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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri Sunil Hirawat Department by: Shri B.B. Rajendra Prasad (DR) Date of Hearing: 08.01.2019 Date of Pronouncement: 30.01.2019 O R D E R
PER AMARJIT SINGH, JM:
The present appeal has been filed by the revenue against the order dated 23.06.2017 passed by the Commissioner of Income Tax (Appeals)-3, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment year 2010-11.
The revenue has raised the following grounds: - “I Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,12,50,000/- made by the AO u/s 68 of the I.T. Act in the Assessment order u/s 143(3) r.w.s. 263 of the I.T. Act, which was in consequence to order u/s 263 passed by the Pr. CIT-1, Mumbai.
ITA. No. 5777/M/2017 A.Y.2010-11 ii. on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the order u/s 143(3) r.w.s. 263, as null and void, without appreciating the fact that the order of the ITAT, relied upon by the Ld. CIT(A) has not been accepted by the Department. 2. The appellant craves leave to add to, to amend or withdraw the aforesaid grounds of appeal
."
3. The brief facts of the case are that the assessee filed its return of income on 02.09.2010 for the A.Y. 2010-11 declaring total income to the tune of Rs.16,33,000/-. The assessment u/s 143(3) of the Act was completed on 17.01.2013. Thereafter, the Hon’ble Commissioner of Income Tax-1 reopened the case u/s 263 of the Act dated 23.03.2015 and set aside the order passed u/s 143(3) of the Act on the issue of high share premium. The CIT(A) has invoked the power u/s 263 of the Act on the following grounds .: - (i)The share premium amount received by assessee, while increasing the assets in balance-sheet in the form of cash/bank balance does not create any liability in the balance-sheet. This amount of premium gets reflected in the reserves and under the Company’s Act the nature of these reserves are such which can be distributed to the share-holders in the form of bonus shares. The relevant provisions of Company’s Act applicable to share premium are u/s 78 of Company’s Act. What can be distributed to share-holders of assessee are only profits or accumulated profits. Therefore, primary nature of premium receipt is revenue and therefore, chargeable to tax.
ITA. No. 5777/M/2017 A.Y.2010-11 (ii) In the alternative, since the nature of receipt has not been explained, the premium amount credited in the books of account is chargeable to tax u/s 68 of the Act.”
Thereafter, the AO reopened the assessment of the assessee and passed the order u/s 143(3) r.w.s 263 of the I.T. Act. The total income of the assessee was assessed to the tune of Rs.171,28,03,350/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who deleted the said addition, therefore, the revenue has filed the present appeal before us.
We have heard the argument and advanced by the Ld. Representative of the parties and perused the record. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - “3 Since the order of the PCIT, passed u/s 263 has been quashed by the Hon’ble ITAT ‘D’ Bench, Mumbai for the AY 2010-11 vide dated 7.4.2017, thus the order passed by the AO u/s 143(3) r.w.s 263 becomes null and void and hence no adjudication is required. The present appeal is disposed off accordingly. For statistical purposes, the Grounds of appeal
are dismissed.”
6. On appraisal of the above said finding, we noticed that the CIT(A) has set aside the order of the AO passed u/s 143(3) r.w.s. 263 of the Act on the basis of this fact of Hon’ble ITAT ‘D’ Bench, Mumbai has set aside the order passed u/s 263 of the Act in ITA. No.1964/M/2015 dated 07.04.2017. Undoubtedly, in the said
ITA. No. 5777/M/2017 A.Y.2010-11 circumstances, when the order passed u/s 263 of the Act is nowhere in existence, therefore, the CIT(A) has rightly set aside the finding of the AO dated 01.03.2016, therefore, we are of the view that the CIT(A) has passed the order quite justifiable and correctly which is not liable to be interfere with at this appellate stage.