ITO Vs Anglian Infrastructure Development Private Ltd (ITAT Delhi)
ITAT Delhi held that disallowance of share premium under section 56(2)(viib) of the Income Tax Act not sustainable since shares are allotted to an existing shareholder and hence creditworthiness cannot be doubted. Accordingly, appeal of revenue dismissed.
Facts- The case of the assessee was selected for limited scrutiny. Thereafter, AO passed assessment order by making addition on account of share premium received; disallowing claim for preliminary expense and disallowing claim of expense against interest income.
CIT(A) granted relief to the assessee. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that there is no case of department as to how disputed interest is not inextricable linked with the setting up of the plant. The nature of deposits have been duly examined in AY2018-19 and found to be inextricable linked with the setting up of the plant. Since, the above fund inextricable linked with the setting up of the plant, the decision of Hon. Supreme Court in the case of CIT (vs) Bokaro Steels Limited is clearly applicable in applicant’s case and ld. CIT(A) has not erred in relying the same. The grounds have no substance.
Held that As before the Ld.CIT(A), it was factually established that the said shareholder M/s Bluwat AG Switzerland was an existing shareholder as on 31.03.2016 i.e. during the immediate preceding year. Hence, the conclusion of ld. CIT(A) that the allotment of shares to an existing shareholder cannot be construed to be an investor whose identity and creditworthiness were not proved, needs no interference. Then we find that ld. CIT(A) has also held that during the immediate preceding year, the same share premium of Rs.2/- per share has been received from the said shareholder. It is also observed from the submission of the appellant that, the said value of Rs.12 per share has been arrived by way of DCF method as prescribed by the Reserve Bank of India which is a prescribed method of valuation in the instant case and the Assessing Officer also has not found fault with the said method of DCF valuation. Thus we are of considered view that, the disallowance made by the Assessing Officer u/s 56(2)(viib) of the Act on the said receipt of the share premium amounting to Rs.52,00,000/- was not sustainable and direction of deletion by ld.CIT(A) needs no interference.
