DCIT 12(1)(2), MUMBAI V. BUSINESSMATCH SERVICES (I) P. LTD, MUMBAI

ITA 5925/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6819 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 18-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Source of fund; Retrospective amendment; Question of law; Fair market value; Corroborative evidences; Capital receipt; Onus to prove; Set aside
• Section: 143(3); 56(2); 133(6); 69A; 207; 68; 69; 56

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE HONBLE SH. SANDEEP GOSAIN , JM & HONBLE SH. G. MANJUNATHA, A M ./ I.T.A. NO . 5925 /MUM/2017 ( / ASSESSMENT YEAR: 2011 - 12 ) D CIT 12(1)(2 ), R. NO. 522 , 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020 / VS. BUSINESS MATCH SERVICES PVT. LTD. 301, 306 TURNER ROAD, OPP. TAWA RESTURANT, BANDRA (EAST), MUMBAI - 400 050 ./ ./ PAN NO. AA ACB6129N ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI ARVIND KUMAR , DR / RESPONDENTBY : SHR I JITENDRA JAIN , AR / DATE OF HEARING : 09 .01 .201 9 / DATE OF PRONOUNCEMENT : 28.02.2019 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMIS S IONER OF INCOME TAX (APPEALS) - 20, MUMBAI, DATED 29.06 .17 FOR AY 2011 - 12 ON THE GROUNDS MENTIONED HEREIN BELOW: - 2 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. 1. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,74,45,0007 - ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT. 2.' WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DISALLOWANCE OF INTEREST OF RS.2,90,96,145/ - U/S 36(1)(III) 3.'THE APPELLANT PRAYS THAT FOR THESE AND OTHER REASONS IT IS SUBMITTED THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED.' 4. 'THE APPELLANT CRAVES LEAVE TO AMEND ADD, AMEND OR ALTER ALL OR ANY OF THE GROUNDS OF APPEAL.' 2 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF PROVIDING CONSULTANCY SERVICES , E TC. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 30.09.11 DECLARING TOTAL INCOME OF ( - ) RS. 3,90,36,096/ - . SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND AFTER SERVING STATUTORY NOTICES AND PROVIDING OPPORTUNITY OF HEARING, ASSES SMENT ORDER U/S 143(3) OF THE I.T. 3 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. ACT WAS PASSED BY THE AO THEREBY MAKING ADDITIONS/DISALLOWANCES UNDER DIFFERENT HEADS. 3 . AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES PARTLY AL LOWED THE APPEAL OF THE ASSESSEE. 4 . AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREIN ABOVE. GROUND NO. 1 5 . THIS GROUND RAISED BY THE REVENUE RELATES TO CHAL LENGING THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION OF RS.2,74,45,000/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT. 6 . LD. DR APPEARING ON BEHALF OF THE REVENUE RELIED UPON THE ORDER PASSED BY AO AND SUBMITTED THAT DURING THE COURSE O F ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO THAT THE 4 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. ASSESSEE HAD ISSUED NON - CUMULATIVE, NON - CONVERTIBLE PREFERENCE SHARES OF 100 EACH AT THE PREMIUM OF RS. 49,900/ - PER SHARE. IN THIS REGARD, ASSESSEE WAS ASKED TO FURNISH THE JUSTIFICATION OF PREMI UM CHARGE WITH VALUATION OF SHARES, HOWEVER THE SUBMISSIONS FURNISHED BY THE ASSESSEE, WERE NOT FOUND TO BE ACCEPTABLE AND THEREFORE WHILE RELYING UPON THE PRINCIPLES LAID DOWN BY THE JUDICIAL PRONOUNCEMENTS IN THE CASE OF SHRI LEKHA BANERJEE VRS. CIT 49 I TR 112 (SC) AND MAJOR METALS VRS. UNION OF INDIA 207 TAXMAN.COM 185 (BOM HC) . IT WAS SUBMITTED THAT PREMIUM RECEIVED BY THE ASSESSEE WAS UNREASONABLE AS THE SHARES WERE ISSUED AT UNJUSTIFIABLE AMOUNT OF PREMIUM AND THE ENTIRE TRANSACTIONS WERE NOT GENUINE. THEREFORE, LD. CIT(A) HAD ERRED IN DELETING THE ADDITIONS ON ACCOUNT OF UNEX PLAINED CASH CREDIT U/S 68 OF THE I.T. ACT. 7. ON THE OTHER HAND, LD. AR RELIED UPON THE ORDERS PASSED BY THE LD. CIT(A) AND REITERATED THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE LD. CIT(A). IT WAS SUBMITTED THAT ASSESSEE COMPANY HAD ISSUED 550 NUMB ER, 1% NON - CUMULATIVE, NON - CONVERTIBLE PREFERENTIAL SHARES TO AN INDIVIDUAL NAMELY ANUJ 5 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. JOSHI AND THE TOTAL CONSIDERATION RECEIVED FO R THE ISSUE OF PREFERENCE SHARE CAPITAL INCLUDES SECURITY PREMIUM, THEREFORE ADDITIONS MADE ON ACCOUNT OF SECURITY PREMIUM RECEIVED BY THE ASSESSEE ON THE GROUND THAT SUCH PREMIUM IS NOT JUSTIFIABLE, IS WITHOUT ANY BASIS. IT WAS SUBMITTED THAT THE ASSESSEE HAD DULY PROVED THE SOURCE OF FUNDS OF THE INVESTOR FOR MAKING THE INVESTMENT. IT WAS ALSO SUBMITTED THAT IDENTITY, CREDIT WORTHINESS OF INVESTOR AS WELL AS GENUINENESS OF THE TRANSCTIONS HAD ALREADY BEEN PROVED BY PLACING ON RECORD THE DOCUMENTS CONTAINING NAME, ADDRESS AND PAN NO. OF SHRI JOSHI (PAGE 9 & 30 OF THE PAPER BOOK), APPLICATION MADE BY JOSHI FOR ALLOTMENT OF PREFE RENCE SHARES (PAGE 30 OF THE PAPER BOOK), MINUTES OF MEETING OF BOARD OF DIRECTORS HELD ON 18.10.10 GRANTING APPROVAL FOR ISSUING PREFERENCE SHARES (PAGE 37 OF PAPER BOOK), BANK STATEMENTS HIGHLIGHTING THE SHARE CAPITAL RECEIVED BY THE ASSESSEE (PAGE 10 & 41), MINUTES OF ANNUAL GENERAL MEETING OF THE SHARE HOLDERS HELD ON 30.09.10 (PAGE 35 OF PAPER BOOK), EXPLANATION OF THE ASSESSEE WITH REGARD TO SOURCE OF FUNDS OF SHRI JOSHI, WHEREIN IT WAS EXPLAINED THAT SHRI JOSHI HAD SOLD SHARES OF M/S PRIME FOCUS LTD (LISTED COMPANY) FOR A CONSIDERATION OF RS. 6 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. 2,84,10,348/ - AND OUT OF THE SALE SAID PROCEEDS, THE AMOUNT WAS INVESTED IN THE ASSESSEE COMPANY (PAGE 46 & 50 OF THE PAPER BOOK), PARTY LEDGER ACCOUNT (PAGE 51 OF THE P.B.), BANK STATEMENT OF JOSHI (PAGE 66 OF T HE P.B). 8. IT WAS ALSO SUBMITTED THAT IT WAS NOT FOR THE FIRST TIME THAT SHRI JOSHI HAD MADE THE INVESTMENT IN THE ASSESSEE COMPANY WHEREAS HE HAD MADE SIMILAR INVESTMENT IN AY 2008 - 09 AND THE SHARE CAPITAL RECEIVED BY THE ASSESSEE FOR AY 2008 - 09 WAS ACC EPTED BY THE AO IN THE ORDER OF ASSESSMENT PASSED U/S 143(3) OF THE ACT AND ALSO LD. AR RELIED UPON THE JUDGMENT IN THE CASE OF GREEN INFRA LTD. 7762/MUM/2012, GAGANDEEP INFRASTRUCTURE PVT. LTD. 2014 TIOL - 656, UMACHARAN SHAH VRS. CIT 37 ITR 271 (SC), CIT V RS. DWARKADISH INVESTMENT PVT. 330 ITR 298, ETC . 