ITO, Ward-10(4), Kolkata, Kolkata V. M/s Tanish Dealers Pvt. Ltd., Kolkata

ITA 1636/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0145 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: D S DAMLE
• Keywords: Source of fund; Retrospective amendment; Question of law; Fair market value; Capital receipt
• Section: 143(3); 260A; 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI A T VARKEY, JM, & SHRI M.BAL AGANESH, AM] I.T.A NO. 1636/KOL/20 16 ASSESSMENT YEAR : 2012-1 3 ITO, WARD-10(4), KOLKATA -VS- M/S TANISH DEALE RS PVT. LTD. [PAN: AADCT 1242 K ] (APPELLANT) (RESP ONDENT) FOR THE APPELLANT : SHRI SAURABH KUMAR , ADDL. CIT SR. DR FOR THE RESPONDENT : SHRI D.S. DAMLE, FCA DATE OF HEARING : 28.11.2018 DATE OF PRONOUNCEMENT : 07.12.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE O RDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-4, KOLKATA [IN SHORT THE LD CIT (A)] IN APPEAL NO. 247/ CIT(A)- 4/WARD-10(4)/KOL/15-16 DATED 26.05.2016 AGAINST TH E ORDER PASSED BY THE ITO, WARD- 10(4), KOLKATA [ IN SHORT THE LD AO] UNDER SECTIO N 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 12.03.2015 FOR THE ASS ESSMENT YEAR 2012-13. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION MADE IN THE SUM OF RS 1,98 ,00,000/- TOWARDS SHARE PREMIUM U/S 68 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.1636/KOL/2016 M/S TANISH DEALERS PVT. LTD. A.YR. 2012-13 2 3. THE BRIEF FACTS OF THIS APPEAL ARE THAT THE ASSE SSEE COMPANY FILED ITS RETURN FOR THE ASST YEAR 2012-13 ON 22.9.2012 DECLARING TOTAL INCO ME OF RS 3,46,856/-. THE LD. AO OBSERVED THAT SINCE THERE WAS NO SUBSTANTIAL BUSINE SS ACTIVITY EXCEPT PROFIT ON SALE OF INVESTMENT CARRIED ON BY THE ASSESSEE, THE ASSESSEE COMPANY CANNOT COMMAND HUGE SHARE PREMIUM. ACCORDINGLY HE SOUGHT TO VERIFY THE VERACITY OF THE SHARE CAPITAL AND SHARE PREMIUM RAISED BY THE ASSESSEE. THE ASSESSEE SUBMITTED THAT IT IS ENGAGED IN THE BUSINESS OF INVESTMENT IN UNQUOTED EQUITY SHARES OF COMPANIES AND PROPERTIES. THE ASSESSEE RAISED SHARE CAPITAL AND SHARE PREMIUM FRO M 18 CORPORATE ENTITIES. THE ASSESSEE COMPANY ISSUED 220000 EQUITY SHARES OF RS 10 EACH AT A PREMIUM OF RS 90 PER SHARE TOTALING TO RS 2,20,00,000/-. OUT OF THIS, T OTAL SUM OF RS. 2,20,00,000/- A SUM OF RS. 22,00,000/- WAS ATTRIBUTED TOWARDS SHARE CAPITA L AND REMAINING SUM OF RS. 1,98,00,000/- WAS ATTRIBUTED TOWARDS SHARE PREMIUM. THE LD AO ADMITTED IN HIS ORDER THAT IN SUPPORT OF SHARE SUBSCRIPTIONS RECEIVED , T HE ASSESSEE COMPANY HAD FURNISHED DOCUMENTS SUPPORTING THE PAYMENT OF SHARE SUBSCRIPT ION AMOUNTS BY SHARE SUBSCRIBERS. NOTICE U/S 133(6) OF THE ACT WERE ISSUED TO ALL THE SHAREHOLDERS WHICH WERE DULY REPLIED BY THEM DIRECTLY BEFORE THE LD. AO. THE LD. AO OBSE RVED THAT REPLY SENT BY THE