Assessee issued shares to its promoters at premium, one of which was an Indian entity and other was a foreign promoter. Assessing Officer treated entire share premium received as unexplained cash credit under section 68 on ground that there was violation of provisions of section 78(2) of Companies Act, 1956. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer. On appeal, the Tribunal directed the Assessing Officer to examine whether there was violation of provisions of section 78(2) of the Companies Act, 1956. On appeal\u00a0 High Court held that\u00a0 there was nothing on record in balance sheet of assessee which showed that share premium was utilized for purposes other than what was prescribed in section 78(2) of Companies Act, 1956.\u00a0 Also closing balance and opening balance of share premium money only indicated that there was increase in share premium account by way of infusion of funds\u00a0 Court held that\u00a0\u00a0 Income-tax Act does not stipulate that non-compliance of any provision of other Act would result in turning a capital receipt into a revenue receipt.\u00a0 Even if assessee had breached provisions of section 78(2) of Companies Act, 1956, it would be penalised by provisions of Companies Act and breach would never turn share premium amount received into a revenue receipt.\u00a0 Assessing Officer also treated entire share premium received as unexplained cash credit under section 68 on ground that there was no justification for charging share premium Court held that\u00a0 money received on issue of shares at premium is on capital account and would not give rise to any income and there was no provision under Act to tax receipt of share premium for assessment year under consideration.\u00a0 CBDT Instruction No. 2\/2015, dated 29-1-2015 Referred Vodafone India Services (P.) Ltd.\u00a0v.\u00a0UOI [2015] 228\u00a0Taxman\u00a025\/[2014] 368 ITR 1 (Bom)(HC) (AY. 2011-12)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 68 : Cash credits-Shares to promoters at premium-Capital or revenue-Income from other sources-Share premium cannot be assessed as revenue receipt even if assessee had breached provisions of section 78(2) of Companies Act, 1956, it would be penalised by provisions of Companies Act and breach would never turn share premium amount received into a revenue receipt-Share premium cannot be assessed as income from other sources. [S.56,260A, Companies Act, 1956, S 78(2)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-46613","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-c7P","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/46613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=46613"}],"version-history":[{"count":2,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/46613\/revisions"}],"predecessor-version":[{"id":59392,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/46613\/revisions\/59392"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=46613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=46613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=46613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}