DCIT, CENTRAL CIRCLE - 4(2), KOLKATA, AAYAKAR BHAWAN POORVA vs. UMA VINIMAY PRIVATE LIMITED, MIDDLETON STREET

The first ground of the Revenue is against the deletion of addition of ₹9,86,95,750/- by the ld. CIT(A) which was made by the AO on account of share capital/ share premium by treating the same as unexplained cash credit.

The facts in brief are that the assessee is the core investment company of the Rika Group holding interests in shares & securities of

In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee after taking into consideration, the contentions and submissions of the assessee and the evidences filed by the assessee by observing and holding as under:

On the other hand, the Ld. AR for the assessee supported the order of the Ld. CIT(A). The Ld. AR, while referring to the evidences filed by the assessee as well as by the subscribers in response to notices issued u/s 133(6) of the Act, submitted that the assessee as well as the subscribers have filed all the evidences proving the identity and creditworthiness of the subscribers as well as genuineness of the transactions. The Ld. AR also submitted that, when the lenders had complied with the notices u/s 133(6) which were issued and served through registered post, the impugned addition could not be made on the ground that there was no compliance to summon issued u/s. 131 of the Act upon the lenders. The ld. AR further pointed out that, subsequent to the amendments made in Section 56(2)(viib) of the Act by the Finance Act, 2012, the share capital was required to be issued

After hearing the rival contentions and perusing the materials available on record, it is seen that the assessee is a core investment company of the Rika Group. During the year, the assessee had raised share capital of Rs.9,85,95,750/- from nineteen (19) subscribers by issuing 1,79,265 equity shares of face value of Rs. 10/- each at a premium of Rs. 540/- per share, the details whereof is at Page 46 of Paper book. We note that the AO had made independent enquiries from the share investors u/s 133(6) of the Act and each of them had duly furnished evidences including their ITRs, bank statements, audited financial statements and confirmations etc. It is noted that, three of the share subscribers, namely, Balajee Vinimay Pvt Ltd, Rika Global Impex Pvt Ltd and Ohm Arts Pvt Ltd were group companies namely; from whom ₹2.82 crores in aggregate had been received as investment/ subscription. It is noted that the Rika Global Impex Pvt Ltd had returned income of Rs.1084.36 lacs and that Balajee Vinimay Pvt Ltd had filed return of income of Rs.10.96 lacs and that there were common director(s) and common shareholding in these entities. In light of these facts, we are in agreement with the Ld. AR that, the bald observations made by the AO doubting the identity and creditworthiness of all the

It is seen that each of these shareholders had filed all the relevant documents which they were required to maintain in the ordinary course of business to substantiate their identity and creditworthiness and genuineness of the transactions. The ld. AR has filed a detailed paper book which is comprising of the documents furnished by these nineteen (19) shareholders in response to notices issued u/s 133(6) of the Act, which is available from page no. 65 to 463 of the paper book. The share investors are noted to have filed all the documents including their bank statements, ITR acknowledgement, audited accounts, confirmations etc. Having gone through these documents, we are in full agreement with the ld. CIT(A) that the shareholders had filed the relevant evidences to discharge their onus of substantiating the identity and creditworthiness of the lenders and genuineness of the transactions.

Coming to the reasonableness of the share premium which was doubted upon by the Ld. DR, we observe that the shares were issued at the prevailing fair market value of the assessee computed in terms of Section 56(2)(viib) read with Rule 11UA of the Rules. Having gone through the copy of the valuation report, which is found at Pages31 to 45 of the paper book that, the intrinsic value of shares of the assessee was higher than book value due to the market value of the shares & securities held by it due to which the shares issued during the year commanded a premium.

With respect to creditworthiness not being there in case of subscribers, we are of the opinion that the mere fact that they had meagre recurring income is not relevant and creditworthiness cannot be doubtful when their own funds are several times the investment made in the assessee company. The case of the assessee find support

As for the non-compliance of summons u/s 131 of the Act is concerned, the case of the assessee is squarely covered by the decision of Hon'ble Apex Court in CIT Vs Orissa Corporation Pvt Ltd. 159 ITR 78(SC) wherein it has been held that where the assessee has discharged the onus of proving the identity and creditworthiness of the of creditors and genuineness of the transactions, no addition can be made on the ground of non-compliance to the summons u/s 131 of the Act. The case of the assessee is also squarely covered by a series of decisions of the Hon'ble Jurisdictional High Court namely i) PCIT vs M/s Maninya Comfin Pvt Ltd. ITAT/271/2023 IA No.: GA/1/2023 dated 1.5.2025, ii) PCIT vs M/s Sitka Mercantile Pvt Ltd ITAT/68/2024IA No.: GA/2/2024,iii)PCIT vs M/s Hirak Vyaapar Pvt Ltd ITAT/242/2023 IA No.: GA/1/2023 dated 3.5.2024, iv) PCIT vs M/s Snowhite Infrastructure Pvt Ltd ITAT/108/2024 IA No. :GA/2/2024 dated 15.5.2024, v) PCIT vs M/s Outcome Buildcom Pvt Ltd ITAT/3/2024 IA No. :GA/1/2024 dated 3.5.2024, vi) PCIT Vs. Naina Distributors Pvt Ltd ITAT/113/2023IA No. GA/1/2023 dated 28.06.2023, vii) Pr. CIT vs Wise Investment Pvt Ltd ITAT/238/2024 IA No. GA/2/2024 dated 06.05.2025, viii) Pr. CIT Vs Vish Realty Solutions Pvt Ltd ITAT/74/2025 IA No. GA/2/2025 dated 10.07.2025wherein it has been held that where the assessee has discharged its burden of proof by satisfying all three conditions as

For the above reasons and circumstances, we do not find any infirmity or defect in the order of the ld. CIT (A) which warrant our interference. Accordingly, we uphold the appellate order by dismissing this ground of the Revenue

The second issue raised by the Revenue in Ground Nos. 2 & 3 is against the deletion of addition by the learned CIT (A) of ₹ 51,123/- as made by the learned AO u/s 14A of the Act.

The facts in brief are that during the impugned financial year, the assessee has not earned any exempt income from the investments in shares and securities. The learned AO during the course of assessment proceedings noted that though the assessee has not received any exempt income during the year but that the investments were capable of yielding exempt income in the subsequent years, and accordingly, by following the CBDT Circular No.5/2014, the AO invoked the provisions of Section 14A of the Act and made an addition of ₹51,123/-.

The learned CIT (A) in the appellate proceedings allowed the appeal of the assessee after taking into account the contentions of the assessee by holding and observing as under:

In the result, the appeal of the Revenue is dismissed.