Hindustan Coca Cola Beverages (P) Ltd. v. DCIT [ITA No. 4261/Del/2006, ITA No. 236/Del/2007, dt. 19-10-2020] : 2020 TaxPub(DT) 4402 (Del.-Trib)

Share premium utilized to wipe of accumulated losses under court approval -- Taxability under MAT

Facts:

Assessee who had huge accumulated losses duly with court approval as per capital reduction provisions of Companies Act, 1956 utilized share premium in their balance sheet for writing off Rs. 2086.14 crores losses on the face of the balance sheet. It was the revenue's contention that the same should have been routed via P&L Account and the said share premium would have become taxable under MAT as well. On higher appeal the first appellate authority dropped the additions. On higher appeal by the department --

Held against the revenue (in favour of the assessee) the share premium could not be brought into MAT computation.

Editorial Note: The quantum in the appeal and the plea of the department is what makes it a one-off case.