Case Law Details
ITO Vs Sunglow Dealcom Private Limited (ITAT Kolkata)
The assessee is a company and is in the business of investment. An addition of unexplained cash credit u/s 68 of the Act, were made by the Assessing Officer on the ground that the assessee failed to explain the sources of funds for the share capital received by it at a premium. On appeal the ld. First Appellate Authority, held that the allotment of shares in this case was a non-cash transactions and that they were subscribed through book entries. He held that Section 68 of the Act, does not apply as the assessee has proved the identity, creditworthiness and genuineness of the transactions. He gave a factual finding and deleted the addition.
The undisputed fact in this case is that the allotment of shares were for consideration other than by way of cash. The four companies which applied for allotment of shares, have sold their investment to the assessee company and the assessee company, has as consideration for the purchase of those shares had allotted shares at a premium. It is a case of swapping of shares. The shares were allotted for consideration other than cash. The question is whether under these facts and circumstances Section 68 of the Act, would be attracted.
The undisputed fact is that shares were issued at a premium, as consideration for the purchase of shares from the share applicant companies. This issue is squarely covered by the decision of the Kolkata ‘C’ Bench of the Tribunal in the case of ITO vs. M/s. Anand Enterprises Ltd.
it was held as follows:-
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