The Income Tax Appellate Tribunal (ITAT), Kolkata bench has held that the Assessing Officer cannot invoke the provisions of Section 68 of the Income Tax Act, 1961 in case of share premium amount if such shares were allotted by the Company under a barter system.
While rejecting the return filed by the assessee-Company, the Assessing Officer applied section 68 by treating the share capital and share premium amount as unexplained cash credit.
On the first appeal, the first appellate authority quashed the above order by referring to the Calcutta High Court’s decision in the case of Jatia Investment Co. –vs.- CIT wherein it was held that section 68 had no application when the Shares were allotted by the assessee-company under a barter system.
The Tribunal found that there was no payment received by the assessee-company against the issue of share capital along with premium by cash or through banking channel. It was further noted that there was no cash or cheque payment received against the issue of share capital with premium, and therefore, the provisions of section 68 had no application.
Further, the Tribunal relied on its own decision in the case of ITO –vs.- M/s. Bhagwat Marom Pvt. Limited, allowed the assessees’ plea and held that “As the issue involved in the present case as well as all the material facts relevant thereto are similar to the case of M/s. Bhagwat Marom Pvt. Limited, we respectfully follow the decision of the Coordinate Bench of this Tribunal rendered in the said case vide order dated July 31, 2019 (supra) and uphold the impugned order of the ld. CIT(Appeals) deleting the addition of Rs.6,00,00,000/- made by the Assessing Officer under section 68 on account of share capital and share premium.”
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