Blooming Tradelink (P) Ltd., , Kolkata v. ITO, Ward - 10(1) , Kolkata

ITA 2691/KOL/2018 | 2012-2013
Pronouncement Date: 28-02-2020 | Result: Allowed

Appeal Details

RSA Number 269123514 RSA 2018
Assessee PAN AAECB5584F
Bench Kolkata
Appeal Number ITA 2691/KOL/2018
Duration Of Justice 1 year(s) 2 month(s)
Appellant Blooming Tradelink (P) Ltd., , Kolkata
Respondent ITO, Ward - 10(1) , Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2020
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 28-02-2020
Last Hearing Date 04-02-2020
First Hearing Date 04-02-2020
Assessment Year 2012-2013
Appeal Filed On 28-12-2018
Judgment Text
C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( . . . . ) [BEFORE SHRI A. T. VARKEY JM & DR. A.L. SAINI AM] I.T.A. NO. 2691/KOL/2018 ASSESSMENT YEAR: 2012-13 BLOOMING TRADELINK PVT. LTD. (PAN: AAECB5584F) VS. INCOME-TAX OFFICER WARD-10(1) KOLKATA APPELLANT RESPONDENT FOR THE APPELLANT SHRI SUBASH AGARWAL ADVOCATE FOR THE RESPONDENT SHRI SUPRIYO PAL JCIT DR DATE OF HEARING 04.02.2020 DATE OF PRONOUNCEMENT 28.02.2020 ORDER PER SHRI A.T.VARKEY JM : THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF LD. CIT(A)-15 KOLKATA DATED 11.12.2018 FOR AY 2012-13. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF ASSES SEE IS AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.5 01 00 000 /- MADE BY AO U/S. 68 OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS TH E ACT) ON ACCOUNT OF BOGUS SHARE CAPITAL INCLUDING SHARE PREMIUM. 3. BRIEFLY STATED FACTS AS OBSERVED BY THE AO ARE T HAT IN THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS RAISED SHARE CAPITAL INCLUDING SHA RE PREMIUM TO THE TUNE OF RS.5 01 00 000/-. THE AO ADDED BACK THE ENTIRE AMO UNT OF SHARE CAPITAL INCLUDING PREMIUM RAISED TREATING THE SAME AS UNEXPLAINED CAS H CREDIT U/S. 68 OF THE ACT. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF AO. AGGRIEVED ASSESSEE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ADDITION U/S. 68 OF THE ACT WAS RESOR TED BY THE AO AND CONFIRMED BY THE LD. CIT(A) ON THE SHARE CAPITAL AND PREMIUM OF RS.5 01 00 000/-. HOWEVER ACCORDING TO THE ASSESSEE NO SUM OF MONEY HAS BEEN COLLECTED FO R TRANSFER OF SHARES WHEREAS SHARES HAVE BEEN RECEIVED BY THE ASSESSEE IN LIEU OF EXCHA NGE OF ITS SHARES THEREFORE NO 2 I.T.A. NO. 2691/KOL/2018 BLOOMING TRADELINK PVT. LTD. ASSESSMENT YEAR: 2012-13 ADDITION U/S. 68 OF THE ACT CAN BE MADE. IN SUPPOR T OF ITS SUBMISSION THE LD. AR RELIED ON THE FOLLOWING CASE LAWS: I) JATIA INVESTMENT CO. VS. CIT 206 ITR 718(CAL); II) V. R. GLOBAL ENERGY PVT. LTD. VS. ITO 407 ITR 145 (MAD); III) ITAT KOLKATA BENCH IN THE CASE OF ITO VS. M/S . SAFFRON COMTRADE PVT. LTD. DATED 28.08.2019; IV) ITAT KOLKATA BENCH IN THE CASE OF ITO VS. M/S. PANSU COMMERCIAL PVT. LTD. DATED 08.05.2019 AND V) ITAT KOLKATA BENCH IN THE CASE OF ITO VS. M/S. SUNGLOW DEALCOM PVT. LTD. DATED 16.11.2018. 