Amount received as share premium: Applicability of Section 68
- The assessee was a company and filed its return of income electronically on declaring the total income of ₹1,76,015/-. During the year, the assessee had received share capital along with share premium of ₹1.57 crores. The shares were issued at the face value of ₹10/-. Shares were at a premium of ₹90/- per share. The entire share capital was subscribed by only one company M/s. Mahakal Shoppers (P) Ltd.
- The AO made an addition u/s 68 of the Act on the ground that the share capital received was seen not a genuine credit.
- Aggrieved by the decision of the AO and the lower authorities, assessee filed an appeal before the tribunal.
- The Tribunal referred to the Kolkata ‘A’ Bench of the Tribunal in the case of ITO vs. M/s. Goodpoint Commodeal Pvt. Ltd. where it was held that after the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, the onus shifted to AO to disprove the documents furnished by assessee.
- Further, where both the nature & source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax assessments u/s 143(3) were placed on record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified.
- The Tribunal relying on the above case held that section 68 was wrong applied and the same was deleted.
- Issue Outcome: Assessee
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