| COURT: | ITAT Bangalore |
| CORAM: | Jason P. Boaz (AM), Sunil Kumar Yadav (JM) |
| SECTION(S): | 56(1)(viib), 68 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | bogus share capital, share premium, Undisclosed Income |
| COUNSEL: | H. N. Khincha |
| DATE: | February 9, 2018 (Date of pronouncement) |
| DATE: | March 3, 2018 (Date of publication) |
| AY: | 2008-09 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| S. 68 Bogus Share Capital: Share premium received can be assessed as undisclosed income if (a) directors are allotted shares at par while others are allotted at premium, (b) the high premium is not justified by a valuation report, (c) the high premium is not supported by the financials, (d) based on financials the value of shares is less and no genuine investor would invest at the premium, (e) there are discrepancies & abnormal features which show transaction as "made up" to camouflage real purpose | |
The argument of the assessee that the provisions of Sec.56(1)(viib) of the Act does not apply to the case on hand for the year under consideration as it has been introduced by Finance Act, 2012 w.e.f. 1.4.2013 is a misplaced one. From a reading of the order of assessment, it is clear that the Assessing Officer has invoked the provisions of Sec. 68 of the Act. This leads us to the question of whether the provisions of Sec. 68 of the Act can be invoked for the nature of transactions involved in the case, where sums of money are credited in the name of share premium. This question has been addressed by the Hon’ble Calcutta High Court in the case of Pragati Financial Management Pvt. Ltd. Vs. CIT in C.A. 887 & 998 of 2016 and others dt.7.3.2017. In its order (supra) on the issue of whether enquiry under Section 68 of the Act can be carried out for examining the genuineness of the share premium transaction, the Hon’ble High Court held that Sec. 68 of the Act can be invoked to conduct enquiry on the genuineness of share premium transactions
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