ITO, Ward-10(4), Kolkata, Kolkata V. M/s Dreamz Met Construction Projects Pvt. Ltd., Kolkata

ITA 2047/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0144 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 14 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: 24-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: D S DAMLE
• Keywords: Unexplained cash credit; Earning of tax free income; Period of limitation; Source of fund; Retrospective amendment; Question of law; Capital receipt; Time period of passing order
• Section: 143(3); 14A; 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. 2047/KOL/20 16 ASSESSMENT YEAR : 2012-1 3 ITO, WARD-10(4), KOLKATA -VS- M/S DREAMZ MET CO NSTRUCTION PROJECTS PVT. LTD. [PAN: AAGCM 2068 R ] (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. 184/LD. CIT(A))-4/WARD-10(4)/KOL/15-16 DATED 04.08.2016 AG AINST THE ORDER PASSED BY THE ITO, WARD-10(4), KOLKATA [ IN SHORT THE LD AO] UN DER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 12.03.201 5 FOR THE ASSESSMENT 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 2,70 ,75,000/- TOWARDS SHARE PREMIUM U/S 68 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.2047/KOL/2016 M/S DREAMZ MET CONSTRUCTION PROJECTS 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 31.8.2012 DECLARING TOTAL INCO ME OF RS 4,70,447/-. THE LD. AO OBSERVED THAT SINCE THERE WAS NO SUBSTANTIAL BUSINE SS ACTIVITY CARRIED ON BY THE ASSESSEE, THE ASSESSEE COMPANY CANNOT COMMAND HUGE SHARE PREM IUM. 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 BUSINE SS OF INVESTMENT IN UNQUOTED EQUITY SHARES OF COMPANIES AND PROPERTIES. THE ASSESSEE RA ISED SHARE CAPITAL AND SHARE PREMIUM FROM THE FOLLOWING SHARE HOLDERS: 1. BLOSSOM VINIMAY PVT LTD (SINCE AMALGAMATED WITH DREAMZ PBC WEB LENGTH PVT LTD) P-445, HEMANTA MUKHOPADHYA SARANI, 4 TH FLOOR, FLAT NO. 4S, KOLKATA 700029 PAN AADCB9501B DATE OF ALLOTMENT OF SHARES 31.3.2012 NUMBER OF SHARES 92500 EQUITY SHARES FACE VALUE PER SHARE RS 10 TOTAL SHARE CAPITAL RECEIVED RS 9,25,000/- PREMIUM VALUE PER SHARE RS 190 TOTAL SHARE PREMIUM RECEIVED RS 1,75,75,000/- 2. BALIRAJA DISTRIBUTORS PVT LTD P-445, HEMANTA MUKHOPADHYA SARANI, 2ND FLOOR, FLAT NO. 2N, KOLKATA 700029 PAN AABCB3083G DATE OF ALLOTMENT OF SHARES 31.3.2012 NUMBER OF SHARES 50000 EQUITY SHARES FACE VALUE PER SHARE RS 10 TOTAL SHARE CAPITAL RECEIVED RS 5,00,000/- PREMIUM VALUE PER SHARE RS 190 TOTAL SHARE PREMIUM RECEIVED RS 95,00,000/- TOTAL SHARE PREMIUM RECEIVED - RS 2,70,75,000/- 3 ITA NO.2047/KOL/2016 M/S DREAMZ MET CONSTRUCTION PROJECTS PVT. LTD. A.YR. 2012-13 3 NOTICE U/S 133(6) OF THE ACT WERE ISSUED TO ALL THE SHARE HOLDERS 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. ONE OF THE LETTERS TO THE INVESTORS RETURNED UNSERV ED. THE SUMMONS U/S 131 OF THE ACT WAS ISSUED TO THE DIRECTORS OF THE ASSESSEE COMPANY TO EXAMINE THE RECEIPT OF PREMIUM AND THE ASSESSEE WAS ALSO DIRECTED