SHARE HOLDERS WERE ALMOST IDENTICAL IN STYLE AND SUBMITTE D ALMOST AT THE SAME POINT OF TIME. EVEN ADDRESS OF THE REGISTERED OFFICE OF SOME OF TH E COMPANIES WERE SAME WITH COMMON DIRECTORS. ACCORDINGLY, THE LD. AO ALLEGED ON THE C ONNIVANCE OF THE ASSESSEE WITH THE SHAREHOLDER COMPANIES. THE SUMMONS U/S 131 OF THE A CT WAS ISSUED TO THE DIRECTORS OF THE ASSESSEE COMPANY TO EXAMINE THE RECEIPT OF PREM IUM AND THE ASSESSEE WAS ALSO DIRECTED TO PRODUCE THE DIRECTORS OF THE SHARE HOLD ER COMPANIES FOR EXAMINATION OF IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWOR THINESS OF THE INVESTORS. THE LD. AO OBSERVED THAT THE SUMMONS ISSUED U/S 131 OF THE ACT REMAINED UNCOMPLIED AND THE ASSESSEE DID NOT PRODUCE THE DIRECTORS OF THE INVES TOR COMPANIES BEFORE THE LD AO. FOR NON-COMPLIANCE OF THE SUMMONS U/S 131 OF THE ACT, B Y NOT PRODUCING THE DIRECTORS OF THE SHARE HOLDER COMPANIES, THE LD. AO CONCLUDED TH AT THE SHARE PREMIUM RAISED BY THE ASSESSEE IN THE SUM OF RS. 1,98,00,000/- AS UNEXPLA INED CASH CREDIT U/S 68 OF THE ACT. 3 ITA NO.1636/KOL/2016 M/S TANISH DEALERS PVT. LTD. A.YR. 2012-13 3 THE LD. AO HOWEVER ACCEPTED THE RECEIPT OF SHARE CA PITAL IN THE SUM OF RS. 22,00,000/- FROM THE VERY SAME SHAREHOLDERS AS GENUINE IN THE A SSESSMENT. 4. THE ASSESSEE PLEADED BEFORE THE LD. CIT(A) THAT IT HAD FURNISHED VARIOUS DOCUMENTARY EVIDENCES SUBSTANTIATING THE SHARE CAPITAL ALONG WI TH SHARE PREMIUM. THE DOCUMENTS SO FURNISHED INTER ALIA INCLUDED COPIES OF LETTERS OF ALLOTMENT, COPIES OF RELEVANT BANK STATEMENTS IN RESPECT OF ACCOUNTS FROM WHICH SHARE APPLICATION MONIES WERE PAID, PAN AND ADDRESS OF THE SHARE SUBSCRIBERS FOR THE YEAR E NDED 31.3.2012, EXPLANATION REGARDING THE IMMEDIATE SOURCE OF PAYMENT OF SHARE APPLICATIO N MONIES, AUDITED FINANCIAL STATEMENTS AND ITR ACKNOWLEDGEMENTS FOR FILING OF R ETURN FOR ASST YEAR 2012-13 OF THE SHARE APPLICANTS. THE ASSESSEE ALSO FURNISHED A COP Y OF RETURN FILED, ALLOTMENT OF SHARES IN FORM NO. 2 FILED WITH ROC. THE ASSESSEE ALSO SUB MITTED EACH OF THE ASSESSEE SUBSCRIBER COMPANY WAS REGULARLY ASSESSED TO INCOME TAX AND THE PAYMENTS TOWARDS SHARE CAPITAL AND SHARE PREMIUM AMOUNTS WERE MADE B Y THEM TO THE ASSESSEE THROUGH THEIR RESPECTIVE BANK ACCOUNTS. IT WAS ALSO SUBMITT ED THAT THE NOTICE ISSUED U/S 133(6) OF THE ACT TO THE SHARE SUBSCRIBERS INDEPENDENTLY WERE DULY COMPLIED WITH BY THEM BEFORE THE LD. AO. IT WAS SUBMITTED THAT THE SUMMONS U/S 131 OF THE ACT WAS ISSUED ASKING THE DIRECTORS OF THE ASSESSEE COMPANY TO APPEAR BEFORE THE LD AO. THE DIRECTOR OF THE ASSESSEE COMPANY APPEARED BEFORE THE LD AO FOR GIVI NG HIS DEPOSITION ALONG WITH HIS IDENTITY PROOF, COPY OF BANK STATEMENT OF THE ASSES SEE COMPANY SUPPORTED BY THE BANK LEDGER AND SHARE SUBSCRIBERS LEDGER BUT