DCIT CC 2(2), MUMBAI V. YASHODA FINVEST P.LTD, MUMBAI

ITA 7560/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0054 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 23-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YESHWANT CHAVAN
• Keywords: Business income
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.7560/M/2016 ASSESSMENT YEAR: 2012-13 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -2(2), PRATISHTHA BHAVAN, 8 TH FLOOR, M.K. ROAD, MUMBAI 400 020 PAN: AAACY0432H VS. M/S. YASHODA FINVEST PRIVATE LIMITED, 51, UDADHI TARANG, JUHU TARA ROAD, SANTACRUZ WEST, MUMBAI 400 049 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI PRAKASH JHUNJHUNWALA, A.R. REVENUE BY : SHRI YESHWANT CHAVAN, D.R. DATE OF HEARING : 31.07.2017 DATE OF PRONOUNCEMENT : 22.08.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 01.10.2016 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2012-13. 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARES, PROPERTIES AN D FINANCE RELATED ACTIVITIES. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS T HE AO) PERUSED THE BALANCE SHEET AS ON 31/03/2012 FILED BY THE ASSESSEE AND OB SERVED THAT THE ASSESSEE, DURING THE IMPUGNED YEAR, HAD TRANSFERRED RS.44,25, 000/- FROM THE SHARE APPLICATION MONEY ACCOUNT TO CAPITAL RESERVE ACCOUN T. DURING THE COURSE OF ASSESSMENT PROCEEDING, ASSESSEE FILED WRITTEN SUBMI SSIONS STATING THAT THE SHARE APPLICATION MONEY OF RS.44,25,000/- WAS RECEIVED FR OM M/S. MADRAS FINVEST PVT. LTD. DURING FINANCIAL YEAR 2004-05 THROUGH BAN KING CHANNEL AND THE ITA NO.7560/M/2016 M/S. YASHODA FINVEST PRIVATE LIMITED 2 ASSESSEE, DURING THE IMPUGNED YEAR, HAD MERELY PASS ED A JOURNAL BOOK ENTRY ON TRANSFERRING THE SHARE APPLICATION MONEY ACCOUNT TO CAPITAL RESERVE ACCOUNT. THE AO WAS NOT CONVINCED WITH THE SUBMISSIONS OF TH E ASSESSEE AND MADE THE ADDITION U/S.28(IV) HOLDING THAT THE BENEFIT HAD AR ISEN IN THE BUSINESS OF THE ASSESSEE. THE FINDINGS OF AO INCORPORATED AT PAGE - 2 OF THE ASSESSMENT ORDER READ AS UNDER :- 'I HAVE GONE THROUGH THE ASSESSEE'S EXPLANATION AND THE SAME IS NOT ACCEPTABLE FOR THE FOLLOWING REASON:- A) THERE IS NO EVIDENCE ON RECORD THAT THE AMOUNT W AS RECEIVED FROM M/S. MADRAS FINVEST PVT. LTD IN FINANCIAL YEAR 2004-05. B) FURTHER THERE IS NO EVIDENCE THAT THE AMOUNT WAS TOWARDS SHARE APPLICATION MONEY FROM M/S. MADRAS FINVEST LTD. C) WITHOUT PREJUDICE, THERE IS NO EVIDENCE THAT THE AMOUNT WAS FORFEITED DUE TO NON PERFORMANCE OF ACTION ON THE PART OF M/S. MADRAS FI N VEST LTD. D) MERE TRANSFER OF AMOUNT TO CAPITAL RESERVE ACCOU NT DOES NOT IPSO FACTO ABSOLVE THE ASSESSEE FROM ITS ONUS TO EXPLAIN THE TRANSACTI ON WITH CORRESPONDING EVIDENCES. E) WHEN THE AMOUNT WAS TRANSFERRED TO CAPITAL RESER VE ACCOUNT, IT HAS RESULTED IN BENEFIT ARISING FROM THE BUSINESS CARRIED OUT BY IT . F) THEREFORE THE AMOUNT IS SQUARELY TAXABLE U/S. 28 (IV) OF THE INCOME TAX ACT 1961.' 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS ALLOWED 5.6 THUS, RESPECTFULLY FOLLOWING THE JUDICIAL DECI SIONS CITED SUPRA AND CONSIDERING THE FACT THAT ENTIRE SHARE APPLICATION MONEY OF RS.44,25,000/- HAD BEEN RECEIVED DURING F.Y.2004-05 AND THAT THE A PPELLANT HAD MERELY PASSED A BOOK ENTRY BY TRANSFERRING THE SHARE APPLI CATION ACCOUNT TO CAPITAL RESERVE ACCOUNT AND AS THE SHARE CAPITAL/PR EMIUM IS IN NATURE OF CAPITAL FIELD, IT CANNOT BE REGARDED THAT ANY BENEF IT OR PERQUISITE HAD ARISEN TO THE APPELLANT IN COURSE OF BUSINESS U/S.28(IV) O F THE ACT. THUS, THE ADDITION MADE IN ASSESSMENT DESERVES TO BE DELETED. I DIRECT AO TO DELETE THE ADDITION OF RS.44,25,000/-. ACCORDINGLY, GROUND NOS.3 & 4 ARE HEREBY ALLOWED. 4. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LOOKING INTO THE FACTS AND THE CIRCUMSTANCES OF THE CASE, I FIND THA T THE ISSUE IN CONTROVERSY IS COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF G.S. HOMES & HOTELS (P) LTD. VS. DCIT 73 TAXMANN.COM 120 (SC) WHEREIN IT IS HELD THAT ITA NO.7560/M/2016 M/S. YASHODA FINVEST PRIVATE LIMITED 3 THE AMOUNT ON ACCOUNT OF SHARE CAPITAL RECEIVED FRO M THE VARIOUS SHAREHOLDERS OUGHT NOT TO HAVE BEEN TREATED AS BUSINESS INCOME. WE FIND THAT SIMILAR ISSUE HAS BEEN DECIDED BY US IN THE CASE OF DCIT VS. NALW A CHROME (P.) LTD. 79 TAXMANN.COM 413 (MUMBAI-TRIB). THEREFORE, WE ARE O F THE VIEW THAT LD. CIT(A) IS JUSTIFIED AND OUR INTERFERENCE IS NOT REQ UIRED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 22.08.2017. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 22.08.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.