5. WE NOTE THAT THIS ISSUE IS NO LONGER RES INTEGRA . WE ALSO FIND THAT THERE IS NO CASH TRANSFERRED FOR THE SHARES BY THE ASSESSEE. WE NOT E THAT THE ASSESSEE HAD SWAPPED SHARES IN LIEU OF SHARES. WE NOTE THAT THIS TRIBUNAL HAS ALREADY HELD THAT SECTION 68 OF THE ACT IS NOT ATTRACTED IN SUCH TRANSFER AND THE TRIBUNAL IN THE CASE OF ITA NO. 2178/KOL/2016 ITO VS. M/S. SUNGLOW DEALCOM PRIVATE LIMITED FOR AY 201 2-13 ORDER DATED 16.11.2018 HAS HELD AS UNDER: 3. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CO NSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE PERUSAL OF THE PAPERS ON RECORD ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED WE HOLD AS FOLLOWS:- 4. THE UNDISPUTED FACT IN THIS CASE IS THAT THE ALL OTMENT OF SHARES WERE FOR CONSIDERATION OTHER THAN BY WAY OF CASH. THE FOUR COMPANIES WHICH APPLIED FOR ALLOTMENT OF SHARES HAVE SOLD THEIR INVESTMENT TO THE ASSESSEE COMPANY AND T HE ASSESSEE COMPANY HAS AS CONSIDERATION FOR THE PURCHASE OF THOSE SHARES HAD ALLOTTED SHARES AT A PREMIUM. IT IS A CASE OF SWAPPING OF SHARES. THE SHARES WERE ALLOTTED FOR CONSIDERATION OTHER THAN CASH. THE QUESTION IS WHETHER UNDER THESE FACTS AND CIRCUMSTA NCES SECTION 68 OF THE ACT WOULD BE ATTRACTED. 4.1. THE LD. D/R SUBMITS THAT THE PREMIUM IS NOT J USTIFIED AND THAT THE LD. CIT(A) WAS WRONG IN HOLDING THAT THE ASSESSEE HAS PROVED THE I DENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. HE RELIED ON THE OR DER OF THE ASSESSING OFFICER. IN REPLY THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT EACH OF THE ABOVE COMPANIES HAVE FILED REPLIES BEFORE THE ASSESSING OFFICER TO THE NOTICE ISSUED U /S 133(6) OF THE ACT. HE FURTHER POINTED OUT THAT THE LD. CIT(A) CALLED FOR A REMAND REPORT THE ASSESSING OFFICER HAD NOT DISPUTED THE IDENTITY CREDITWORTHINESS OF THE SHARE SUBSCRIBERS AS WELL AS THE GENUINENESS OF THE TRANSACTIONS. HE RELIED ON THE ORDER OF THE LD. CIT (A). 4.2. THE UNDISPUTED FACT IS THAT SHARES WERE ISSUED AT A PREMIUM AS CONSIDERATION FOR THE PURCHASE OF SHARES FROM THE SHARE APPLICANT COMPANI ES. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE KOLKATA C BENCH OF THE TRIBUN AL IN THE CASE OF ITO VS. M/S. ANAND ENTERPRISES LTD. ITA NO. 1614/KOL/2016 & C.O. NO.5 6/KOL/2016; DT. 26/09/2018 WHEREIN UNDER IDENTICAL CIRCUMSTANCES AT PARA 4.3. IT WAS HELD AS FOLLOWS:- 3 I.T.A. NO. 2691/KOL/2018 BLOOMING TRADELINK PVT. LTD. ASSESSMENT YEAR: 2012-13 4.3. IN VIEW OF THE AFORESAID OBSERVATIONS IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE AFORESAID JUDIC IAL PRECEDENTS