TO PRODUCE THE D IRECTORS OF THE SHARE HOLDER COMPANIES FOR EXAMINATION OF IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE INVESTORS. THE LD. AO OBSERVED THAT THE SUMM ONS ISSUED U/S 131 OF THE ACT DID NOT FIND COMPLIANCE FROM THE DIRECTORS OF THE ASSES SEE COMPANY. THE ASSESSEE DID NOT PRODUCE THE DIRECTORS OF THE INVESTOR COMPANIES BEF ORE THE LD AO. FOR NON-COMPLIANCE OF THE SUMMONS U/S 131 OF THE ACT, BY NOT PRODUCING THE DIRECTORS OF THE SHARE HOLDER COMPANIES, THE LD. AO CONCLUDED THAT THE SHARE PREM IUM RAISED BY THE ASSESSEE IN THE SUM OF RS. 270,75,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE LD. AO HOWEVER ACCEPTED THE RECEIPT OF SHARE CAPITAL IN TH E SUM OF RS. 14,25,000/- FROM THE VERY SAME SHAREHOLDERS AS GENUINE IN THE ASSESSMENT . 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 INCOME TAX RETURN ACKNOWLEDGEMENT OF SHAREHOLDERS, SHARE APPLICATION FORM FOR EQUITY SH ARES, SHARE ALLOTMENT ADVICE, AUDITED FINANCIAL STATEMENTS, COPIES OF RELEVANT BANK STATE MENTS IN RESPECT OF ACCOUNTS FROM WHICH SHARE APPLICATION MONIES WERE PAID , BOARD RE SOLUTION FOR MAKING INVESTMENT IN ASSESSEE COMPANY, PAN, ADDRESS OF SHARE SUBSCRIBERS FOR THE YEAR ENDED 31.03.2012. THE ASSESSEE ALSO FURNISHED A COPY OF RETURN FILED, ALLOTMENT OF SHARES IN FORM NO. 2 FILED WITH ROC. THE ASSESSEE ALSO SUBMITTED EACH OF THE A SSESSEE SUBSCRIBER COMPANY WAS REGULARLY ASSESSED TO INCOME TAX AND THE PAYMENTS T OWARDS SHARE CAPITAL AND SHARE PREMIUM AMOUNTS WERE MADE BY THEM TO THE ASSESSEE T HROUGH THEIR RESPECTIVE BANK ACCOUNTS. IT WAS ALSO SUBMITTED THAT THE NOTICE ISS UED U/S 133(6) OF THE ACT TO THE SHARE 4 ITA NO.2047/KOL/2016 M/S DREAMZ MET CONSTRUCTION PROJECTS PVT. LTD. A.YR. 2012-13 4 SUBSCRIBERS INDEPENDENTLY WERE DULY COMPLIED WITH B Y THEM BEFORE THE LD. AO. IT WAS SUBMITTED THAT THE SUMMONS U/S 131 OF THE ACT WAS I SSUED AT THE END OF THE LIMITATION PERIOD. THE SUMMON WAS ISSUED ASKING THE DIRECTORS OF THE ASSESSEE COMPANY TO APPEAR BEFORE HIM IN SHORT NOTICE. THE DIRECTOR OF THE AS SESSEE MR SUKHENDRA SHUKLA APPEARED ON DUE DATE ON 19.2.2015 FOR GIVING HIS DEPOSITION ALONG WITH HIS IDENTITY PROOF, COPY OF BANK STATEMENT OF THE ASSESSEE 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 COM PANY MR SUKHENDRA SHUKLA EXPLAINED ALL THESE FACTS VIDE HIS WRITTEN SUBMISSION FILED O N 25.2.2015 BEFORE THE LD AO IN RESPONSE TO SUMMONS U/S 131 OF THE ACT. IT WAS AL SO SUBMITTED THAT THE DIRECTOR OF THE INVESTOR COMPANY ALSO DID APPEAR TO GIVE HIS DEPOSI TION AND SUBMIT THE PAPERS BEFORE THE LD AO. IT WAS STATED THAT THE LD AO VERY OPENL Y REFUSED TO TAKE ANY DEPOSITION OR RECORD THE PRESENCE FOR THAT AND SUGGESTED TO FILE THE DOCUMENTS OFFICIALLY IN HIS OFFICE WHICH WAS DULY COMPLIED WITH UPTO THE SATISFACTION OF THE LD AO. THUS IT WAS PLEADED THAT THE ASSESSEE HAD DISCHARGED ITS ONUS AS DESCRI BED U/S 68 OF THE ACT AND ESTABLISHED THE GENUINENESS OF THE