DCIT Vs Bits N Bytes Pvt. Ltd (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT) Delhi, in a recent ruling, has upheld the deletion of an addition made by the Assessing Officer (AO) under Section 68 of the Income-tax Act, 1961, concerning share premium received by Bits N Bytes Pvt. Ltd. from non-resident investors. The appeal, filed by the Deputy Commissioner of Income Tax (DCIT), challenged the decision of the National Faceless Appeal Centre (NFAC), which had favored the assessee.
Bits N Bytes Pvt. Ltd. is a company engaged in developing vehicle tracking systems and related services, targeting the Business-to-Consumer (B2C) market. To support its growth, the company had sought and received multiple rounds of funding from various non-resident investors, including BA India (Mauritian resident) and Chalet LLC (US resident), starting from the financial year 2015-16. For the Assessment Year (AY) 2018-19, the period under scrutiny, the assessee received foreign direct investment (FDI) from these two non-resident investors, amounting to Rs. 6,87,72,386/- in share premium against the allotment of 844 equity shares. While the AO accepted the genuineness of the share capital portion, the share premium, calculated at Rs. 81,483.87 per share, was deemed unjustified by the AO and subsequently treated as an unexplained cash credit under Section 68 of the Act.
