| The Tax Publishers2019 TaxPub(DT) 2032 (Mum-Trib) INCOME TAX ACT, 1961
Section 68
Mere presumption that premium received by the assessee was unjustified and unreasonable, could not be a ground for making addition of share premium received by the assessee in case assessee had duly discharged burden cast on it to prove identity, creditworthiness of investors and genuineness of the transactions.
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Income from undisclosed sources - Addition under section 68 - Receipt of share premium presumed to be unreasonable - Assessee having proved identity, creditworthiness and genuineness
Assessee-company issued non-cumulative, non-convertible preference shares of 100 each at a premium of Rs. 49,900 per share. Although AO had not doubted identity, creditworthiness of investors and genuineness of transactions, however, AO made addition of share premium under section 68 on the ground that premium received by the assessee was unjustified and unreasonable. Held: What section 68 pre-supposes to charge to income-tax, is sum found to be credited in the books of assessee if, (i) nature and source of the same is not explained by assessee, (ii) explanation offered by the assessee is not found satisfactory by AO. Accordingly AO in the instant case had lost sight of the fact that mere presumption that premium received by the assessee was unjustified and unreasonable could not be a ground for making addition of share premium received by assessee under section 68. Accordingly, addition was deleted.
Followed:CIT v. Green Infra Ltd. (2017) 146 DTR 262 (Bom) : 2017 TaxPub(DT) 640 (Bom-HC) Judgment dt. 16-2-2017 and Asstt. CIt v. M/s. Gagandeep Infrastructure (P) Ltd. ITA No. 5784/Mum/2011, Co No. 126/Mum/2012, dt 23-4-2014.
REFERRED : CIT v. Lovely Exports (Pvt.) Ltd. 2009 TaxPub(DT) 261 (SC).
FAVOUR : In assessee's favour.
A.Y. : 2011-12
INCOME TAX ACT, 1961
Section 36(1)(iii)
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