The Income Tax Appellate Tribunal (ITAT) Delhi bench held that forfeiture of share application money is capital receipt and not revenue receipt.
Assessee V C Solutions Pvt. Ltd. after filing the return which was selected for scrutiny.During the scrutiny proceedings Assessing Officer has treated the forfeiture of share application money as “Revenue” in nature.
Aggrieved by the assessment order, the assessee filed an appeal before the CIT(A) who deleted the addition made by the assessing officer. Therefore the revenue filed another appeal before the tribunal.
During the appeal proceedings the tribunal relied upon the decision of Aditya Birla Minacs Worldwide Ltd. Vs. DCIT and observed that the share application money cannot be treated as loan amount merely because there is a delay in issuance of shares by the subsidiary in the name of the assessee.
After considering the facts and various judicial decisions, the two member bench of N.K.Billaiya (Accountant Member) and Kul Bharat (Judicial Member) held that forfeiture of share application money is capital in nature. Therefore the bench deleted the impugned addition. V. K. Agarwal, counsel appeared for the assessee. P. Barnwal, counsel appeared for revenue.
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