RELIED UPON HEREINABOVE WE HOLD THAT THE ID. AO HAD ERRONEOUSL Y INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT TO THE FACTS OF THE INSTANT C ASE 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 WITH OUT PAYING ANY CASH CONSIDERATION AND INSTEAD THE CONSIDERATION WAS SET TLED THROUGH ISSUANCE OF SHARES TO THE RESPECTIVE PARTIES. MOREOVER IN THE BALANCE SHEET OF THE ASSESSEE COMPANY IN THE SCHEDULE TO SHARE CAPITAL IT IS VERY CLEARLY M ENTIONED BY WAY OF NOTE THAT THE FRESH SHARE CAPITAL WAS RAISED DURING THE YEAR FOR CONSIDERATION OTHER THAN CASH. HENCE WE HOLD THAT PROVISION OF SECTION 68 OF THE A CT ARE NOT APPLICABLE IN THE INSTANT CASE AND ACCORDINGLY THE ENTIRE ADDITION DE SERVES TO BE DELETED WHICH HAS RIGHTLY BEEN DONE BY THE ID. CIT(A) WHICH DOES NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY GROUNDS RAISED BY THE REVENUE ARE DISM ISSED. 4.2. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF JATIA INVESTMENT CO .V. COMMISSIONER OF INCOME-TAX [1994] 206 ITR 718 (CAL. ) HELD AS FOLLOWS:- SECTION 68 OF THE INCOME-TAX ACT 1961 CASH CRED ITS ASSESSMENT YEAR 1976- 77 PARTNERS OF ASSESSEE-FIRM WERE MEMBERS OF ONE J GROUP RUNNING SEVERAL BUSINESSES AND INDUSTRIES ACCOUNTS OF ASSESSEE-FI RM SHOWED THAT IT HAD BORROWED CERTAIN AMOUNT FROM GB A PROPRIETARY CONCERN OF ON E OF ITS PARTNERS JM WHICH WAS INVESTED IN PURCHASE OF SHARES ITO FOUND THAT GB HAD NO CASH BALANCE TO ADVANCE SAID AMOUNT TO ASSESSEE HE THUS CONCLUD ED THAT SOURCE OF FUNDS FOR PURCHASE OF SHARES BY ASSESSEE WAS NOT EXPLAINED A ND CONSEQUENTLY ASSESSED THAT AMOUNT AS INCOME FROM UNDISCLOSED SOURCES IT WAS CONTENDED BY ASSESSEE THAT NOTIONAL CASH ENTRIES WERE MADE TO REDUCE INDEBTEDN ESS OF THREE COMPANIES OF J GROUP TO GB IN ORDER TO COMPLY WITH CERTAIN DIRECTI ONS OF RBI ASSESSEE-FIRM SUBSTITUTED THREE COMPANIES OF J GROUP AS DEBTOR TO GB IT WAS FURTHER STATED THAT QUESTION OF CASH CREDIT DID NOT ARISE THERE B EING NO ACTUAL PASSING OR RECEIPT OF CASH BUT TRANSACTIONS WERE MERE BOOK ENTRIES W HETHER IN AFORESAID CIRCUMSTANCES EFFECT AND IMPORT OF TRANSACTION WAS THAT ASSESSEE TOOK OVER LIABILITY OF AFORESAID THREE COMPANIES TO GB IN EXCHANGE FO R SHARES AND THEREFORE AMOUNT OF LOAN IN QUESTION COULD NOT BE TREATED AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES HELD YES 4.3. RECENTLY THE HONBLE MADRAS HIGH COURT IN THE CASE OF V. R. GLOBAL ENERGY (P.) LTD. V. INCOME-TAX OFFICER CORPORATE WARD 3(4) CHENNAI [2018] 96 TAXMANN.COM 647 (MADRAS) WHILE DEALING WITH A CASE WHERE CASH CREDI T TOWARDS SHARE CAPITAL WERE ADMITTEDLY ONLY BY WAY OF BOOK ADJUSTMENTS AND NO ACTUAL CASH WAS RECEIVED TOWARDS SHARE SUBSCRIPTION MONEY HELD AS FOLLOWS:- 25. HOWEVER THE SECOND QUESTION IS ANSWERED IN FA VOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN ELECTRO POLYCHEM LTD. (SUPRA) AND STELLER INVESTMENT LTD. (SUPRA). 