TRANSACTIONS. IT WAS ALSO SPECIFICALLY POINTED OUT THAT THE LD AO GROSSLY ERRED IN QUOTING THAT THE ASSESSEE FAILED T O DISCHARGE ITS ONUS. IT WAS PLEADED THAT APART FROM THE AFORESAID DOCUMENTS, CONFIRMATIONS T OGETHER WITH EXPLANATION WITH REGARD TO IMMEDIATE SOURCES OF PAYMENT OF SHARE PRE MIUM WERE ALSO FURNISHED BEFORE THE LD. AO. IT WAS PLEADED THAT THE ASSESSEE ALSO P LACED ON RECORD THE FACT THAT THE INVESTOR COMPANIES HAD SUFFICIENT INVESTIBLE FUNDS TO MAKE INVESTMENT IN THE ASSESSEE COMPANY THEREBY PROVING THEIR CREDITWORTHINESS BEYO ND DOUBT. IT WAS SUBMITTED THAT FROM THE AFORESAID DOCUMENTS AND EVIDENCES, THE IDE NTITY AND CREDITWORTHINESS OF THE SHARE SUBSCRIBERS STAND CONCLUSIVELY PROVED TOGETHE R WITH THE GENUINENESS OF THE TRANSACTION. IT WAS SUBMITTED THAT THE SHARE SUBSCR IBERS HAD EVEN ESTABLISHED THE SOURCE OF SOURCE OF FUNDS IN THE INSTANT CASE. NO LACUNA, INFIRMITY, FALSITY OR DEFECT WAS ESTABLISHED OR PROVED IN THE EVIDENCES PLACED ON R ECORD NOR WAS THE LD. AO ABLE TO PROVE ANY FALSITY IN THE EXPLANATION FURNISHED BY T HE SHARE APPLICANTS IN RESPECT OF 5 ITA NO.2047/KOL/2016 M/S DREAMZ MET CONSTRUCTION PROJECTS PVT. LTD. A.YR. 2012-13 5 SOURCE AND/OR THE SOURCE OF SOURCE OF INVESTMENTS. 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. SUBMISSIONS WERE ALSO MADE WITH SPECIFIC REFERENCE TO A PROVISO INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013 IN SECTION 68 WHICH READS AS UNDER: [PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY ( N OT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED), AND THE SUM SO CREDI TED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CRE DIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSING OF FICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: 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 WHICH AR E PART OF THE PAPER BOOK, FROM WHERE, IT IS EVIDENT THAT ALL THE TRANSACTIONS WERE ROUTED THROUGH PROPER BANKING CHANNELS AND DULY REFLECTED IN THEIR RESPECTIVE BOO KS OF ACCOUNTS WHICH PROVES THE 6 ITA NO.2047/KOL/2016 M/S DREAMZ MET CONSTRUCTION PROJECTS PVT. LTD. A.YR. 2012-13 6 GENUINENESS OF THE TRANSACTION BEYOND DOUBT. HE ALS O OBSERVED THAT ALL THE SHARE APPLICANTS EXPLAINED THEIR RESPECTIVE SOURCE OF FUN DS IN THEIR REPLIES TO 133(6) NOTICE DIRECTLY BEFORE THE LD. AO AND THAT THE NET WORTH O F EACH OF THE SHARE SUBSCRIBERS ARE FAR HIGHER THAN THE AMOUNT OF INVESTMENTS MADE BY THEM IN THE ASSESSEE COMPANY, WHICH CLEARLY PROVED THE CREDITWORTHINESS OF THE SHARE SU BSCRIBERS TO MAKE INVESTMENTS IN THE ASSESSEE COMPANY. HE HELD THAT THE VERY FACT THAT N OTICES U/S 133(6) WERE DULY SERVED ON THE RESPECTIVE SHARE SUBSCRIBERS AND THAT THEY WERE DULY REPLIED WITH BY THEM DIRECTLY BEFORE THE LD. AO, PROVES THEIR IDENTITY BEYOND DOU BT. HENCE, HE HELD THAT ALL THE THREE INGREDIENTS OF SECTION 68 NAMELY THE IDENTITY OF TH E SHARE SUBSCRIBERS, CREDITWORTHINESS OF THE SHARE SUBSCRIBERS AND GENUINENESS OF THE TRA NSACTION 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. 