Case Law Details
Blooming Tradelink Pvt. Ltd. Vs ITO (ITAT Kolkata)
The sole issue involved in this appeal of assessee is against the action of Ld. CIT(A) in confirming the addition of Rs. 5,01,00,000/- made by AO u/s. 68 of the Income-tax Act, 1961 on account of bogus share capital including share premium.
Briefly stated facts as observed by the AO are that in the year under consideration, the assessee has raised share capital including share premium to the tune of Rs.5,01,00,000/-. The AO added back the entire amount of share capital including premium raised treating the same as unexplained cash credit u/s. 68 of the Act. Aggrieved, assessee preferred an appeal before the Ld. CIT(A), who confirmed the action of AO. Aggrieved, assessee is before us.
According to the assessee, no sum of money has been collected for transfer of shares, whereas shares have been received by the assessee in lieu of exchange of its shares, therefore, no addition u/s. 68 of the Act can be made.
In the facts and circumstances of the case and respectfully following the judicial precedents relied upon, we hold that the AO had erroneously invoked the provisions of section 68 of the Act to the facts of the instant case, which, in our considered opinion, are not at all applicable herein. This is a simple case of acquiring shares of certain companies from certain shareholders without paying any cash consideration and instead, the consideration was settled through issuance of shares to the respective parties. Hence we hold that provisions of section 68 of the Act are not applicable in the instant case and accordingly, the entire addition deserves to be deleted and we delete the addition as confirmed by the Ld. CIT(A) and allow the appeal of the assessee.
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