26. THIS CASE IS DISTINGUISHABLE FROM THE CASE OF C IT V. LOVELY EXPORT (P.) LTD. [2008] 216 CTR 195 (SC) IN THAT THE TRANSACTIONS WE RE ONLY BOOK TRANSACTIONS AND THERE WAS NO CASH RECEIPT. THE DECISIONS IN (I) CIT V. FOCUS EXPORTS (P.) LTD. [2014] 51 TAXMANN.COM 46/228 TAXMAN 88 (DELHI) (MAG .); (II) CIT V. GLOBUS SECURITIES & FINANCE PVT. LTD. [2014] 41 TAXMANN.CO M 465/224 TAXMAN 237 (DELHI); (III) ONASSIS AXLES (P.) LTD. V. CIT [2014 ] 364 ITR 53/224 TAXMAN 80 (MAG.)/44 TAXMANN.COM 408 (DELHI); (IV) OLWIN TILES INDIA (P.) LTD. V. DY. CIT [2016] 382 ITR 291/237 TAXMAN 342/66 TAXMANN.COM 8 (GUJ.); (V) B.R. PETROCHEM (P.) LTD. V. ITO [2017] 81 TAXMANN.COM 42 4 (MAD.); AND (VI) RAJMANDIR ESTATES (P.) LTD. V. PR. CIT [2016] 386 I TR 162/240 TAXMAN 306/70 TAXMANN.COM 124 (CAL.) CITED ON BEHALF OF THE RESP ONDENT ARE DISTINGUISHABLE IN THAT THE CASH CREDITS TOWARDS SHARE CAPITAL WERE AD MITTEDLY ONLY BY WAY OF BOOK 4 I.T.A. NO. 2691/KOL/2018 BLOOMING TRADELINK PVT. LTD. ASSESSMENT YEAR: 2012-13 ADJUSTMENT AND NOT ACTUAL RECEIPTS WHICH COULD NOT BE SUBSTANTIATED AS RECEIPTS TOWARDS SHARE SUBSCRIPTION MONEY. 5. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN T HE ABOVE CASES TO THE FACTS OF THIS CASE WE UPHOLD THE ORDER OF THE LD. FIRST APPELLATE AUTH ORITY AND DISMISS THIS APPEAL OF THE REVENUE. 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND R ESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE WE HOL D THAT THE 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 H EREIN. THIS IS A SIMPLE CASE OF ACQUIRING SHARES OF CERTAIN COMPANIES FROM CERTAIN SHAREHOLDE RS WITHOUT PAYING ANY CASH CONSIDERATION AND INSTEAD THE CONSIDERATION WAS SE TTLED THROUGH ISSUANCE OF SHARES TO THE RESPECTIVE PARTIES. HENCE WE HOLD THAT PROVISIONS O F SECTION 68 OF THE ACT ARE NOT APPLICABLE IN THE INSTANT CASE AND ACCORDINGLY THE ENTIRE ADDITION DESERVES TO BE DELETED AND WE DELETE THE ADDITION AS CONFIRMED BY THE LD. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT APPEAL OF ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28TH FEBRU ARY 2020. SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28TH FEBRUARY 2020 JD. SR. PS COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. BLOOMING TRADELINK PVT. LTD. C/O SUBASH AGARWAL & ASSOCIATES ADVOCATES SIDDHA GIBSON 1 GIBSON LANE SUITE 213 2 ND FLOOR KOLKATA-700 069. 2. RESPONDENT ITO WARD-10(1) KOLKATA. 3. CIT(A)-15 KOLKATA. (SENT THROUGH E-MAIL) 4. CIT KOLKATA. 5. DR KOLKATA BENCHES KOLKATA. (SENT THROUGH E-MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT KOLKATA BENCHES