PCIT Vs Essar Agrotech Ltd. (Bombay High Court)
Summary: The Bombay High Court dismissed the Revenue’s appeal against the ITAT order concerning Assessment Year 2012-13 and upheld deletion of the addition relating to share capital and share premium under Section 68 of the Income-tax Act, 1961. The assessee, engaged in agricultural activities, cultivation of flowers and vegetables and maintenance of mango orchards, had issued 22,50,000 equity shares at ₹50 per share, comprising face value of ₹10 and premium of ₹40 per share. The CIT(A) deleted the addition and the ITAT affirmed that decision after examining the evidence furnished regarding the subscriber.
The High Court noted that complete details regarding the subscriber’s identity, financial statements and bank statements had been furnished; the investment was reflected in the subscriber’s financial statements; the subscriber itself had undergone scrutiny assessment without any adverse comment concerning the investment; and the assessee had also furnished the complete money trail explaining the source of the investment. The ITAT had found that the subscriber received the relevant amounts from various group companies. On these factual findings, both the CIT(A) and ITAT were satisfied regarding the genuineness of the transaction, identity and creditworthiness of the subscriber and the source of the money invested. The High Court therefore held that no substantial question of law arose merely because the shares were issued at a high premium.
