Case Law Details
ITO Vs Saffron Comtrade Pvt. Ltd. (ITAT Kolkata)
The issue under consideration is that Whether the ld. CIT(A) was correct in deleting the addition made u/s 68?
The company decided to raise its capital by issue of 15325 equity shares by issue of shares of Rs. 10/- each at a premium price of Rs. 1990/- each. The share subscribing company, namely, M/s Jyotika Commercial Pvt. Ltd, who agreed to subscribe 15325 shares of Rs. 10/- each at a premium of Rs. 1990/- each. As per terms of agreement the assessee company agreed to allot 15325 shares of Rs. 10/- with premium of Rs.1990/- each to Jyotika commercial Pvt. Ltd. against handing over its investments in other companies. The assessee also filed copy of agreement with Jyotika Commercial Pvt Ltd for transfer of its share holdings in three other companies as the consideration for allotment of 15325 shares.
At the outset itself, ld Counsel for the assessee submitted before us that section 68 of the Act is not applicable on the facts of the assessee’s case, since no money transaction took place between assessee and share subscribing companies. It is a simple case of shares being allotted in lieu of shares held by the share subscribers. That is, it is just swapping of shares, i.e. shares are exchanged from another shares, therefore, section 68 does not attract in the assessee’s case under consideration.
Considering the above facts and circumstances of the case and respectfully following the aforesaid judicial precedents relied upon hereinabove, ITAT hold that the ld. AO had erroneously invoked the provisions of section 68 of the Act to the facts of the instant case, which, in our considered opinion, are not at all applicable herein. This is a simple case of acquiring shares of certain companies from certain shareholders without paying any cash consideration and instead the consideration was settled through issuance of shares to the respective parties. That is, section 68 of I.T. Act, 1961 does not apply to cases of purchase of share assets and allotment of shares by the appellant when purchase and allotment are under a barter That being so, ITAT decline to interfere in the order passed by the ld CIT(A), his order on this issue is hereby upheld and grounds of appeal raised by the Revenue is dismissed.
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