9 . WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD, JUDGMENT CITED BY THE PARTIES AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. 7 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. 10 . BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE REVENUE IN PARA NO. 6.4 TO 6.15 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 6.4 I HAVE PERUSED THE ASSESSMENT ORDER OF THE AO, DETAILED SUBMISSION OF THE APPELLANT, VARIOUS SUPPORTING EVIDENCES FILED BY THE APPELLANT AS WELL AS BY THE AO. ON PERUSAL OF THE ASSESSMENT ORDER, THE AO IS OF THE VIEW THAT THE SECURITY PREMIUM RECEIVED BY THE APPE LLANT IS TAXABLE UNDER SECTION 68 OF THE ACT. 6.5 THE FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE APPELLANT COMPANY HAS ISSUED 550 (NUMBERS), 1% NON - CUMULATIVE, NON - CONVERTIBLE PREFERENCE SHARES HAVING FACE VALUE OF RS. 100 PER SHARE AT PREMIUM OF RS. 49,900/ - PER SHARE TO AN INDIVIDUAL NAMELY SHRI ANUJ JOSHI. THUS, THE TOTAL CONSIDERATION RECEIVED ON ISSUE OF PREFERENCE SHARE CAPITAL WAS RS. 2,75,00,000/ - BEING PREFERENCE SHARE CAPITAL OF RS. 55,000/ - AND SECURITY PREMIUM OF RS. 2,74, 45,000/ - . 6.6. IT IS NOTED THAT THE AO HAS MADE THE ADDITION OF RS.2,74,45,000/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE AR HAS VEHEMENTLY 8 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. OPPOSED THE ADDITIONS. THE APPELLANT HAS STATED IN ITS SUBMISSION THAT THE ACTION OF THE AO IN M AKING THE ADDITION IS ARBITRARY. THE APPELLANT SUBMITTED THAT IT HAS DISCHARGED ITS ONUS TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE INVESTOR AS WELL AS GENUINENESS OF THE TRANSACTION. IN ORDER TO DISCHARGE THE ONUS CASTE BY SECTION 68 OF THE ACT, T HE APPELLANT HAS FILED VARIOUS DOCUMENTS WHICH ARE STATED AS UNDER: (I) NAME, ADDRESSES AND PAN OF SHRI JOSHI (INVESTOR) (II) APPLICATION MADE BY SHRI JOSHI FOR ALLOTMENT OF PREFERENCE SHARES (III) MINUTES OF MEETING OF THE BOARDS OF DIRECTORS HELD ON 08.1 0.2010 GRANTING APPROVAL FOR ISSUING PREFERENCE SHARES TO SHRI JOSHI (IV) RELEVANT EXTRACT OF BANK STATEMENT HIGHLIGHTING THE SHARE CAPITAL RECEIVED BY THE ASSESSEE (IV) MINUTES OF ANNUAL GENERAL MEETING OF THE SHAREHOLDERS HELD ON 30.09.2010 AUTHORISING T HE BOARD OF DIRECTORS TO ISSUE PREFERENCE SHARES TO SHRI JOSHI (IV) THE APPELLANT EXPLAINED THAT SHRI JOSHI HAS SOLD THE SHARES OF M/S. PRIME FOCUS LTD (A LISTED COMPANY) FOR A CONSIDERATION OF RS. 2,84,10,384/ - AND OUT OF THE 9 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. SAID SALES PROCEEDS, AN AMOUN T OF RS. 2,75,00,000/ - HAS BEEN INVESTED IN THE APPELLANT COMPANY. IN SUPPORT OF THIS, THE APPELLANT FILED: BROKER CONTRACT ISSUED BY M/S. CENTRUM BROKING LIMITED SHOWING THE SHARES SOLD BY SHRI JOSH! FOR A CONSIDERATION OF RS. 2,84,10,384/ - PARTY LEDGER ACCOUNT ISSUED BY M/S. CENTRUM BROKING LIMITED HIGHLIGHTING THE AMOUNT OF RS. 2,84,10,384/ - BEING SALES CONSIDERATION RECEIVABLE BY SHRI JOSHI ON SALE OF SHARES OF M/S PRIME FOCUS LIMITED BANK STATEMENT OF SHRI JOSHI HIGHLIGHTING THAT THE SALES CONSIDERATI ON OF M/S PRIME FOCUS LTD (RS. 2,84,10,384/ - ) HAS BEEN CREDITED IN THE BANK ACCOUNT ON 08.10.2010 AND AN AMOUNT OF RS. 2,75,00,000/ - HAS BEEN INVESTED IN THE APPELLANT COMPANY OUT OF THE ABOVE SALES PROCEEDS ON THE SAME DAY (I.E . 08.10.2010) 6.7 THE DOCUMENTS FILED BY THE APPELLANT HAVE BEEN PERUSED. IN ORDER TO ADJUDICATE THE GROUND DISPUTED IN APPEAL SECTION 68 OF THE ACT HAS BEEN REFERRED. ON PERUSAL OF SECTION 68 OF THE ACT IT EMERGES THAT SECTION 68 OF THE IT. ACT SUPPOSE TO TAX THE SUM FOUND TO BE CREDITED IN BOOKS OF ASSESSEE IF (I) THE NATURE AND SOURCE OF THE SAME IS NOT EXPLAINED BY THE ASSESSEE (II) 10 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND SATISFACTORY BY THE AO. IT FURTHER STATES THAT WHERE THE ASSESSEE IS A PRIVATE COMPANY AND THE SUM SO CREDITED 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 THE PERS ON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED WHICH IS FOUND TO BE SATISFACTORY BY THE AO. THUS, BY WAY OF EXPLAINING THE NATURE AND SO URCE, THE APPELLANT HAVE TO EXPLAIN THE IDENTITY AND CREDITWORTHINESS OF THE INVESTOR AS WELL AS GENUINENESS OF THE TRANSACTION. 6.8 IN THE PRESENT CASE, THE APPELLANT DULY SUBMITTED THAT MR. JOSHI HAS ALSO INVESTED IN THE APPELLANT COMPANY IN THE ASSESSME NT YEAR 2008 - 09 AN AMOUNT OF RS. 4,75,00,000/ - . DURING THE COURSE OF ASSESSMENT PROCEEDING FOR THE ASSESSMENT YEAR 2008 - 09, MR. JOSHI WAS SUMMONED TO INCOME TAX OFFICE WHEREIN HE CONFIRMED THAT HE HAS INVESTED IN THE SHARES OF THE APPELLANT AND HE FILED TH E RELEVANT DOCUMENTS AS ASKED BY THE AO. AFTER CONSIDERING HIS STATEMENT, THE AMOUNT RECEIVED FROM HIM HAS BEEN DULY ACCEPTED BY THE AO. THEREFORE, IN THE LIGHT OF THE FACTS THAT THE AO HAS 11 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. ALREADY VERIFIED THE INVESTOR THE IDENTITY OF THE INVESTOR IS PROV ED BEYOND ANY DOUBT. 6.9 COMING TO THE CREDITWORTHINESS OF THE INVESTOR, THE APPELLANT EXPLAINED THAT SHRI JOSHI HAD AN INVESTMENT IN THE SHARES OF M/S. PRIME FOCUS LTD (A LISTED COMPANY) WHICH HAS BEEN SOLD FOR A CONSIDERATION OF RS. 2,84,10,384/ - AND OUT OF THE SAID SALES PROCEEDS, AN AMOUNT OF RS. 2,75,00,000/ - HAS BEEN INVESTED IN THE APPELLANT COMPANY. IN ORDER TO PROVE THE SAME, THE APPELLANT FILED (I) BROKER CONTRACT ISSUED BY M/S. CENTRUM BROKING LIMITED SHOWING THE SHARES SOLD BY SHRI JOSHI FOR A C ONSIDERATION OF RS. 2,84,10,384/ - (II) PARTY LEDGER ACCOUNT ISSUED BY M/S. CENTRUM BROKING LIMITED HIGHLIGHTING THE AMOUNT OF RS. 2,84,10,384/ - BEING SALES CONSIDERATION RECEIVABLE BY SHRI JOSHI ON SALE OF SHARES OF M/S PRIME FOCUS LIMITED (III) - BANK STATE MENT OF SHRI JOSHI HIGHLIGHTING THAT THE SALES CONSIDERATION OF M/S PRIME FOCUS LTD (RS. 2,84,10,384/ - ) HAS BEEN CREDITED IN THE BANK ACCOUNT ON 08.10.2010 AND AN AMOUNT OF RS. 2,75,00,000/ - HAS BEEN INVESTED IN THE APPELLANT COMPANY OUT OF THE ABOVE SALES PROCEEDS ON THE SAME DAY (I.E. 2010). THE ABOVE DOCUMENTS FILED BY THE APPELLANT HAVE BEEN PERUSED AND THE EXPLANATION OF THE APPELLANT HAS BEEN FOUND CORRECT. THEREFORE, I AM OF THE THE VIEW THAT THE CREDITWORTHINESS OF THE INVESTOR IS ALSO PROVED. 