PCIT Vs Livros Publishing Pvt. Ltd. (Allahabad High Court)
Share Capital Addition Invalid as Assessee Was Only Recipient of Investment; No Section 68 Addition Without Evidence That Assessee Routed Its Own Money Through Investor; High Court Upholds Deletion of Share Premium Addition Due to Lack of Direct Evidence; High Share Premium Alone Not Enough for Section 68 Addition.
The Allahabad High Court dismissed the Revenue’s appeal against the order of the Income Tax Appellate Tribunal (ITAT), which had upheld the decision of the Commissioner of Income Tax (Appeals) deleting an addition made under Section 68 of the Income-tax Act, 1961 in respect of share capital and share premium received by the assessee company.
The Revenue challenged the genuineness of the transaction on the ground that the assessee, a newly incorporated company with no discernible net worth, had received share application money at a premium of ₹490 per share on a face value of ₹10. It was argued that the transaction lacked commercial rationale and that the test of human probabilities, as laid down by the Supreme Court in Sumati Dayal v. CIT, ought to have been applied.
The assessee raised a preliminary objection regarding maintainability, contending that the tax effect involved was ₹1.29 crore, which was below the monetary threshold of ₹2 crore prescribed under CBDT Circular No. 09/2024. It was also submitted that no adverse material had been found against the assessee to justify an addition under Section 68.
