ACIT Vs Signature Global (India) Pvt Ltd (ITAT Delhi)
ITAT Delhi held that addition under section 68 of the Income Tax Act not justified as genuineness and identity of shareholders proved. Accordingly, appeal of revenue dismissed and CIT(A) upheld.
Facts- Assessee is engaged in the business of construction and development of affordable housing projects. During assessment proceedings, AO observed that assessee has received share capital of Rs.13,09,86,251/- (622,820 shares @ Rs.210.31 per share) from various individuals. Post analysis, AO came to the conclusion that shareholders do not have sufficient capacity to make the investment in this company. Accordingly, he proceeded to make the addition of amount of share capital invested by him u/s 68 of the Act.
AO also proceeded to make addition u/s 68 of the Act to the extent of unsecured loan taken from nine parties to the extent of Rs.23,71,70,947/- and he also disallowed the interest paid to them u/s 37 of the Act to the extent of Rs.27,02,664/-. Further, AO relying on the CBDT Circular No.5/2014 dated 11.02.2014 and provisions of section 14A read with Rule 8D determined the disallowance u/s 14A at Rs.44,41,641/-.
CIT(A) deleted the addition and partly allowed ground with regard to disallowance u/s. 14A. Being aggrieved, revenue has preferred the present appeal.