12 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. MOREO VER, IN THE PRECEDING YEARS, THE INVESTOR HAS INVESTED ALMOST DOUBLE THE AMOUNT INVESTED BY HIM DURING THE SUBJECTED YEAR WHICH HAS BEEN DULY ACCEPTED BY THE AO; THEN I FOUND NO REASON (EXCEPT SOME DOUBT IN PREMIUM) AS TO WHAT MADE THE AO TO DOUBT THE GENU INENESS OF THE INVESTOR AND MAKE THE ADDITION. 6.10 COMING TO THE GENUINENESS OF THE TRANSACTION, AS EXPLAINED IN PARAGRAPH 6.6 ABOVE, I AM OF THE VIEW THAT THE APPELLANT HAS FILED THE ENOUGH DOCUMENTS TO PROVE THE GENUINENESS OF THE TRANSACTION WHICH IN F ACT ACCEPTED BY THE AO; THEREFORE, I FOUND NO REASON OR JUSTIFICATION AS WHY THE AO HAS MADE THE ADDITION. 6.11 THE ADDITION HAS BEEN MADE BY THE AO ON THE REASON THAT THE SECURITY PREMIUM RECEIVED BY THE APPELLANT IS UNJUSTIFIABLE AS THE APPELLANT IS A LO SS MAKING COMPANY. FOR THIS REASON MY ATTENTION WAS DULY DRAWN TO THE DECISION OF HON'BLE MUMBAI ITAT IN THE CASE OF GREEN INFRA LIMITED [7762/MUM/2012] WHEREIN THE HON'BLE ITAT HAS CATEGORICALLY HELD THAT 'WE CANNOT IGNORE THE FACT THAT IT IS A PREROGATIV E OF THE BOARD OF DIRECTORS OF A COMPANY TO DECIDE THE PREMIUM AMOUNT AND IT IS THE WISDOM OF THE SHARE HOLDERS WHETHER THEY WANT TO SUBSCRIBE TO SUCH A HEAVY PREMIUM. THE REVENUE AUTHORITIES CANNOT QUESTION THE CHARGING OF SUCH OF HUGE PREMIUM - WITHOUT AN Y BAR 13 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. FROM ANY LEGISLATED LAW OF THE LAND. DETAILS OF SUBSCRIBERS - WERE BEFORE THE REVENUE AUTHORITIES '. 6.12 THIS DECISION OF THE HON'BLE MUMBAI ITAT HAS BEEN CONFIRMED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE CIT VS GREEN INFRA LIMITED [146 DTR 262 - JUDGMENT DATED 16.02.2017] WHEREIN THE QUESTION REFERRED BY THE DEPARTMENT BEFORE THE HON'BLE BOMBAY HIGH COURT WAS 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN DISAGREEING WITH INVOCATION OF SECTION 68 OF THE ACT TO TAX SHARE PREMIUM?' THE ABOVE QUESTION HAS BEEN ANSWERED BY THE HON'BLE HIGH COURT AS UNDER: 'BEFORE THE TRIBUNAL, THE REVENUE RAISED A NEW PLEA VIZ - THAT THE SO CALLED SHARE PREMIUM HAS ALSO TO BE JUDGED ON THE TOUCHSTONE OF SECTI ON 68 OF THE ACT WHICH PROVIDES FOR CASH CREDIT BEING CHARGED TO TAX. THE IMPUGNED ORDER OF THE TRIBUNAL ALLOWED THE ISSUE TO BE RAISED BEFORE IT FOR THE FIRST TIME, 'ING THE OBJECTION OF THE RESPONDENT ASSESSEE, U RG ED ORDER EXAMINED THE APPLICABILITY OF S ECTION 68 OF THE ACT ON THE PARAMETERS OF THE THE SUBSCRIBER TO THE SHARE CAPITAL, GENUINENESS OF THE TRANSACTION AND THE CAPACITY OF THE TO THE SHARE CAPITAL. IT FOUND THAT THE IDENTITY OF THE SUBSCRIB ERS WAS CONFIRMED BY VIRTUE OF ASS ESSING OFFICER ISSUI NG A NOTICES UNDER SECTION 133(6) OF THE ACT TO THEM. FURIKER, IT HOLDS THAT THE REVENUE ITSELF MAKES NO GRIEVANCE OF THE IDENTITY OF THE SUBSCRIBERS. SO FAR AS THE GENUINENESS OF THE TRANSACTION OF SHARE SUBSCRIBER I S CONCERNED, IT CONCLUDES AS 14 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. THE ENTIRE TRANSACTION IS RECORDED IN THE BOOKS OF ACCOUNTS AND REFLECTED IN THE FINANCIAL STATEMENTS OF THE ASSESSEE SINCE THE SUBSCRIPTION WAS DONE THROUGH THE BANKING CHANNELS AS EVIDENCED BY BANK STATEMENTS WHICH WERE EXAMINED BY THE TRIBUNAL WITH REGARD TO THE CAPACITY OF THE SUBSCRIBERS THE IMPUGNED ORDER RECORDS A FINDING THAT 98% OF THE SHARES IS HELD BY IDFC PRIVATE EQUITY FUNDLL WHICH IS A FUND MANAGER OF IDFC LTD. MOREOVER, THE CONTRIBUTIONS IN IDFC PRIVATE EQUITY FUNDLL ARE ALL BY PUBLIC SECTOR UNDERTAKIN GS. (C) MR.CHHOTARAY THE LEARNED COUNSEL FOR THE REVENUE STATES THAT THE IMPUGNED ORDER ITSELF HOLDS THAT SHARE PREMIUM OF RS.490/PER SHARE DEFIES ALL COMMERCIAL PRUDENCE. THEREFORE IT HAS TO BE CONSIDERED TO BE CASH CREDIT. WE FIND THAT THE TRIBUNAL HAS E XAMINED THE CASE OF THE REVENUE ON THE PARAMETERS OF SECTION 68 OF THE ACT AND FOUND ON FACTS THAT IT IS NOT SO HIT. THEREFORE, SECTION 68 OF THE ACT CANNOT BE INVOKED. THE REVENUE HAS NOT BEEN ABLE TO SHOW IN ANY MANNER THE FACTUAL FINDING RECORDED BY THE TRIBUNAL IS PERVERSE IN ANY MANNER. (D) THUS, QUESTION NO.(II) AS FORMULATED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW AND THUS NOT ENTERTAINED. ' 6.13 THUS, THE HON'BLE BOMBAY HIGH COURT HELD THAT SECTION 68 OF THE ACT CANNOT BE INVOKED ON TH E GROUND OF HIGHER PREMIUM RECEIVED IF THE ASSESSEE PROVED THE IDENTITY AND CREDITWORTHINESS OF THE INVESTORS AND GENUINENESS OF THE TRANSACTION. IN THE PRESENT: CASE, THE APPELLANT HAS DULY PROVED THE IDENTITY AND CREDITWORTHINESS OF THE INVESTOR AND GENU INENESS OF THE 15 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. TRANSACTIONS; THEREFORE, THE ADDITION MADE BY THE AO IS DELETED. 6.14 THIS VIEW ALSO FIND SUPPORT FROM THE ANOTHER DECISION OF HON'BLE MUMBAI ITAT IN THE CASE OF GAGANDEEP INFRASTRUCTURE PVT. LTD. [2014 - TIOL - 656 - ITAT - MUM] WHEREIN IT HAS BEE N CATEGORICALLY HELD THAT '11. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN OUR CONSIDERED VIEW, THE ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION WHICH DOES NOT REQUIRE ANY JUSTIFICATION. FURTHER THE PREMIUM IS A CAPITAL RECEIPT WHICH HAS TO BE DEALT WITH IN ACCORDANCE WITH SEC. 78 OF THE COMPANIES ACT, 1956. FURTHER, THE COMPANY IS NOT REQUIRED TO PROVE THE GENUINENESS, PURPOSE OR JUSTIFICATION FOR CHARGING PREMIUM OF SHARES, SHARE PREMIUM BY ITS VERY NATURE IN A CAPITAL RECEIPTS NOT INCOME FOR ITS ORDINARY SENSE' 6.15. THIS DECISION IS ALSO UPHELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VRS G AGANDEEP INFRASTRUCTURE PVT. LTD [ITA NO. 1613 OF 2014] WHEREIN THE HON BLE HIGH COURT HAS HELD THAT U 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 201314 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 16 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. EFFECTIVE ONL Y 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 'DECLARATOR Y'. 