THE LD AO DID NOT GAVE HIM AN OPPORTUNITY TO PRESENT HIS CASE BEFORE HIM. LATER THE DIRECTOR OF THE ASSESSEE COMPANY FURNISHED THE EXPLANATION AND THE DETAILS CALLED FOR IN SUMMONS U /S 131 OF THE ACT IN WRITING AS DIRECTED BY THE LD AO. IT WAS PLEADED THAT APART FROM THE AFORESAID DOCUMENTS, CONFIRMATIONS TOGETHER WITH EXPLANATION WITH REGARD TO IMMEDIATE SOURCES OF PAYMENT OF SHARE PREMIUM WERE ALSO FURNISHED BEFORE THE LD. AO. IT WAS PLEADED THAT THE ASSESSEE ALSO PLACED ON RECORD THE FACT THAT THE IN VESTOR COMPANIES HAD SUFFICIENT INVESTIBLE FUNDS TO MAKE INVESTMENT IN THE ASSESSEE COMPANY THEREBY PROVING THEIR 4 ITA NO.1636/KOL/2016 M/S TANISH DEALERS PVT. LTD. A.YR. 2012-13 4 CREDITWORTHINESS BEYOND DOUBT. IT WAS SUBMITTED THA T FROM THE AFORESAID DOCUMENTS AND EVIDENCES, THE IDENTITY AND CREDITWORTHINESS OF THE SHARE SUBSCRIBERS STAND CONCLUSIVELY PROVED TOGETHER WITH THE GENUINENESS OF THE TRANSAC TION. IT WAS SUBMITTED THAT THE SHARE SUBSCRIBERS HAD EVEN ESTABLISHED THE SOURCE OF SOUR CE OF FUNDS IN THE INSTANT CASE. NO LACUNA, INFIRMITY, FALSITY OR DEFECT WAS ESTABLISHE D OR PROVED IN THE EVIDENCES PLACED ON RECORD NOR WAS THE LD. AO ABLE TO PROVE ANY FALSITY IN THE EXPLANATION FURNISHED BY THE SHARE APPLICANTS IN RESPECT OF SOURCE AND/OR THE SO URCE OF SOURCE OF INVESTMENTS. IT WAS PLEADED THAT THE LD AOS SOLE PREMISE FOR MAKING TH E ADDITION WAS THAT THE ASSESSEE FAILED TO JUSTIFY THE REASONS FOR ISSUING SHARES AT A PREMIUM WAS CONTRARY TO THE JURISDICTIONAL FACTS AVAILABLE ON RECORD. ALL THE SHARES WHICH WERE ISSUED BY THE COMPANY WERE AT THE SAME VALUE TO ALL THE SHAREHOLD ERS. IT WAS THE JOINT CALL OF ALL THE SUBSCRIBING SHAREHOLDERS TO DECIDE THE VALUE OF THE SHARE ISSUE. ALL THE SHAREHOLDERS CONSENTED TO THE SAME AND ACCORDINGLY IT WAS ISSUED AT THE SAME VALUE. THERE WAS NO DISCRIMINATION WHATSOEVER. IT WAS POINTED OUT THAT THERE WAS NO BAR IN THE COMPANIES ACT, 1956 TO ISSUE SHARES AT A PREMIUM ESPECIALLY W HEN ALL THE SHAREHOLDERS ARE BEING CHARGED THE SAME PRICE. IT WAS SUBMITTED THAT THE A SSESSEE ALSO DID NOT WANT TO HAVE A LARGE EQUITY BASE SINCE THE SERVICING COST WOULD HA VE ALSO BEEN CORRESPONDINGLY HIGH. THE ASSESSEE WAS CONTEMPLATING TO MAKE AN INITIAL P UBLIC OFFER (IPO) IN FUTURE. IF THE ASSESSEE HAD CREATED A LARGE EQUITY BASE, THEN THE SERVICING COST BY WAY OF DIVIDEND WOULD HAVE BEEN SUBSTANTIALLY HIGH. THE ASSESSEE T HEREFORE WANTED TO REDUCE THE SERVICING COST OF EQUITY CAPITAL BASE AND THEREFORE SHARES HAVING FACE VALUE OF RS 10 EACH WERE ISSUED AT PREMIUM OF RS 90 PER SHARE. THE ASSESSEE PLACED RELIANCE ON THE DECISION OF VARIOUS HIGH COURTS INCLUDING HONBLE J URISDICTIONAL HIGH COURT IN SUPPORT OF ITS CONTENTIONS. THE ASSESSEE SPECIFICALLY ARGUE D BEFORE THE LD. CIT(A) THAT THE ALLOTMENT OF SHARES AT A PREMIUM CANNOT BE CONSIDER ED AS SHAM OR INCOME OF THE ASSESSEE. IT WAS PLEADED THAT IN THE INSTANT CA SE, THE ASSESSEE HAD EVEN JUSTIFIED WITH COGENT REASONS FOR ISSUANCE OF SHARES AT PREMIUM AN D THAT THE PREMIUM WAS CHARGED AT THE SAME RATE FOR ALL THE SHAREHOLDERS. 5 ITA NO.1636/KOL/2016 M/S TANISH DEALERS PVT. LTD. A.YR. 2012-13 5 5. THE LD. CIT(A) OBSERVED THAT THE LD. AO HAD ADJU DICATED THE ISSUE WITH A PRE- DETERMINED STATE OF MIND THAT THE SHARE PREMIUM REC EIVED BY THE ASSESSEE IS NOT GENUINE. HE ALSO OBSERVED THAT THE LD. AO HELD THAT THE SHAREHOLDERS DID NOT EXIST AND THE TRANSACTIONS WERE ACCORDINGLY AN EYE WASH ONLY FOR BRINGING THE BLACK MONEY OF THE ASSESSEE ONLY INTO THE COMPANY IN THE GARB OF SHARE CAPITAL AND SHARE PREMIUM. THE LD. CIT(A) GAVE A CATEGORICAL FINDING THAT EACH OF THE SHARE SUBSCRIBERS ARE REGULARLY ASSESSED TO INCOME TAX AND THAT THE INVESTMENTS MAD E BY EACH OF THEM WERE DULY AND FULLY REFLECTED IN THEIR AUDITED BOOKS OF ACCOUNTS AS WELL AS IN THEIR INCOME TAX RETURNS WHICH ARE PART OF THE PAPER BOOK. THE NOTICES U/S 1 33(6) OF THE ACT ISSUED BY THE LD. AO TO EACH OF THE SHARE SUBSCRIBERS ALSO STOOD DULY CO MPLIED WITH. HE HELD THAT EACH OF THE SHARE APPLICANTS MAINTAINED BANK STATEMENT , FROM W HERE, IT IS EVIDENT THAT ALL THE TRANSACTIONS WERE ROUTED THROUGH PROPER BANKING CHA NNELS AND DULY REFLECTED IN THEIR RESPECTIVE BOOKS OF ACCOUNTS WHICH PROVES THE GENUI NENESS OF THE TRANSACTION BEYOND DOUBT. HE ALSO OBSERVED THAT ALL THE SHARE APPLICAN TS EXPLAINED THEIR RESPECTIVE SOURCE OF FUNDS IN THEIR REPLIES TO 133(6) NOTICE DIRECTLY BE FORE THE LD. AO AND THAT THE NET WORTH OF EACH OF THE SHARE SUBSCRIBERS ARE FAR HIGHER THA N THE AMOUNT OF INVESTMENTS MADE BY THEM IN THE ASSESSEE COMPANY, WHICH CLEARLY PROVED THE CREDITWORTHINESS OF THE SHARE SUBSCRIBERS TO MAKE INVESTMENTS IN THE ASSESSEE COM PANY. HE HELD THAT THE VERY FACT THAT NOTICES U/S 133(6) WERE DULY SERVED ON THE RESPECTI VE SHARE SUBSCRIBERS AND THAT THEY WERE DULY REPLIED WITH BY THEM DIRECTLY BEFORE THE LD. AO, PROVES THEIR IDENTITY BEYOND DOUBT. HENCE, HE HELD THAT ALL THE THREE INGREDIENT S OF SECTION 68 NAMELY THE IDENTITY OF THE SHARE SUBSCRIBERS, CREDITWORTHINESS OF THE SHAR E SUBSCRIBERS AND GENUINENESS OF THE TRANSACTION WERE PROVED IN THE INSTANT CASE BY THE ASSESSEE. 5.1. THE LD. CIT(A) GAVE A CATEGORICAL FINDING THAT THE LD. AO HAD NOT DOUBTED THE IDENTITY AND CREDITWORTHINESS OF THE SHARE SUBSCRIB ERS AND THE GENUINENESS OF THE TRANSACTIONS IN RESPECT OF RECEIPT OF SHARE CAPITAL IN THE SUM OF RS. 22,00,000/-. WHILE 6 ITA NO.1636/KOL/2016 M/S TANISH DEALERS PVT. LTD. A.YR. 2012-13 6 THAT IS SO, HOW CAN THE SAME BE DOUBTED FOR THE PUR POSE OF RECEIPT OF SHARE PREMIUM ALONE. ACCORDINGLY HE DELETED THE ADDITION MADE ON ACCOUNT OF SHARE PREMIUM TO THE TUNE OF RS. 1,98,00,000/- FOR THE YEAR UNDER APPEAL . AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FACT ST ATED HEREINABOVE REMAIN UNDISPUTED BEFORE US BY EITHER OF THE PARTIES AND HENCE THE SA ME ARE NOT REITERATED FOR THE SAKE OF BREVITY. AT THE OUTSET, WE FIND THAT THE ASSESSEE H AD RECEIVED SHARE CAPITAL OF RS. 22,00,000/- FROM 18 CORPORATE ENTITIES AND RS. 1,98 ,00,000/- FROM THE VERY SAME SHAREHOLDERS TOWARDS SHARE PREMIUM. THE SHARE CAPI TAL RECEIVED BY THE ASSESSEE HAS BEEN DULY ACCEPTED BY THE LD. AO WITHIN THE KEN OF SECTION 68 OF THE ACT. HOWEVER, SHARE PREMIUM COMPONENT HAS BEEN DOUBTED BY THE LD. AO. WE FIND THAT THE ASSESSEE IN THE INSTANT CASE HAD DULY COMPLIED WITH BY FURNISHI NG THE COMPLETE DETAILS OF SHARE SUBSCRIBERS TO PROVE THEIR IDENTITY, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF SHARE SUBSCRIBERS BEYOND DOUBT. THESE ARE DULY S UPPORTED BY THE DOCUMENTARY EVIDENCES. THE LD. AO HAD NOT FOUND ANY FALSITY OR ANY ADVERSE INFERENCE OF THE SAID DOCUMENTS. WE FIND THAT THE LD. CIT(A) HAD PLACED HEAVY RELIANCE ON THESE DOCUMENTS AND HAD GRANTED RELIEF TO THE ASSESSEE. ALL THE SHA RE SUBSCRIBERS ARE DULY ASSESSED TO INCOME TAX AND THE TRANSACTION WITH THE ASSESSEE CO MPANY ARE DULY ROUTED THROUGH BANKING CHANNELS AND ARE DULY REFLECTED IN THEIR RE SPECTIVE AUDITED BALANCE SHEETS WHICH ARE ALSO PLACED ON RECORD BEFORE US. IN ANY CASE, O NCE THE RECEIPT OF SHARE CAPITAL HAS BEEN ACCEPTED AS GENUINE WITHIN THE KEN OF SECTION 68 OF THE ACT, THERE IS NO REASON FOR THE LD. AO TO DOUBT THE SHARE PREMIUM COMPONENT REC EIVED FROM THE VERY SAME SHAREHOLDERS AS BOGUS. WE HELD THAT ALL THE THREE N ECESSARY INGREDIENTS OF SECTION 68 HAD BEEN DULY COMPLIED WITH BY THE ASSESSEE WITH PROPER DOCUMENTARY EVIDENCES. WE FIND THAT NOTICES ISSUED U/S 133(6) HAVE BEEN DULY COMPL IED WITH. WE FIND THAT THE DIRECTOR OF THE ASSESSEE COMPANY WAS PRESENT BEFORE THE LD AO A ND THE ASSESSEE HAD SUBMITTED THAT THE LD AO HAD INFORMED THEM TO FILE THE NECESSARY D ETAILS CALLED FOR IN THE SUMMONS U/S 7 ITA NO.1636/KOL/2016 M/S TANISH DEALERS PVT. LTD. A.YR. 2012-13 7 131 OF THE ACT IN HIS OFFICE THROUGH PROPER MODE IN TAPAL, WHICH WAS ACCORDINGLY DONE BY HIM. IT WAS ALSO SUBMITTED THAT THE DIRECTOR OF THE ASSESSEE COMPANY OFFERED HIMSELF FOR DEPOSITION WHICH WAS REFUSED BY THE LD AO. THI S FACT WAS NOT CONTROVERTED BY THE REVENUE BEFORE US. IN OUR CONSIDERED OPINION, FOR T HIS REASON ALONE, THERE CANNOT BE ANY ADDITION U/S 68 OF THE ACT IN THE FACTS OF THE INST ANT CASE. WE FIND THAT THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF NOVO PROMOT ERS AND FINELEASE PVT. LTD. REPORTED IN 342 ITR 169 (DEL) VEHEMENTLY RELIED UPO N BY THE LD. DR BEFORE US, IS NOT APPLICABLE IN THE INSTANT CASE, AS IN THE FACTS BEF ORE THE HONBLE DELHI HIGH COURT, THE NOTICES U/S 133(6) HAVE NOT BEEN DULY COMPLIED WITH . HENCE THE DECISION RENDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE REFERRED T O SUPRA IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE AND IS FACTUALLY DISTINGHUISHAB LE.. 6.1. WE FIND THAT THE RELIANCE PLACED BY THE LD. AR IN THE DECISION OF HONBLE BOMBAY HIGH COURT IN PR. CIT VS. APEAK INFOTECH REPORTED I N 88 TAXMANN.COM 695 DT 08.06.2017 WHEREIN THE QUESTION RAISED BEFORE THE H ONBLE BOMBAY HIGH COURT ARE AS UNDER: A. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE TRIBUNAL WAS CORRECT TO UPHOLD THE DECISION ON COMMISSIONER OF I NCOME TAX (APPEALS) THAT THE SHARE PREMIUM RECEIVED BY THE ASSESSEE-COMPANY CANNOT BE TAXED UNDER SECTION 68 OF THE ACT IGNORING THE RATIO LAID DOWN BY THIS COURT IN ITS D ECISION REPORTED IN THE CASE OF MAJOR METALS LTD. VS. UNION OF INDIA [2013] 359 ITR 450 ( BOM)? B. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE TRIBUNAL AS WELL AS THE COMMISSIONER OF INCOME TAX (APPEALS) WAS RIG HT IN DELETING ADDITION MADE BY THE ASSESSING OFFICER, BY HOLDING THAT THE SHARE PR EMIUM RECEIPT IS CAPITAL IN NATURE? THE HONBLE COURT HELD AS UNDER: REGARDING QUESTION A : (A) THE ISSUE RAISED BY THE REVENUE IN THIS QUES TION IS TO BRING TO TAX THE SHARE PREMIUM RECEIVED UNDER SECTION 68 OF THE ACT. WE FIND THAT THE ISSUE OF BRINGING THE SHARE PREMIUM TO TAX UNDER SECTION 68 OF THE ACT WAS NOT AN ISSUE WHICH WAS URGED BY THE APPELLANT REVENUE BEFORE THE TRIBUNAL. THE ONLY ISSUE WHICH WAS URGED BEFORE THE TRIBUNAL AS RECORDED IN PARA 11 OF THE IMPUGNED ORD ER IS THE ADDITION OF SHARE CAPITAL AND SHARE APPLICATION MONEY IN THE HANDS OF THE ASS ESSEE AS INCOME UNDER SECTION 8 ITA NO.1636/KOL/2016 M/S TANISH DEALERS PVT. LTD. A.YR. 2012-13 8 28(IV) OF THE ACT. WE FIND THAT THE COMMISSIONER OF INCOME- TAX (APPEALS) DID CONSIDER THE ISSUE OF APPLICABILITY OF SECTION 68 OF THE ACT AND CONCLUDED THAT IT DOES NOT APPLY. THE REVENUE SEEMS TO HAVE ACCEPTED THE SAME AND DID NOT URGE THIS ISSUE BEFORE THE TRIBUNAL. MR. BHOOT, LEARNED COUNSEL APPEARING FOR T HE REVENUE ALSO FAIRLY STATES THAT THE ISSUE OF APPLICABILITY OF SECTION 68 OF THE ACT WAS NOT URGED BY THE REVENUE BEFORE THE TRIBUNAL. (B) IT IS A SETTLED POSITION IN LAW AS HELD BY THIS C OURT IN CIT V. TATA CHEMICALS LTD . [2002] 122 TAXMAN 643/256 ITR 395 (BOM.) THAT IN AN APPEAL UNDER SECTION 260A OF THE ACT, THE HIGH COURT CAN ONLY DECIDE A QUESTION IF IT HAD BEEN RAISED BEFORE THE TRIBUNAL EVEN IF NOT DETERMINED BY THE TRIBUNAL. THEREFORE, NO OCCASION TO CONSIDER THE QUESTION AS PRAYED FOR ARISES. (C) IN ANY CASE, WE MAY POINT OUT THAT