14,25,000/-. WHILE 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. 2,70,75,000 /- FOR THE YEAR UNDER APPEA L. 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. 14,25,000/- FROM TWO SHAREHOLDERS AND RS. 2,70,75,0 00/- 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 7 ITA NO.2047/KOL/2016 M/S DREAMZ MET CONSTRUCTION PROJECTS PVT. LTD. A.YR. 2012-13 7 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 WHICH ARE ENCLOSED IN THE PAPER BOOK. THE LD. AO HAD NOT FOUND ANY FALSITY OR ANY ADVERSE INFERENCE OF THE SAID DOCUMENTS. WE FIN D THAT THE LD. CIT(A) HAD PLACED HEAVY RELIANCE ON THESE DOCUMENTS AND HAD GRANTED R ELIEF TO THE ASSESSEE. ALL THE SHARE SUBSCRIBERS ARE DULY ASSESSED TO INCOME TAX AND THE TRANSACTION WITH THE ASSESSEE COMPANY ARE DULY ROUTED THROUGH BANKING CHANNELS AN D ARE DULY REFLECTED IN THEIR RESPECTIVE AUDITED BALANCE SHEETS WHICH ARE ALSO PL ACED ON RECORD BEFORE US. IN ANY CASE, ONCE 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 RECEIVED FROM THE VERY SAME SHAREHOLDERS AS BOGUS. WE HELD THAT ALL THE THREE NECESSARY INGREDIENTS OF SECTION 68 HAD BEEN DULY COMPLIED WI TH BY THE ASSESSEE WITH PROPER DOCUMENTARY EVIDENCES. WE FIND THAT NOTICES ISSUED U/S 133(6) HAVE BEEN DULY COMPLIED WITH. WE FIND THAT THE DIRECTOR OF THE ASSESSEE COM PANY TOGETHER WITH THE DIRECTOR OF THE INVESTOR COMPANY WERE PRESENT BEFORE THE LD AO AND THE ASSESSEE HAD SUBMITTED THAT THE LD AO HAD INFORMED THEM TO FILE THE NECESSARY DETAI LS CALLED FOR IN THE SUMMONS U/S 131 OF THE ACT IN HIS OFFICE THROUGH PROPER MODE IN TAP AL, WHICH WAS ACCORDINGLY DONE BY THEM. IT WAS ALSO SUBMITTED THAT THE BOTH THE DIRE CTORS OF THE ASSESSEE COMPANY AS WELL AS THE DIRECTOR OF THE INVESTOR COMPANY OFFERED THE MSELVES FOR DEPOSITION WHICH WAS REFUSED BY THE LD AO. THIS FACT WAS NOT CONTROVERT ED BY THE REVENUE BEFORE US. IN OUR CONSIDERED OPINION, FOR THIS REASON ALONE, THERE CA NNOT BE ANY ADDITION U/S 68 OF THE ACT IN THE FACTS OF THE INSTANT CASE. WE FIND THAT THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF NOVO PROMOTERS AND FINELEASE PVT. LT D. REPORTED IN 342 ITR 169 (DEL) VEHEMENTLY RELIED UPON BY THE LD. DR BEFORE US, IS NOT APPLICABLE IN THE INSTANT CASE, AS IN THE FACTS BEFORE 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 TO SUPRA IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE AND IS FACTUALLY DISTINGHUISHABLE.. 