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 ADDIN G OF THE PROVISO. IN ANY VIEW OF THE MATTER THE THREE ESSENTIAL TESTS WHILE CONFIRMING THE PREPROVISO 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. FURTHER IT WAS A SUBMISSION ON BEHALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SUSPICION ON THE GENUINENESS FIDENTITY) OF THE SHAREHOLDERS LE. THEY ARE B OS US. THE APEX COURT IN LOVELY EXPORTS (P) LTD, (SUPRA) IN THE CONTEXT TO THE VREAMENDED SECTION 68 OF THE ACT HAS HELD THAT WHERE THE REVENUE UFSES THAT THE AMOUNT OF SHARE APPLICATION MONEY HAS BEEN RECEIVED FROM BOSUS SHAREHOLDERS THEN IT IS FOR THE IN COME TAX OFFICER TO PROCEED BY REOPENINE THE ASSESSMENT OF SUCH SHAREHOLDERS AND ASSESSINE 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 (F) IN THE ABOVE CIRCUMSTANCE S AND PARTICULARLY IN VIEW OF THE CONCURRENT FINDING OF FACT ARRIVED AT BY THE CIT(A) AND THE TRIBUNAL, THE PROPOSED QUESTION OF LAW DOES NOT G IVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS NOT ENTERTAINED.' THUS, RESPECTFULLY FOLLOWING THE ABOVE TWO JU DGMENTS OF THE HON'BLE JURISDICTIONAL HIGH COURT, I AM OF THE CONSIDERED VIEW THAT SINCE THE APPELLANT HAS PROVED 17 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. THE IDENTITY AND CREDITWORTHINESS OF THE INVESTOR AS WELL AS GENUINENESS OF THE TRANSACTION; NO ADDITION CAN BE MADE FOR THE SOLE REASON THAT THE PREMIUM RECEIVED BY THE APPELLANT ARE HIGHER. IN VIEW OF THIS DISCUSSION THE ADDITION ON ACCOUNT OF .SECURITY PREMIUM OF RS. 2,74,45,000 / - MADE BY THE AO CANNOT BE SUSTAINED IN APPEAL AND IS DIRECTED TO BE DELETED. ACCORDINGLY THIS GROUND OF APPEAL IS ALLOWED. 11. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AND HEARING THE PARTIES AT LENGTH, WE FIND AS PER THE FACTS OF THE PRESENT CASE , THE ASSESSEE HAD ISSUED 550 NO, 1% NON - CUMULATIVE, NON - CONVERTIBLE PREFERENCE SHARES TO AN INDIVIDUAL SHRI ANUJ JOSHI. THE ASSESSEE HAD ALSO PLACED ON RECORD THE SOURCE OF FUND OF THE INVESTOR OF MAKING THE INVESTMENT AND HAD ALSO FILED VARIOUS DOCUMENTS AND MADE SUBMISSION WHICH ARE IN DETAIL MENTION IN PARA NO. 6.2 OF THE ORDER OF LD. CIT(A), THEREBY PRO VING THE IDENTITY, CREDITWORTHINESS OF INVESTORS AND GENUINENESS OF THE TRANSACTIONS. ALTHOUGH THE AO HAD NOT DOUBTED THE IDENTITY, CREDITWORTHINESS OF THE INVESTORS AND GENUINENESS OF THE TRANSACTIONS, BUT HAD MADE THE ADDITIONS MERELY ON THE PRESUMPTION THAT THE PREMIUM RECEIVED BY THE 18 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. ASSESSEE IS UNJUSTIFIED AND UNREASONABLE. WHEREAS, THE AO HAD LOST SIGHT OF THE FACT THAT THE SAID FACT CANNOT BE A GROUND FOR MAKING THE ADDITION FOR SHARE PREMIUM RECEIVED BY THE ASSESSEE BECAUSE, WHAT SECTION 68 OF THE A CT, PRE - SUPPOSES TO CHARGE TO THE INCOME TAX, IS THE SUM FOUND TO BE CREDITED IN THE BOOKS OF THE ASSESEEE IF, (I) THE NATURE AND SOURCE OF THE SAME IS NOT EXPLAINED BY THE ASSESSEE, (II) THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND SATISFACTORY B Y THE AO. IT FURTHER STATES THAT WHERE THE ASSESSEE IS A PRIVATE COMPANY AND THE SOME SHOW CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, THEN ANY EXPLANATION OFFERED BY SUCH ASSESSEE COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM, SO CREDITED, WHICH IS FOUND TO BE SAT ISFACTORY BY THE AO. THEREFORE, IN SUCH CIRCUMSTANCES, WHAT ASSESSEE NEEDS TO PROVE IS, (1) NATURE OF RECEIPT, (2) SOURCE OF RECEIPT AND (3) SOURCE OF INVESTOR. 19 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. 12. FROM THE RECORDS, WE OBSERVED THAT ASSESSEE HAD DULY PROVED THE ABOVE INGREDIENTS. MOREOVE R, IN THE PRESENT CASE, THE SAID INVESTOR I.E. SHRI ANUJ JOSHI HAD ALSO MADE INVESTMENTS IN ASSESSEE COMPANY IN AY 2008 - 09, BUT THE SAME WERE ACCEPTED IN THE ORDER OF ASSESSMENT U/S 143(3) OF THE I.T. ACT. THE SAID FACT WAS ALSO BROUGHT TO THE KNOWLEDGE OF AO. IT IS IMPORTANT TO MENTION THAT AS PER THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE LD. CIT(A), IT WAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDING FOR AY 2008 - 09, IN REPLY TO SUMMONS U/S 131(1) OF THE ACT, THE SAID JOSHI CONFIRME D THAT HE WAS ALLOTTED PREFERENCE SHARES HAVING FACE VALUE 100 EACH AT A PREMIUM OF RS. 9900/ - EACH, WHICH WAS ACCEPTED BY THE AO U/S 133(3) OF THE ACT. 13. IN THE CASE OF GREEN INFRA LTD, GAGANDEEP INFRASTRUCTURE PVT. LTD. (SUPRA), IT HAS BEEN HELD THAT THE ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION, WHICH DOES NOT REQUIRE ANY JUSTIFICATION. FURTHER, THE PREMIUM IS A CAPITAL RECEIPT WHICH HAS TO BE DEALT WITH IN ACCORDANCE WITH SECTION 78 OF THE COMPANIES ACT 1956 . 20 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. 14. WE HAVE ALSO CONSI DERED THE WRITTEN SUBMISSION, WHEREIN THE ASSESSEE HAS DISTINGUISHED THE JUDGMENTS RELIED UPON BY THE REVENUE AND WE ARE IN AGREEMENT WITH THE SAID REASONING. LD. AR HAS ALSO SUBMITTED THAT IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH O F ITAT IN ITA NO. 2317/MUM/2017 IN THE CASE OF DCIT VRS. PIRAMAL REALTY PVT. LTD , WHEREIN IN PARA NO. 5 TO 16 IT WAS HELD AS UNDER: - 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY ISSUED 59,850 1% NCCPS HAVING FACE VALUE OF 10/ - AT A PREMIUM OF 99,990/ - TO PCPL. THESE SHARES WERE ISSUED I N TWO TRANCHES OF 20,000 AND 39,850/ - SHARES RESPECTIVELY. IN RESPECT OF FIRST TRANCHE OF ISSUE OF SHARES WAS APPLIED BY PCPL AND MONEY FOR THE SAME WAS RECEIVED IN EARLIER YEAR I.E. YEAR ENDED 31ST MARCH 2011, WHICH WAS DISCLOSED AS APPLICATION MONEY RECE IVED PENDING ALLOTMENT UNDER THE CURRENT LIABILITIES IN THE FY ENDED 31.03.2011. THE SECOND TRANCHE WAS RECEIVED IN THE PREVIOUS YEAR 2011 - 12 RELEVANT TO AY 2012 - 13. THE ASSESSEE COMPANY FILED STATUTORY FORMS WITH ROC IN FORM NO. 2 FOR EACH TRANCHE SEPARAT ELY DISCLOSING THE NUMBER OF SHARES, FACE VALUE AND PREMIUM PER SHARE 21 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. AND ALSO THE NAME OF THE ALLOTTEE. THE ASSESSEE ALSO FILED ITS ANNUAL RETURN OF WITH ROC IN FORM NO. 20B DISCLOSING THE DETAILS OF ACCOUNTS OF NUMBER OF SHARES, FACE VALUE AND PREMIUM OF SHARE, NAME AND ADDRESS OF SHAREHOLDERS. