AR 2012-13 UNDER CONSIDERATION. THEREFORE, SHARE PREMIUM IS NOT CHARGEABLE TO TAX. EVEN IF THE SHARE PREMIUM IS EXCESSIVE , THE SAME CANNOT BE TAXED UNDER THE PROVISIONS OF SECTION 68 DURING THE A.Y. 2012-13 UNDER CONSIDERATION, SINCE THE NATURE AND SOURCE OF THE SAME STANDS FULLY EXPLAINED. THIS CONTENTION IS DULY SUPPORTED BY THE DECISION OF THE MUMBAI TRIBUNAL IN TH E CASE OF DCTT V S. VARSITY EDUCATION MANAGEMENT PVT. LTD. [ITA 6991/MUM/2016]. ACCORDINGLY, WE DIRECT THE ASSESSING OFFI CER TO DELETE THE ADDITION MADE ON ACCOUNT OF SHARE PREMIUM R ECEIVED BY THE ASSESSEE AMOUNTING TO RS. 34,99,65,000/-. 6. WE FURTHER NOTE THAT THE OTHER JUDICIAL DECISIONS R ELIED UPON BY THE REPRESENTATIVES OF BOTH THE SIDES HAVE BEEN DULY CONSI DERED. IN OUR CONSIDERED VIEW, WE DO NOT FIND ANY PARITY IN THE FAC TS OF THE DECISIONS RELIED UPON WITH THE PECULIAR FACTS OF THE CASE IN HAND. 7. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CA SE AND RESPECTFULLY FOLLOWING THE AFORESAID PRECEDENTS INCLUDING THE ITAT, MUMBAI 13 DECISION IN THE CASE OF ACIT VS. GOLDMOHUR DESIGN & APPAR EL PARK LTD. REPORTED IN 96 TAXMANN.COM 375 AND THE ITAT, DELHI BENCH DECISION IN THE CASE OF ACIT VS. SPECTRUM COAL AND POWER LTD. IN WHICH VARIOUS CASE LAWS OF THE TRIBUNAL, AS WELL AS HONBLE HIGH COURTS HAVE BEEN F OLLOWED BY THE TRIBUNAL, WE ARE OF THE CONSIDERED VIEW THAT THE ADD ITION IN DISPUTE ON ACCOUNT OF PART SHARE PREMIUM U/S. 68 OF THE ACT WHIC H IS NOT MADE IN ACCORDANCE WITH LAW AND THEREFORE, THE SAME IS HEREBY DE LETED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAN DS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/07/2019. SD/- SD/- [B.R.R. KUMAR] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 12/07/2019 SRB COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES