ITA Nos. 2259 and 2579/M/2015. Case: Reed Infomedia India Pvt. Ltd. and Ors. Vs Income Tax Officer 7(2)(1) and Ors.. ITAT (Income Tax Appellate Tribunal)
| Case Number | ITA Nos. 2259 and 2579/M/2015 |
| Counsel | For Appellant: Vijay Mehta and Rajesh Lakhara, A.Rs. and For Respondents: Saurabhkumar Rai, D.R |
| Judges | Sanjay Garg, Member (J) and Manoj Kumar Aggarwal, Member (A) |
| Issue | Income Tax Act, 1961 - Section 68 |
| Judgement Date | April 03, 2017 |
| Court | ITAT (Income Tax Appellate Tribunal) |
Order:
Sanjay Garg, Member (J), (ITAT Mumbai 'I' Bench)
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The above captioned cross appeals one by the assessee and the other by the Revenue have been preferred against the order dated 19.02.2015 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)]. First we take up Revenue's appeal bearing ITA No. 2579/M/2015.
Revenue's Appeal (ITA No. 2579/M/2015)
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The Revenue in its appeal has taken the following grounds:
1. The Learned CIT(A) has erred on facts and in law in restricting the addition made U/s. 68 on account of increase in share capital to Rs. 1,96,00,000/- instead of Rs. 4,00,00,000/- without properly appreciating the factual and legal matrix as clearly brought out by the Assessing Officer in the assessment order that the assessee has increased share capital during the year for an amount of Rs. 4,00,00,000/-.
2. The Learned CIT(A) has erred on facts and in law in restricting the addition made U/s. 68 to Rs. 1,96,00,000/- on account of increase in share capital inspite of holding that the assessee could not prove the genuineness of the transaction as per requirement of Sec. 68 and there is increase of Rs. 4,00,00,000/- in share capital during previous year relevant to A.Y. 2010-11 (Share capital was Rs. 6,00,00,000/in A.Y. 2009-10 and Rs. 10,00,00,000/- in A.Y. 2010-11).
The Ld. CIT(A)'s order is contrary to law and facts and deserves to be set aside and A.O.'s order be restored.
3. The Ld. CIT(A)'s order is contrary to law and facts and deserves to be set aside and A.O.'s order be restored.
4. The appellant craves leave to amend or alter any ground or add a new ground that may be necessary.
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The brief facts relevant to the issue under consideration are that the assessee company is a joint venture of two companies i.e. M/s. Reed Elsevier Overseas BV (a foreign company) with 51% share capital and M/s. Infomedia 18 Ltd. (Indian company) with 49% share capital. The assessee is engaged in the business of publication of magazine in the gems and jewellery sector. For the assessment year under consideration, the AO noted from the balance sheet of the assessee that during the year, the share capital of the assessee has been increased by Rs. 4,00,00,000/- (Rupees four crores only). He asked the assessee to furnish necessary details in this respect. The assessee accordingly furnished the necessary details to the AO including the names of the subscribers, PAN numbers, annual financial report of subscribers, cash flow statements etc. However, the AO was not satisfied by the details submitted by the assessee and observed that the assessee has failed to prove the source, identity of the subscribers and the genuineness of the transaction. He, therefore, made the addition of the above amount of Rs. 4,00,00,000/- as unexplained credits under section 68 of the Act into the taxable income of the assessee. Being aggrieved by the order of the AO, the assessee preferred appeal before the Ld. CIT(A).
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It was explained before the Ld. CIT(A) that during the year under consideration, the assessee had received share capital money to the tune of Rs. 1,96,00,000/- only from M/s. Infomedia 18 Ltd. in consideration for issue of Rs. 1,96,00,000/- equity shares of Rs. 10/- each. However, the assessee company had received a sum of Rs...
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