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT DATED 28.03.2014 REQUIRING THE ASSESSEE TO FURNISH DETAILS IN RESPECT OF SHARES ISSUED AT PREMIUM. THE ASSESSEE REPLI ED AND FILED FOLLOWING DETAILS: - ANNEXURE1 - DETAILS OF SHARE ALLOTMENT ANNEXURE 2 - FORM 2 FILED FOR EACH TRANCHE OF ALLOTMENT FILED WITH ROC ANNEXURE 3 - ANNUAL RETURN FILED IN FORM 20B FILED WITH ROC ANNEXURE 4 - DETAILS OF APPLICANT (INCLUDING PAN AND ADDRESS) SHARES ALLOTTED, CONSIDERATION, ETC.' 6. THE AO REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE SHARE PREMIUM IS NOT ADDED TO THE RETURNED INCOME OF THE ASSESSEE. THE ASSESSEE FILED ITS REPLY DA TED 16.03.2015, WHEREIN IT IS SUBMITTED THAT THE RETURN OF INCOME FILED BY PCPL AND ALSO AUDITED FINANCIAL STATEMENT FOR THE AY 2012 - 13. THE AO INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT AND ADDED SHARE PREMIUM OF 598,44,01,500/ - , WITHOUT DISPUTING THE FACE VALUE OF SHARES TO THE TOTAL INCOME OF THE ASSESSEE 22 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. ON THE GROUND THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE NATURE AND SOURCE OF THE CREDIT ON THE ACCOUNT OF THE SHARE PREMIUM. THE CIT(A) DELETED THE ADDITION AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS NOTED ABOVE. 7. WE HAVE NOTED THAT DURING THE COURSE OF HEARING OF THIS APPEAL, THE LD CIT - DR IN ALL FAIRNESS ADMITTED THAT THE IDENTITY, SOURCE AND CREDITWORTHINESS OF THE TRANSACTION IS NOT IN DOUBT BUT ONLY DISPUTE OF THE DEPARTMENT IS AS REGARDS THE NATURE OF THE TRANSACTION IN LIGHT OF THE HUGE PREMIUM CHARGED BY THE ASSESSEE. THE LD CIT - DR PLACED HEAVY RELIANCE ON THE DECISION OF CO - ORDINATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF PRATIK SYNTEX (P.) LTD. VS. ITO (2018)94 TAXMANN.C OM 12. THE LD COUNSEL FOR THE ASSESSEE SH THAR EXPLAINED THAT THE SAID DECISION CANNOT BE APPLIED IN THE PRESENT CASE ON FACTS OF THE CASE. HE EXPLAINED THAT THE SAID DECISION IS RENDERED ON DIFFERENT SET OF FACTS AS COMPARED TO THE PRESENT CASE. HE STATED THAT THE VALUATION OF THE SHARE PREMIUM IS TO BE LOOKED INTO FOR THE PURPOSE OF SECTION 68 OF THE ACT. THE FACTS IN THAT CASE WERE THAT EQUITY SHARES WERE ISSUED IN THE YEAR UNDER CONSIDERATION TO THE PROMOTERS AS WELL AS THREE NEW PARTIES. BOTH THESE CLA SSES OF SHAREHOLDERS WERE ISSUED EQUITY SHARES. PROMOTERS WERE ISSUED SHARES AT PAR WHEREAS PREMIUM OF RS. 4901 - PER SHARE 23 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. WAS CHARGED FROM THE NEW PARTIES AND FOR THIS THE TRIBUNAL HAS MADE SPECIFIC NOTE OF THE FOLLOWING: DESPITE MAKING SUCH HUGE INVEST MENT IN THE COMPANY, THE COMPANY DID NOT KNOW THE WHEREABOUTS OF THOSE SHAREHOLDERS (PARA 6, PAGE 10 OF THE ORDER). LD COUNSEL STATED THAT NO JUSTIFICATION FOR SUCH DIFFERENT ISSUE PRICE EVEN WITHIN THIS RELEVANT YEAR UNDER CONSIDERATION IS BROUGHT ON RE CORD. THE TRIBUNAL NOTED THAT NO DOUBT THE PRICE CAN BE DIFFERENT IN GENUINE TRANSACTIONS AS WELL HOWEVER THE CASE GOT AGGRAVATED SINCE THE SHAREHOLDERS TO WHOM PREMIUM WAS CHARGED COULD NOT BE TRACED (PARA 6, PAGE 10 OF THE ORDER). THE AO DEPUTED AN INSPE CTOR TO MAKE FIELD INQUIRIES WITH RESPECT TO THE SHAREHOLDERS. THE INSPECTOR REPORTED THAT THESE THREE NEW SHAREHOLDERS ARE NOT AVAILABLE AT THE GIVEN ADDRESSES AND THEIR WHEREABOUTS ARE NOT KNOWN. THE ASSESSE IN THAT CASE WAS CONFRONTED WITH THE ADVERSE I NSPECTOR REPORT BUT THE ASSESSEE COULD NOT PRODUCE CURRENT ADDRESSES OF THESE THREE NEW SHAREHOLDERS (PARA 6. PAGE 10 OF THE ORDER). THE CREDITWORTHINESS OF THE SHAREHOLDERS WAS ALSO NOT PROVED SINCE THE SHAREHOLDERS DID NOT HAVE THEIR OWN MONEY AS EVERY P AYMENTS MADE BY THEM TOWARDS SHARE MONEY IN THE FAVOUR OF THE ASSESSEE IS PRECEDED BY DEPOSIT IN THE HANK ACCOUNT AND THE BALANCE 24 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. MAINTAINED REGULARLY BY THEM WAS MINISCULE (PARA 6, PAGE 14 OF THE ORDER). THE CONFIRMATIONS RECEIVED FROM THREE PARTIES WERE SIGNED BY THE SAME PERSON. THE ASSESSEE IN THAT CASE COULD NOT JUSTIFY THE CHARGEABILITY OF SUCH A HUGE SHARE PREMIUM RECEIVED FROM THREE NEW SHAREHOLDER VIS - A - VIS ISSUING SHARES AT PAR TO THE ORIGINAL PROMOTERS WITHIN THE SAME RELEVANT YEAR UNDER CONSIDER ATION. TO CONTEND THAT SECTION 56(2)(VIIB) R.W.S. 2(24XXVI) OF THE ACT ARE PLACED IN STATUTE BY FINANCE ACT, 2012 W.E.F. 01 - 04 - 2013 AND NO QUESTION CAN HE RAISED AS TO THE VALUATION OF SHARES AT AN HUGE SHARE PREMIUM IS NOT CORRECT AS IN THE INSTANT CASE, THE GENUINENESS OF THE TRANSACTION OF RAISING OF SHARE CAPITAL INCLUSIVE OF SHARE PREMIUM TO THE TUNE OF RS. 300 LACS FROM THESE THREE NEW SHAREHOLDERS IS ITSELF NOT PROVED. 8. WE HAVE GONE THROUGH THE CASE LAWS RELIED BY THE ASSESSEE HAVE BEEN DISTINGUI SHED BY THE TRIBUNAL WHILE RENDERING THE AFORESAID DECISION. WE SEEK TO SPECIFICALLY ADDRESS HOW THE TRIBUNAL DEALT WITH THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. GAGANDEEP INFRASTRUCTURE (P.) LTD. (2017) 394 ITR 680. THE HONBLE TRIBUNAL HAS HELD THAT IN THE CASE OF GAGANDEEP (SUPRA) THE HON'BLE BOMBAY HIGH COURT CONSIDERED THE FACTUAL MATRIX OF THE CASE WHEREIN IT WAS OBSERVED THAT THE TAXPAYER SATISFIED THE 25 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. THREE INGREDIENTS OF SECTION 68 OF THE ACT WHICH STOOD PROVED NAMELY ID ENTITY AND CREDITWORTHINESS OF SHAREHOLDERS AND GENUINENESS OF THE TRANSACTION AND ON THAT FACTUAL MATRIX DECISION OF THE TRIBUNAL WAS ACCEPTED WHEREIN TRIBUNAL RULED IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE TAXPAYER DID SATISFIED ALL THE THREE INGRED IENTS OF SECTION 68 OF THE ACT. 9. NOW LET US GO THROUGH THE DECISION RELIED ON BY THE ASSESSEE OF HON'BLE BOMBAY HIGH COURT IN CASE OF GAGANDEEP (SUPRA) WHICH READS AS UNDER: - (C) BEING AGGRIEVED, THE REVENUE CARRIED THE ISSUE IN THE APPEAL TO THE TR IBUNAL. THE IMPUGNED ORDER OF THE TRIBUNAL HOLDS THAT THE RESPONDENT ASSESSEE HAD ESTABLISHED THE IDENTITY, GENUINENESS AND CAPACITY OF THE SHAREHOLDERS WHO HAD SUBSCRIBED TO ITS SHARES. THE IDENTITY WAS ESTABLISHED BY THE VERY FACT THAT THE DETAILED NAMES , ADDRESSES OF THE SHAREHOLDERS, PAN NUMBERS, BANK DETAILS AND CONFIRMATORY LETTERS WERE FILED. THE GENUINENESS OF THE TRANSACTION WAS ESTABLISHED BY FILING A COPY OF SHARE APPLICATION FORM, THE FORM FILED WITH THE REGISTRAR OF COMPANIES AND AS ALSO BANK D ETAILS OF THE SHAREHOLDERS AND THEIR CONFIRMATIONS WHICH WOULD INDICATE BOTH THE GENUINENESS AS ALSO THE CAPACITY OF THE SHAREHOLDERS TO SUBSCRIBE TO THE SHARES. FURTHER THE TRIBUNAL WHILE 26 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. UPHOLDING THE FINDING OF CIT(A) ALSO THAT THE AMOUNT RECEIVED ON IS SUE OF SHARE CAPITAL ALONGWITH THE PREMIUM RECEIVED THEREON, WOULD BE ON CAPITAL RECEIPT AND NOT IN THE REVENUE FIELD. FURTHER RELIANCE WAS ALSO PLACED UPON THE DECISION OF APEX COURT IN LOVELY EXPORTS (P) LTD. (SUPRA) TO UPHOLD THE FINDING OF THE CIT(A) A ND DISMISSING THE REVENUE'S APPEAL. 