Case Law Details
Mangal Credit and Fincorp Ltd. Vs DCIT (ITAT Mumbai)
In the instant case, the assessee has received money on issuing share capital in the form of exercise of rights in share warrants. The share capital so collected by the assessee is not in the course of negotiations for transfer of capital asset. The shares so issued may constitute Capital asset in the hands of the persons, who purchased the shares, but that is not relevant here. Issuing share capital does not result in transfer any capital asset. Accordingly, since the money was not received in the course of negotiations for transfer of capital asset, the provisions of sec.56(2)(ix) will not apply to the facts of the present case.
ITAT held that the amount of 1,50,35,625/- forfeited by the assessee out share capital issued by it shall not fall within the scope of sec.56(2)(ix) of the Act. Further, the said amount shall constitute a Capital receipt in the hands of the assessee. Accordingly, the above said amount is not taxable in the hands of the assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The assessee has filed this appeal challenging the order dated 22.10.2022 passed by the learned CIT(A)-47, Mumbai and it relates to A.Y. 2018-19. The assessee is aggrieved by the decision of the learned CIT(A) in confirming the addition of Rs. 1.50 crores made under section 56(2)(ix) of the I.T. Act.
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