THE AMENDMENT TO SECTION 68 OF THE ACT BY THE ADDITION OF PROVISO THERETO TOOK PLACE WITH EFFECT FROM APRIL 1, 2013. THEREFORE, IT IS NOT APPLICABLE FOR THE SUBJECT ASSESSMENT YEAR 2012 -13. SO FOR AS THE PRE- AMENDED SECTION 68 OF THE ACT IS CONCERNED, THE SAME CANNOT BE INVOKED IN THIS CASE, AS EVIDENCE WAS LED BY THE RESPONDENTS-ASSESSEES BEFOR E THE ASSESSING OFFICER WITH REGARD TO IDENTITY, CAPACITY OF THE INVESTOR AS WEL L AS THE GENUINENESS OF THE INVESTMENT. THEREFORE, ADMITTEDLY, THE ASSESSING OF FICER DID NOT INVOKE SECTION 68 OF THE ACT TO BRING THE SHARE PREMIUM TO TAX. SIMILARL Y, THE COMMISSIONER OF INCOME- TAX (AP PEALS) ON CONSIDERATION OF FACTS, FOUND THAT SECTIO N 68 OF THE ACT CANNOT BE INVOKED. IN VIEW OF THE ABOVE, IT IS LIKELY THAT TH E REVENUE MAY HAVE TAKEN AN INFORMED DECISION NOT TO URGE THE ISSUE OF SECTION 68 OF THE ACT BEFORE THE TRIBUNAL. (D) WE MAY ALSO POINT OUT THAT DECISION OF THIS COURT IN MAJOR METALS LTD. V. UNION OF INDIA [2012] 19 TAXMANN.COM 176/207 TAXMAN 185/[2013] 359 ITR 450 BOM . PROCEEDED ON ITS OWN FACTS TO UPHOLD THE INVOCA TION OF SECTION 68 OF THE ACT BY THE SETTLEMENT COMMISSION. IN THE ABOVE CASE, THE SETTL EMENT COMMISSION ARRIVED AT A FINDING OF FACT THAT THE SUBSCRIBERS TO SHARES OF T HE ASSESSEE 'COMPANY WERE NOT CREDITWORTHY INASMUCH AS THEY DID NOT HAVE FINANCIA L STA NDING WHICH WOULD ENABLE THEM TO MAKE AN INVESTMENT OF RS. 6,00,00,000 AT PR EMIUM AT RS. 990 PER SHARE. IT WAS THIS FINDING OF THE FACT ARRIVED AT BY THE SETT LEMENT COMMISSION WHICH WAS NOT DISTURBED BY THIS COURT IN ITS WRIT JURISDICTION. I N THE PRESENT C ASE THE PERSON WHO HAVE SUBSCRIBED TO THE SHARE AND PAID SHARE PREMIUM HAVE ADMITTEDLY MADE STATEMENT ON OATH BEFORE THE ASSESSING OFFICER AS RECORDED BY TH E TRIBUNAL. NO FINDING IN THIS CASE HAS BEEN GIVEN BY THE AUTHORITIES THAT SHAREHOLDER/ SHARE APPLICA NTS WERE UNIDENTIFIABLE OR BOGUS. (E) IN THE ABOVE VIEW QUESTION NO. A IS NOT BEING ENT ERTAINED IN VIEW OF THE DECISION IN TATA CHEMICAL LTD. (SUPRA). ACCORDINGLY, THE QUESTI ON (A) IS NOT ENTERTAINED. REGARDING QUESTION B : (A) WE FIND THAT THE IMPUGNED ORDER OF THE TRIBUNAL U PHELD THE VIEW OF THE COMMISSIONER OF INCOME- TAX (APPEALS) TO HOLD THAT SHARE PREMIUM IS CAPITAL RECEIPT AND THEREFORE, CANNOT BE TAXED AS INCOME. THIS CONCLUSION WAS REAC HED BY THE IMPUGNED ORDER FOLLOWING THE DECISION OF THIS COURT IN VODAFONE IN DIA SERVICES (P.) LTD. (SUPRA) AND OF 9 ITA NO.1636/KOL/2016 M/S TANISH DEALERS PVT. LTD. A.YR. 2012-13 9 THE APEX COURT IN G. S. HOMES AND HOTEL (P.) LTD. ( SUPRA ). IN BOTH THE ABOVE CASES THE COURT HAS HELD THAT THE AMOUNT RECEIVED ON ISSUE OF SHARE CAPITAL INCLUDING PREMIUM ARE ON CAPITAL ACCOUNT AND CANNOT BE CONSIDERED TO BE INCOME. (B) IT IS FURTHER