10. NOW, IN THE PRESENT CASE OF THE ASSESSEE, THE MAIN CRUX OF THE FACTS THAT THE ASSESSEE FILED SUFFICIENT EVIDENCES VIZ, RETURN OF INCOME, SHARE ALLOTMENT, ANNUAL RETURN, DETAILS INCLUDING NAME, ADDRESS AND PAN OF T HE SHAREHOLDER WHICH ARE NOT NEGATED BY THE AO. THE AO IN THE PRESENT CASE HAS HIMSELF ASSESSED THE PREFERENCE SHAREHOLDER FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND AFTER SCRUTINY HAS PASSED THE ORDER U/S 143(3) OF THE ACT AROUND THE SAME DATE AND HA S NEITHER MADE ANY ADDITION NOR MADE ANY ADVERSE REMARKS. THE AO HAS NOT QUESTIONED THE PREFERENCE SHARE CAPITAL TO THE EXTENT OF THE FACE VALUE BUT HAS ONLY QUESTIONED THE SHARE PREMIUM. BY THIS ACTION OF THE AO HIMSELF, THE 'NATURE' OF TRANSACTION AS THA T OF 'PREFERENCE SHARE ALLOTMENT' IS PROVED BEYOND DOUBT AND MERELY BECAUSE HE FEELS THAT THE SHARE PREMIUM IS HIGH THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED FOR THE PURPOSE OF SECTION 68 OF THE ACT. 27 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. 11. WE FIND THAT IN THE GIVEN FACTS OF THE CASE THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF GAGANDEEP (SUPRA) SQUARELY APPLIES TO THE ASSESSEE'S CASE. THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS GREEN INFRA LTD 78 TAXMANN.COM 340 IS SQUARELY APPLICABLE TO TH E CASE OF THE ASSESSEE. DESPITE BEING THE SPECIFIC ARGUMENT OF THE CIT - DR THAT THE SHARE PREMIUM DEFIES COMMERCIAL PRUDENCE, HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT GENUINENESS OF THE TRANSACTION IS PROVED SINCE THE ENTIRE TRANSACTION IS RECORDED I N THE BOOKS OF THE ASSESSEE AND THE TRANSACTION HAS TAKEN PLACE THROUGH BANKING CHANNELS. THE DECISION OF THE HONBLE HIGH COURT HAS SPECIFICALLY HELD THAT IT IS A PREROGATIVE OF THE BOARD OF DIRECTORS OF A COMPANY TO DECIDE THE PREMIUM AMOUNT AND IT IS TH E WISDOM OF THE SHAREHOLDERS WHETHER THEY WANT TO SUBSCRIBE TO SUCH A HEAVY PREMIUM. THE REVENUE AUTHORITIES CANNOT QUESTION THE CHARGING OF SUCH OF HUGE PREMIUM WITHOUT ANY BAR FROM ANY LEGISLATED LAW OF THE LAND. THE TRIBUNAL AFTER EXAMINING THE INGREDIE NTS OF SECTION 68 OF THE ACT HELD THAT THE ADDITION OF SHARE PREMIUM UNDER SECTION 68 OF THE ACT CANNOT BE SUSTAINED. WE HEREUNDER REPRODUCE THE RELEVANT PARAGRAPH OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN EASE OF GREEN INFRA (SUPRA) FOR READ Y REFERENCE: 28 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. 3.REGARDING QUESTION NO.(II): (A)BEFORE THE TRIBUNAL, THE REVENUE RAISED A NEW PLEA VIZ. THAT THE SO CALLED SHARE PREMIUM HAS ALSO TO BE JUDGED ON THE TOUCHSTONE OF SECTION 68 OF THE ACT WHICH PROVIDES FOR CASH CREDIT BEING CHARGED TO TAX. THE IMPUGNED ORDER OF THE TRIBUNAL ALLOWED THE ISSUE TO BE RAISED BEFORE IT FOR THE FIRST TIME, OVERRULING THE OBJECTION OF THE RESPONDENTASSESSEE. (B)THE IMPUGNED ORDER EXAMINED THE APPLICABILITY OF SECTION 68 OF THE ACT ON THE PARAMETERS OF THE IDENTITY OF THE SUBSCRIBER TO THE SHARE CAPITAL, GENU INENESS OF THE TRANSACTION AND THE CAPACITY OF THE SUBSCRIBERTO THE SHARE CAPITAL. IT FOUND THAT THE IDENTITY OF THE SUBSCRIBERS WAS CONFIRMED BY VIRTUE OF THE ASSESSING OFFICER ISSUING A NOTICES UNDER SECTION 133(6) OF THE ACT TO THEM. FURTHER, IT HOLDS T HAT THE REVENUE ITSELF MAKES NO GRIEVANCE OF THE IDENTITY OF THE SUBSCRIBERS. SO FAR AS THE GENUINENESS OF THE TRANSACTION OF SHARE SUBSCRIBER IS CONCERNED, IT CONCLUDES AS THE ENTIRE TRANSACTION IS RECORDED IN THE BOOKS OF ACCOUNTS AND REFLECTED IN THE FI NANCIAL STATEMENTS OF THE ASSESSEE SINCE THE SUBSCRIPTION WAS DONE THROUGH THE BANKING CHANNELS AS EVIDENCED BY BANK STATEMENTS WHICH WERE EXAMINED BY THE TRIBUNAL. WITH REGARD TO THE CAPACITY OF THE SUBSCRIBERS THE IMPUGNED ORDER RECORDS A FINDING THAT 98 % OF THE SHARES IS HELD BY IDFC PRIVATE 29 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. EQUITY FUND WHICH IS A FUND MANAGER OF IDFC LTD. MOREOVER, THE CONTRIBUTIONS IN IDFC PRIVATE EQUITY FUNDII ARE ALL BY PUBLIC SECTOR UNDERTAKINGS. (C) MR.CHHOTARAY THE LEARNED COUNSEL FOR THE REVENUE STATES THAT THE IMPUGNED ORDER ITSELF HOLDS THAT SHARE PREMIUM OF RS.490/ PER SHARE DEFIES ALL COMMERCIAL PRUDENCE. THEREFORE IT HAS TO BE CONSIDERED TO BE CASH CREDIT. WE FIND THAT THE TRIBUNAL HAS EXAMINED THE CASE OF THE REVENUE ON THE PARAMETERS OF SECTION 68 OF THE ACT AND FOUND ON FACTS THAT IT IS NOT SO HIT. THEREFORE, SECTION 68 OF THE ACT CANNOT BE INVOKED. THE REVENUE HAS NOT BEEN ABLE TO SHOW IN ANY MANNER THE FACTUAL FINDING RECORDED BY THE TRIBUNAL IS PERVERSE IN ANY MANNER. (D) THUS, QUESTION NO.(II) AS FO RMULATED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW AND THUS NOT ENTERTAINED. 12. IN VIEW OF THE AFORESAID, WE ARE OF THE VIEW THAT VALUATION IS NOT RELEVANT FOR DETERMINING GENUINENESS OF THE TRANSACTION FOR THE PURPOSE OF SECTION 68 OF THE ACT. WE ARE OF THE VIEW THAT CIT(A) HAS RIGHTLY DELETED THE ADDITION ON ACCOUNT OF THE SHARE PREMIUM RELYING ON THE DECISION OF HON'BLE JURISDICTIONAL TRIBUNAL IN CASE OF GREEN INFRA LTD. VS. ITO (2013) 145 ITR 240. 30 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. IT IS A SETTLED POSITION THAT WHAT IS AP PARENT IS REAL UNLESS PROVED OTHERWISE. IT IS A SETTLED LEGAL POSITION THAT 'APPARENT IS REAL' AND THE ONUS TO PROVE THAT THE APPARENT IS NOT THE REAL IS ON THE PARTY WHO CLAIMS IT TO BE SO AS HELD BY HON'BLE SUPREME COURT IN CASE OF CIT VS. DAULAT RAM RAW ATMULL (1973) 87 ITR 349. 13. IN THE PRESENT CASE, THE OVERWHELMING EVIDENCE PROVES THAT THE 'NATURE' OF RECEIPT IS SHARE PREMIUM. THE AUDITED ACCOUNTS OF BOTH PARTIES, THE STATUTORY SINCE IT WAS THE DEPARTMENT WHICH CLAIMED THAT THE SHARE PREMIUM IS NOT I N FACT SO, DESPITE THE STATUTORY FORMS VIZ. FORM 2 FOR RETURN OF ALLOTMENT AND FORM 20B FOR ANNUAL RETURN FILED WITH THE ROC ALL SHOW THE 'NATURE' AS SHARE PREMIUM. IF THE DEPARTMENT WANTS TO CONTEND THAT WHAT IS APPARENT IS NOT REAL, IT IS THE ONUS OF THE DEPARTMENT TO PROVE THAT IT WAS ASSESSEE'S OWN MONEY WHICH WAS ROUTED THROUGH A THIRD PARTY. ONLY THEN CAN THE PROVISIONS OF SECTION 68 OF THE ACT BE INVOKED. THIS ASPECT IS CONSIDERED IN THE DECISION OF MUMBAI TRIBUNAL IN CASE OF GREEN INFRA LTD. VS. ITO (2013) 145 LTD 240, WHEREIN TRIBUNAL HAS HELD THAT IT IS A PREROGATIVE OF THE BOARD OF DIRECTORS OF A COMPANY TO DECIDE THE PREMIUM AMOUNT AND IT IS THE WISDOM OF THE SHAREHOLDERS WHETHER THEY WANT TO SUBSCRIBE TO SUCH A HEAVY PREMIUM. THE REVENUE AUTHORI TIES CANNOT QUESTION THE CHARGING OF SUCH OF HUGE PREMIUM WITHOUT ANY BAR FROM ANY LEGISLATED LAW OF THE LAND. THE SAID 31 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. DECISION HAS BEEN AFFIRMED BY HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF GREEN INFRA LTD (SUPRA). 14. THE LD. COUNSEL FOR THE ASSESS EE MADE ANOTHER ARGUMENT THAT THE POWER OF CARRYING VALUATION IS NOT ENVISAGED BY THE LEGISLATURE FOR THE PURPOSE OF SECTION 68 OF THE ACT. HE ARGUED THAT, WHEREVER THE LEGISLATURE INTENDED TO GIVE THE POWER TO DETERMINE THE VALUE TO THE AO, IT EITHER PRES CRIBES RULE FOR VALUATION OF A PARTICULAR THING OR VESTED UPON THE AO THE POWER TO REFER TO THE VALUATION OFFICER. THE POWER OF AO TO MAKE A REFERENCE TO THE VALUATION OFFICER IS CONTAINED IN SECTION 142A OF THE ACT. SECTION 142A OF THE ACT AS IT STOOD FOR THE YEAR UNDER CONSIDERATION READS AS UNDER: 142. (1) FOR THE PURPOSES OF MAKING AN ASSESSMENT OR REASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 OR SECTION 6911 OR THE VALUE OF ANY BULLION, JEWEL LERY OR OILIER VALUABLE ARTICLE REFERRED TO IN SECTION 69A OR SECTION 6911 OR FAIR MARKET VALUE OF ANY PROPERTY REFERRED TO IN SUB - SECTION (2) OF SECTION 56 IS REQUIRED TO BE MADE, THE ASSESSING OFFICER MAY REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO HIM. 32 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. 15. WE HAVE CONSIDERED THE ISSUE AND FIND THAT THIS SECTION DOES NOT COVER SECTION 68 OF THE ACT. THUS, THE LEGISLATURE DOES NOT ENVISAGE ANY SORT OF VALUATION FOR THE PURPOSE OF SECTION 68 OF THE ACT. INDEED, VALUATION OF PREFERENCE SHARES IS A COMPLETELY DIFFERENT EXERCISE AS COMPARED TO VALUATION OF EQUITY SHARES. THE AO MAKES THE MENTION OF THE RESERVES AND LOSS WHILE CHALLENGING THE CHARGE OF SHARE PREMIUM ON PREFERENCE SHARES. 'RESERVES' COULD BE RELEVANT FOR VALUING EQUITY SHARES. THEY ARE NOT RELEVANT FOR VALUING PREFERENCE SHARES. PREFERENCE SHAREHOLDERS GET PRIORITY OVER THE EQUITY SHAREHOLDERS IN TERMS OF PAYMENT OF DIVIDEND AND DURING WINDING UP. THEY GET ONLY A FIXED RATE OF DIVIDEND. THE REDEMPTION AMOUNT DEPENDS ON THE TERMS OF ISSUE. THE CONVERSION DEPENDS ON THE TERMS OF ISSUE. THE TERMS OF ISSUE ARE RELEVANT FOR VALUING PREFERENCE SHARES. EVEN THE PRESENT RULE 11UA OF THE INCOME TAX RULES 1962 ARE APPLICABLE ONLY TO SECTION 56(2) OF THE ACT, REQU IRES VALUATION OF PREFERENCE SHARES BY THE MERCHANT BANKERS. THE AO HAS NOT EVEN ATTEMPTED TO DO ANY SORT OF VALUATION OF PREFERENCE SHARES. HIS ADDITION IS BASED ENTIRELY ON CONJECTURES AND SURMISES. IT IS A SETTLED IAW THAT THE ASSESSMENT CANNOT HE MADE ON MERE SUSPICION, CONJECTURES AND SURMISES. 33 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. 16. EVEN AMENDMENT TO SECTION 68 BROUGHT BY FINANCE ACT, 2012 DOES NOT REFER TO VALUATION. THE INSERTION OF THE PROVISO TO SECTION 68 OF THE ACT BY FINANCE ACT, 2012 CASTS AN ADDITIONAL ONUS ON THE CLOSELY HEL D COMPANIES TO PROVE SOURCE IN THE SHAREHOLDERS SUBSCRIBING TO THE SHARES OF COMPANIES. DURING THE COURSE OF THE HEARING, THE LD COUNSEL EXPLAINED THAT THE EXPLANATORY MEMORANDUM TO THE FINANCE BILL 2012 MAKES IT CLEAR THAT THE ADDITIONAL ONUS IS ONLY WITH RESPECT TO SOURCE OF FUNDS IN THE HANDS OF THE SHAREHOLDERS BEFORE THE TRANSACTION CAN BE ACCEPTED AS A GENUINE ONE. EVEN THE AMENDED SECTION DOES NOT ENVISAGE THE VALUATION OF SHARE PREMIUM. THIS IS FURTHER EVIDENT FROM A PARALLEL AMENDMENT IN SECTION 56 (2) OF THE ACT WHICH BRINGS IN ITS AMBIT SO MUCH OF THE SHARE PREMIUM AS CHARGED BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, AS IT EXCEEDS THE FAIR MARKET VALUE OF THE SHARES. IF ONE ACCEPTS THE LD CIT - DR'S CONTENTIO NS THAT SECTION 68 OF THE ACT CAN HE APPLIED WHERE THE TRANSACTION IS PROVED TO BE THAT OF A SHARE ALLOTMENT THAT HERE THE VALUATION FOR CHARGING PREMIUM IS NOT JUSTIFIED, IT WILL MAKE THE PROVISIONS OF SECTION 56(2)(VIIB) OF THE ACT REDUNDANT AND NUGATORY . THIS CANNOT BE THE INTENTION OF THE LEGISLATURE ESPECIALLY WHEN THE AMENDMENTS IN THE TWO SECTIONS ARE BROUGHT IN AT THE SAME TIME. 34 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. IN VIEW OF THE MATTER, THE LD COUNSEL EXPLAINED THAT IT IS A SETTLED LAW THAT WHERE TWO VIEWS ARE POSSIBLE, THE VIEW FAV ORABLE TO THE ASSESSE SHOULD BE ADOPTED AS HELD BY HONBLE SUPREME COURT IN CASE OF CIT VS. VEGETABLE PRODUCTS LTD. (1973) 88 ITR 192. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED ITS ONUS BY ADEQUATELY DISCLOSING THE TRANSACTION IN ITS BOOKS OF ACCOUNTS, FILING STATUTORY FORMS AS REGARDS ALLOTMENT OF SHARES, PROVIDING NAME, ADDRESS AND PAN OF THE SHAREHOLDERS, ETC. THE ASSESSEE HAS SUFFICIENTLY DISCHARGED THE ONUS CAST UPON IT FOR THE PURPOSE OF SECTION 68 OF THE ACT AND NO ADDITION CAN BE MADE ON THIS ACCOUNT. HENCE, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAME. THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 15 . AFTER HAVING CONSIDERED THE ENTIRE FACTS AND CI RCUMSTANCES OF THE CASE AND THE ORDERS PASSED BY THE REVENUE AUTHORITIES, WE FIND THAT LD. CIT(A) HAD PASSED A DETAILED ORDER WHILE RELYING UPON VARIOUS JUDGMENTS CITED BY THE PARTIES AND ALSO CONSIDERING THE PRINCIPLES LAID DOWN BY HONBLE SUPREME COURT I N THE CASE OF LOVELY EXPORTS PVT. LTD.