8 ITA NO.2047/KOL/2016 M/S DREAMZ MET CONSTRUCTION PROJECTS PVT. LTD. A.YR. 2012-13 8 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 QUEST ION 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 I SSUE 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 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 TH E 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 WELL AS TH E GENUINENESS OF THE 9 ITA NO.2047/KOL/2016 M/S DREAMZ MET CONSTRUCTION PROJECTS PVT. LTD. A.YR. 2012-13 9 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 (APPEALS) ON CONSIDERATION OF FACTS, FOUND THAT SECTION 68 OF TH E 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 INVOCATION OF S ECTION 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 STANDING WHI CH 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 CASE THE P ERSON 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 APPLICANTS 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 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 SHARE IN EXCESS OF ITS FAIR M ARKET VALUE. THIS CAME INTO THE STAT UTE 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 ADDIT ION 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 OF 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 10 ITA NO.2047/KOL/2016 M/S DREAMZ MET CONSTRUCTION PROJECTS PVT. LTD. A.YR. 2012-13 10 SUBSTANTIAL QUESTION OF LAW AS IT IS AN ISSUE CONCL UDED BY THE DECISION OF THIS COU RT 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 3 RAISE D BY THE REVENUE ARE DISMISSED. 7. THE GROUND NO. 4 RAISED BY THE REVENUE IS WITH R EGARD TO DELETION OF DISALLOWANCE OF RS 2,98,571/- U/S 14A OF THE ACT READ WITH RULE 8D OF THE RULES BY THE LD CITA. THE ASSESSEE PLEADED THAT IT HAD NOT MADE ANY INVESTMEN TS USING ANY BORROWED FUNDS AND HAD NOT CLAIMED ANY BORROWED COST AS EXPENDITURE IN ITS AUDITED FINANCIAL STATEMENTS FOR THE YEAR UNDER APPEAL. MOREOVER, IT WAS POINTED OUT THAT THERE WAS NO EXEMPT INCOME CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME AND ACCORDINGLY THE PROVISIONS OF SECTION 14A OF THE ACT CANNOT BE MADE APPLICABLE AT ALL. WE FIND THAT THIS ISSUE IS NOW WELL SETTLED BY THE FOLLOWING DECISIONS OF VARIOUS HIGH COURTS AS UNDER;- CIT VS CHETTINAD LOGISTICS (P) LTD (2017) 80 TAXM ANN.COM 221 (MAD HC) CIT VS HOLCIM INDIA PVT LTD IN ITA NO. 486 /2014 (D ELHI HC) CHEMINVEST LTD VS CIT REPORTED IN 378 ITR 33 (DELHI HC) CIT VS LAKHANI MARKETING IN ITA NO. 970/2008 DATED 2.4.2014 (P&H HC) CIT VS CORRTECH ENERGY PVT LTD REPORTED IN 223 TAXM AN 130 (GUJ) CIT VS SHIVAM MOTORS PVT LTD IN ITA NO. 88 OF 2014 (ALL HC) 11 ITA NO.2047/KOL/2016 M/S DREAMZ MET CONSTRUCTION PROJECTS PVT. LTD. A.YR. 2012-13 11 PCIT VS IL & FS ENERGY DEVELOPMENT CO LTD (2017) 39 9 ITR 483 (DEL) RESPECTFULLY FOLLOWING THE SAME, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CITA GRANTING RELIEF TO THE ASSESSEE. ACCORDINGLY, THE GROUND NO. 4 RAISED BY THE REVENUE IS DISMISSED. 8. THE GROUND NO. 5 RAISED BY THE REVENUE IS GENERA L IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 07.12.2 018 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 DREAMZ MET CONSTRUCTION PROJECTS PVT. LTD., P -445, HEMANTA MUKHOPADHYA SARANI, 4 TH FLOOR, FLAT NO. 4S, 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 12 ITA NO.2047/KOL/2016 M/S DREAMZ MET CONSTRUCTION PROJECTS PVT. LTD. A.YR. 2012-13 12