INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Receipt of share capital/premium - Assessee duly furnished necessary documentary evidences except ITR of investor

Assessee received share capital premium from M/s. 'R' based at mauritius. AO treated the same as unexplained credit under section 68 on the ground that on account of assessee not having furnished copy of income-tax return of M/s. 'R' intimation, if any, issued by Mauritian tax authorities to M/s. 'R' for the relevant year, source of funds and creditworthiness of M/s. 'R' could not be accepted.Held: Assessee had submitted Foreign Inward Remittance Certificate (FIRC), tax residency certificate issued by Mauritian authorities; FCGPR return filed with RBI in the context of allotment of shares under FDI route, copy of Board resolution indicating the shares offered, share price premium, Board resolution for allotment of shares to M/s. 'R' along with copy of return filed with RoC in that regard. From the report received from FT & TR division after making enquiries with Mauritian tax authorities, information pertaining to Directors of M/s. 'R', its shareholders, its source of funds for making investments in India were placed on record. Entire transactions of receipt of share capital and premium under FDI route had been duly approved by RBI merely because, investor had not filed its income tax returns, it did not make entire transactions bogus, when assessee had duly established three necessary ingredients of section 68 one facts and on merits duly supported by all documentary evidences, accordingly addition could not be sustained.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 23(1)(c)

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