(SUPRA) AND M OREOVER, N O NEW FACTS 35 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD CIT (A) . THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT (A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE REVENUE STANDS DISMISSED . GROUND NO. 2 16 . THIS GROUND RAISED BY THE REVENUE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) ERRED IN DISALLOWANCE OF INTEREST OF RS.2,90,96,145/ - U/S 36(1)(III) OF THE ACT. 17 . WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD, JUDGMENT CITED BY THE PARTIES AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. 1 8 . BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESS ARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS 36 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. DEALT WITH THE ABOVE GROUNDS RAISED BY THE REVENUE IN PARA NO. 7.4 TO 7.7 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 7.4 I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER OF THE AO AS WELL AS WRITTEN SUBMISSION AND PAPER BOOK FILED BY THE APPELLANT. THE APPELLANT AT THE VERY OUTSET HAS CLARIFIED THAT THE INTEREST FREE FUNDS GIVEN BY IT IS RS, 22,10,18,973/ - WHICH HAS BEEN WRONGLY TAKEN AT RS. 30,05,18,973 BY THE AO. PARTICULARS AMOUNT INTEREST FREE LOANS BBIPL INFRASTRUCTURE (INDIA) PVT. LTD. 2,72,00,000 P & M INFRASTRUCTURE PVT. LTD 10,60,00,000 GALAXY ASBETOS & FITTING PVT LTD 78,30,000 SUNARK INVESTMENT PVT LTD 87,14,300 AXIS SPACES PVT LTD 5,85,00,000 20,82,44,300 SUBSIDIARY COMPANIES 98,81,408 OTHER ADVANCES 25,00,000 ADVANCE FOR PROPERTY 3,93,265 TOTAL (A) 22,10,18,973 INTEREST BEARING LOAN EFFORT BPO 1.30,00,000 37 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. THE APPELLANT HAS FILED THE DETAILS OF LOANS AND ADVANCES GIVEN WHICH WERE PLACED ON PAGE 32 OF THE PAPER BOOK; THE SAME IS TABULATED BELOW FOR THE PURPOSE OF COMPLETENESS FROM THE DETAILS FILED BY THE APPELLANT WHICH ARE TABULATED ABOVE, THE APPELLANTS CONTENTION IS FOUND TO BE IN ORDER AND IT IS ACCEPTED THAT THE INTEREST FREE LOANS OR ADVANCES GIVEN BY THE APPELLANT IS RS. 22,10,18,973F - ONLY AS AGAINST THE AMOUNT OF RS. 30,05,18,9737 - CONSIDERED BY THE A.O. ON PERUSAL OF THE BALANCE SHEET OF THE APPELLANT,, IT WAS SEEN THAT OWN FUND (I.E. SHARE CAPITAL AND SURPLUS) OF THE APPELLANT IS RS. 27,43,62,7427 - AGAINST WHICH THE INTEREST FREE ADVANCES GIVEN BY THE APPELLANT IS RS , 22,10,18,973/ - . THIS ESTABLISHES THAT THE INTEREST FREE FUNDS HAVE BEEN GIVEN BY THE APPELLANT OUT OF ITS OWN FUNDS. IN VIEW OF THIS DISCUSSION THE ADDITION MADE BY EXPRESSIT LOGISTIC WORLDVIDE LIMITED 1,00,00,000 AXIS SPACES PVT LTD - INTER CORPORATE DEPOSITS 5,00,00,000 FRAMEBOXX ANIMATION AND VISUAL EFFECTS PVT. LTD 65,00,000 TOTAL (B) 7,95,00,000 TOTAL (A+B) 30,05,18,973 38 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. THE A.O. CANNOT BE SUSTAINED IN APPEAL. IN VIEW OF THIS DISCUSSION THE DISALLO WANCE MADE BY THE AO DESERVES TO BE DELETED. 7.5 THIS VIEW IS DULY SUPPORTED BY THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT AND HON'BLE ITAT IN THE FOLLOWING DECISIONS: - CIT VS RELIANCE UTILITIES & POWER LTD [313 ITR 340 BOM] - MANOHAR MANAK ALLOYS P. LTD VS ACIT FITA 2094/MUM/2013L - ACIT VS GOPAL FABRICS FITA 3338/AHD/2010L 7:6 THIS VIEW IS ALSO SUPPORTED BY THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF HDFC BANK LIMITED VS DCIT [383 ITR 0529] WHEREIN IT HAS BEEN HELD THAT 'THE PETITIONER WAS POSSESSED OF SUFFICIENT INTEREST FREE FUNDS OFRS.2153 CRORES AS AGAINST THE INVESTMENT IN TAX FREE SECURITIES OFRS.52.02 CRORES. CONSEQUENTLY, THERE IS A PRESUMPTION THAT THE INVESTMENT WHICH HAS BEEN MADE IN THE TAX FREE SECURITIES HAS COME OUT OF THE INTEREST FREE FUNDS AVAILABLE WITH THE PETITIONER. THIS IS SO AS IT HAS BEEN HELD BY THIS COURT IN THE PETITIONER'S OWN CASE FOR AN EARLIER ASSESSMENT YEAR BEING HDFC BANK LTD. (SUPRA). THIS DECISION ON THE ABOVE ISSUE HAS BEEN ACCEPTED BY THE REVENUE. THIS IS EVIDENCED BY THE FACT ALTHOUGH AN APPEAL HAS BEEN FILED TO THE SUPREME COURT WITH REGARD TO ANOTHER ISSUE ARISING FROM THE ORDER IN HDFC BANK LTD. (SUPRA) NAMELY 39 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. BROKEN PERIOD INTE REST, NO APPEAL ON THIS ISSUE AS RAISED BEFORE THE TRI BUNAL HAS BEEN CHALLENGED BEFORE THE SUPREME COURT. 7.7 THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE JUDGMENTS OF THE HON'BLE BOMBAY HIGH COURT I AM OF THE VIEW THAT THE INTEREST FREE ADVANCES HAVE BEEN GIVEN BY THE APPELLANT OUT OF OWN FUNDS; HENCE, THE QU ESTION OF DISALLOWANCE OF INTEREST DOES NOT ARISE AND THE DISALLOWANCE MADE BY THE A.O. IS DIRECT ED TO BE DELETED. ACCORDINGLY THIS GROUND IN APPEAL IS ALLOWED. 19 AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AND HEARING THE PARTIES AT LENGTH, WE FIND AS PER THE FACTS OF THE PRESENT CASE THAT THE ASSESSEE HAD FILED THE DETAILS OF LOANS AND ADVANCES GIVEN AND FROM THE SAID DETAILS, THE CONTENTION OF THE ASS ESSEE WAS FOUND TO BE IN ORDER TO THE EFFECT THAT INTEREST FEE LOANS OR ADVANCES GIVEN BY THE ASSESSEE IS AT RS. 22,10,18,973/ - ONLY AS AGAINST THE AMOUNT OF RS. 30,05,18,9737 - CONSIDERED BY THE A.O. THEREFORE, AFTER CONSIDERING THE BALANCE SHEET. THE OWN FUND (I.E. SHARE CAPITAL AND SURPLUS) OF THE ASSESSEE WAS RS. 27,43,62,742/ - AGAINST WHICH THE INTEREST FREE ADVANCES GIVEN BY THE ASSESSEE WAS RS, 22,10,18,973/ - . THUS. THIS ESTABLISHES THAT THE INTEREST FREE FUNDS HAVE BEEN GIVEN BY THE ASSESSEE OUT OF ITS 40 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. OWN FUNDS. THEREFORE, WHILE RELYING UPON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT AND HON'BLE ITAT IN THE CASE OF CIT VS RELIANCE UTILITIES & POWER LTD [313 ITR 340 BOM], MANOHAR MANAK ALLOYS P. LTD VS ACIT FITA 2094/MUM/2013L AND ACIT VS GOPAL FABRI CS ITA 3338/AHD/2010, THE LD. CIT (A) HAD RIGHTLY ALLOWED THIS GROUND. 20. MOREOVER, N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD CIT (A) . THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT (A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE REVENUE STANDS DISMISSED . GROUND NO. 3 & 4 21 . THESE GROUND RAISED BY THE REVENUE ARE GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. 41 I.T.A. NO. 5925 / MUM/201 7 BUSINESS MATCH SERVICES PVT. LTD. 22 . IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEB , 2019 . SD/ - SD/ - ( G. MANJUNATHA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 2 8 . 02 .201 9 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI