The Delhi bench of Income Tax Appellate Tribunal (ITAT) ruled that share capital received from directors and shareholders of the company was duly discharged with evidence . Therefore the bench deleted the addition made under Section 68 of the Income Tax Act 1961.
The assessee Nishit Capinvest Pvt. Ltd. engaged in the business of making investments. During the instant year it has raised share capital from Directors of the assessee company and their relatives when it issued 3896000 Equity shares to them for a total consideration of Rs.42,85,00,000/- which consisted of share capital amounting to Rs.3,89,60,000/- and share premium of Rs. 38,96,00,000/-.
Aggrieved, the assessee filed appeal before the CIT(A). Who deleted the addition made by the assessing officer and allowed the appeal filed by the assessee. Hence the revenue filed another appeal.
Assesee representative , Suryanarayan argued that supported the order of CIT(A) and argued that share capital received from directors and shareholders of the company was duly discharged with evidence.
Vizay B. Vasanta, the Department representative argued that CIT(A) has fallen in error in not appreciating that AO has very meticulously examined the source of source of the investors and had rightly concluded that investor’s funds were generated from the source in which the assessee company and the directors of assessee company were interested.
The tribunal during the adjudication observed that CIT(A) has taken into consideration all the relevant information about the identity of the investors, their bank statements, and other financials which were duly filed to give details of the financial credibility of the investor.
Therefore the two-member bench Of Narendra Kumar Billaiya, (Accountant member) and Anubhav Sharma, (Judicial Member) observed that share capital received from directors and shareholders of the company was duly discharged with evidence . Thus the bench deleted the addition made under Section 68 of the Income Tax Act.
Accordingly the bench dismissed the appeal filed by the revenue.
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