PERTINENT TO NOTE THAT THE DEFINITION OF INCOME AS PROVIDED UNDER SECTION 2(24) OF THE ACT AT THE RELEVANT TIME DID NOT DEFIN E AS INCOME ANY CONSIDERATION RECEIVED FOR ISSUE OF SH ARE IN EXCESS OF ITS FAIR MARKET VALUE. THIS CAME I NTO THE STATUTE ONLY WITH EFFECT FROM APRIL 1, 2013 AND THUS, WOULD HAVE, NO APPLICATION TO THE SHARE PREMIUM RECEIVED BY THE RESPONDENT'ASSESSEE IN TH E PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2012- 13. SIMILARLY, THE AMENDMENT TO SECTION 68 OF THE A CT BY ADDITION OF PROVISO WAS MADE SUBSEQUENT TO PREVIOUS YEAR RELEVANT TO THE SUBJECT ASSESSMENT YEAR 2012-13 AND CANNOT BE INVOKED. IT M AY BE POINTED OUT THAT THIS COURT IN CIT V. GAGANDEEP INFRASTRUCTURE (P.) LTD. [2017] 80 TAXMANN.COM 272/247 TAXMAN 245/394 ITR 680 (BOM.) HAS WHILE REFUSING TO ENTERTAIN A QUESTION WITH REGARD TO SECTION 68 OF THE ACT HAS HELD THAT THE P ROVISO TO SECTION 68 O F THE ACT INTRODUCED WITH EFFECT FROM APRIL 1, 2013 WILL NOT HAVE RETROSPECTIVE EFFECT AND WOULD BE EFFECTIVE ONLY FROM THE ASSESSMENT YEAR 2013-14. (C) IN VIEW OF THE ABOVE, QUESTION NO. B AS PROPOSED ALSO DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW AS IT IS AN ISSUE CONCLUDED BY THE DECISION OF THIS COURT IN VODAFONE INDIA SERVICES (P.) LTD. (SUPRA) AND IN TH E APEX COURT IN G. S. HOMES AND HOTELS (P.) LTD. (SUPRA). THUS NOT ENTERTAINED. THEREFORE, ALL THE SIX APPEALS ARE DISMISSED. NO OR DER AS TO COSTS. 6.2. WE FIND THAT THE ISSUE UNDER DISPUTE WAS THE S UBJECT MATTER OF ADJUDICATION ON EXACTLY SIMILAR FACTS BY THIS TRIBUNAL IN THE CASE OF ITO VS TREND INFRA DEVELOPERS PVT LTD IN ITA NO. 2270/KOL/2016 DATED 26.10.2018 FOR A SST YEAR 2012-13, WHEREIN THE ADDITION MADE TOWARDS SHARE PREMIUM WAS DELETED. T HE FINDINGS GIVEN THEREIN ARE NOT REITERATED FOR THE SAKE OF BREVITY. 6.3. IN VIEW OF THE AFORESAID OBSERVATIONS IN THE F ACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELI ED UPON HEREINABOVE, WE HOLD THAT THE LD. CIT(A) HAD RIGHTLY GRANTED RELIEF TO THE ASSESS EE IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WHICH IN OUR CONSIDERED OPINION, DOES NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY, THE GROUNDS 1 TO 2 RAISE D BY THE REVENUE ARE DISMISSED. 10 ITA NO.1636/KOL/2016 M/S TANISH DEALERS PVT. LTD. A.YR. 2012-13 10 7. THE GROUND NO. 3 RAISED BY THE REVENUE IS GENERA L IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 07.12. 2018 SD/- SD/- [A T VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.12.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-10(4), KOLKATA, P-7, CHOWRINGHEE SQUAR E, KOLKATA-700069. 2. M/S TANISH DEALERS PVT. LTD., 111, ASHOKA APARTM ENT, SOUTHERN AVENUE, FLAT NO. 1, 1 ST FLOOR, KOLKATA-700029. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES