ITAT deleted addition u/s 68 (of Income Tax Act, 1961) on share application money received
ITAT deleted addition u/s 68 (of Income Tax Act, 1961) on share application money received
G M Modi Hospitals Corp Pvt Ltd declared loss of Rs 73 lakhs. In P&L a/c it had shown Rs 10 lakhs income from capital advances written back. AO made additon of Rs 10 lakhs u/s 68 (of Income Tax Act, 1961). CIT(A) held that the write off was taxable u/s 28(iv) (of Income Tax Act, 1961). ITAT deleted addition as share application money received was utilised for incurring expenditure in the capital field.-500298
1. G M Modi Hospitals Corp Pvt Ltd was a medical and other equipments renting and chemist shop.
2. It filed its return of income declaring loss of Rs 73 lakhs
3. In the audited P&L a/c though it had shown income from capital advances written back of Rs 10 lakhs under profit before tax.
4. AO made additon of Rs 10 lakhs u/s 68 (of Income Tax Act, 1961) to assessee’s income.
5. CIT(A) held that the write off of share application money received is taxable u/s 28(iv) (of Income Tax Act, 1961).
On appeal, the ITAT held as under:
6. In the present case the amounts were never received towards trading purpose.
7. The share application amount was treated as a capital receipt, and likewise the amount of Rs. 45,41,542/- was shown as liability towards purchase of capital assets.
8. Having regard to the law declared in HHEC, consequently it never changed its character when it was eventually transferred to the capital reserve in 2006-07 when the conversion took place 6-7 years later.
9. The period of time when the amounts were held by the assessee in its books also factually eliminated the suspicion that the amounts were given as grants or aid.
10. The assessee while filing the annual accounts before the Ld.CIT(A) demonstrated that the share application money received was utilised for incurring expenditure in the capital field.
11. Under these circumstances we have to apply the binding decision of the Jurisdictional High Court in the case of ICC India P.Ltd. (supra) and uphold the contentions of the assessee and delete the addition of Rs.10 lakhs.
Case Reference - G.M. Modi Hospitals Corporation Pvt. Ltd. vs. DCIT.
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH "D", NEW DELHI
BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER
AND SHRI KULDIP SINGH, JUDICIAL MEMBER
ITA No. 6584/Del/2013
(AY: 2010-11)
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