“share application money”

Cash Credits & Unexplained ItemsSection 68Section 682,489 judgments

The decision most relied on for share application money is CIT v. Lovely Exports (P) Ltd. (216 CTR 195), cited in 854 judgments on BharatTax.

Leading authorities on share application money

CIT v. Lovely Exports (P) Ltd.

216 CTR 195 · 2008 · Supreme Court

854

citing judgments

If an assessee company receives share application money from alleged bogus shareholders and provides their details to the Assessing Officer, no addition can be made under Section 68 in the company's hands; the Department must proceed against the shareholders by reopening their individual assessments.

(Central)-1 v. NRA Iron & Steel (P) Ltd.

103 Taxmann.com 48 · 2019 · Supreme Court

696

citing judgments

When assessing cash credits, share capital, or loans, the assessee bears the onus to prove the identity, creditworthiness, and genuineness of transactions. This burden is not discharged merely by documentary evidence if field inquiries reveal accommodation entries or dealings with paper/shell companies.

Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd.

342 ITR 169 · 2012 · High Court

658

citing judgments

To make an addition under Section 68 for unexplained cash credits, the Assessing Officer must conduct proper inquiry into the identity, genuineness, and creditworthiness of the creditor, especially concerning share application money. The assessee's initial discharge of burden by providing necessary details shifts the onus back to the AO for further investigation, including the source of source.

Nemi Chand Kothari v. CIT

264 ITR 254 · 2003 · High Court

340

citing judgments

For a cash credit, merely transacting by cheque is insufficient to discharge the assessee's burden of proof. The assessee must prove the identity of the creditors, the genuineness of the transaction, and the creditworthiness of the creditors; upon which, the burden shifts to the revenue.

CIT v. Kamdhenu Steel & Alloys Ltd.

361 ITR 220 · 2014 · High Court

328

citing judgments

When making an addition under section 68, the creditworthiness or financial strength of an investor contributing share capital or share application money can be proved by producing their bank statements showing sufficient balance for the investment. The Supreme Court dismissed the SLP against this decision.

CIT v. Sophia Finance Ltd.

205 ITR 98 · 1994 · High Court

295

citing judgments

To discharge the burden of proof under Section 68 for share capital or share application money, an assessee must establish the identity of the shareholders and the genuineness of the transaction, confirming that the payment was truly made by them.

CIT v. Oasis Hospitalities P. Ltd.

333 ITR 119 · 2011 · High Court

292

citing judgments

When explaining cash credits under Section 68, the assessee must establish the identity of the creditor, their creditworthiness or financial capacity, and the genuineness of the transaction. Merely proving identity does not discharge this initial onus, which shifts to the Assessing Officer once these three elements are prima facie proven.

CIT v. Nipun Builders & Developers

350 ITR 407 · 2013 · High Court

264

citing judgments

For any sum credited in an assessee's books, including share application money, the assessee must prove the identity and creditworthiness of the creditor and the genuineness of the transaction. Failure to discharge this onus under Section 68 renders the amount taxable.

Judgments citing share application money

ITO 27(3)(1), Mumbai, Navi Mumbai vs. Triveni Lifestyle Developers LLP, Ghatkopar East Mumbai

ITA 2887/MUM/2023[AY 2018-19]Status: DisposedITAT Mumbai16 Oct 2024

Bench: Shri Amarjit Singhshri Sandeep Singh Karhail

For Appellant: Shri Vijay MehtaFor Respondent: Shri Manoj Kumar Sinha, Sr.DR

Section 142(1)Section 143Section 143(2)Section 143(3)Section 250Section 68

books of account such money has surfaced. If an amount has surfaced in the books of an assessee either in the shape of share application money, investments or deposit/loan, it is presumed that such money belongs to the person in whose name it has been shown. However, as per provisions

Shivnandan Buildwell Pvt. Ltd., Delhi vs. DCIT, Circle- 23(1), New Delhi

In the result, the appeal filed by the assessee is allowed

ITA 7785/DEL/2018[2013-14]Status: DisposedITAT Delhi16 Oct 2024AY 2013-14

Bench: SHRI S. RIFAUR RAHMAN (Accountant Member), SHRI VIMAL KUMAR (Judicial Member)

Section 142Section 142(1)Section 143(2)Section 143(3)

documents. The assessee is engaged in business of real estate activities. In response to notice u/s 142 (1), assessee submitted following details of share application money vide letter dated 07/01/2016. Sr. Name of Company Opening Share Share Share No. Balance Application Application Application Money Money Money O/S received refunded ... erred in confirming the additions of Rs.7,94,50,000 and Rs.21,000/- on account of unexplained credit in respect of share application money received by appellant and expenditure receivable. Learned CIT(A) erred in upholding the additions without affording proper opportunity to the appellant. Learned CIT(A) erred

Deputy Commissioner of Income Tax, Kolkata vs. Sdr Meghnath Investments Private Limited, Kolkata

ITA 1088/KOL/2023[2012-13]Status: DisposedITAT Kolkata15 Oct 2024AY 2012-13

Bench: Sri Rajesh Kumar & Pradip Kumar Choubey

Section 131Section 143(3)Section 250Section 253Section 68

आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री राजेश

Maulana Azad Alpasankhyank Arthik Vikas Mahamandal Maryadit, Mumbai vs. ITO, WD-2(2)(3), Mumbai

In the result, appeal filed by the assessee is allowed in the above terms

ITA 2160/MUM/2024[2017-18]Status: DisposedITAT Mumbai14 Oct 2024AY 2017-18

Bench: Shri. Br Baskaran & Shri. Raj Kumar Chauhan

Section 142(1)Section 147Section 148Section 250Section 272A(1)(d)

AIMS MULTI YEAR NMS of ITBA Portal regarding the assessee has received interest income of Rs. 1,38,565/-. Purchase shares (including share application money) to the tune of Rs. 50,00,000/- and has purchased time deposits (other than a time deposit made through renewal of another time deposit

Sandesh Projects Pvt. Ltd, Mumbai vs. ITO 11(1)(3), Mumbai

In the result appeal of the assessee is partly allowed

ITA 1734/MUM/2024[2010-11]Status: DisposedITAT Mumbai14 Oct 2024AY 2010-11

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm

Section 133Section 142Section 143Section 147Section 148Section 68

assessee. The learned CIT A further asked the assessee to submit the Ledger account of the investors from the date of receipt of share application money till date and details of dividend or any other benefits extended by the assessee to the investor. 13. The assessee submitted such details which ... duty of the assessee to prove the identity, genuineness, and creditworthiness of the shareholder. Assessee has submitted details of share application money, copy of the Ledger account in the books of investor companies, name address permanent account number in tax jurisdiction etc of the investor companies, income tax return

Vashisth Builders and Engineers Pvt. Ltd., New Delhi vs. DCIT, Circle- 26(1), New Delhi

In the result, the appeal filed by the assessee is partly allowed

ITA 6934/DEL/2018[2012-13]Status: DisposedITAT Delhi11 Oct 2024AY 2012-13

Bench: Shri S. Rifaur Rahman & Shri Sudhir Pareek, Judicialmember Vashisth Builders & Engineers Pvt. Ltd., Vs. Dcit, Circle-26(1), A-52, 2Nd Floor, Fiee Complex, New Delhi Okhla Industrial Area, Phase-2, New Delhi. (Pan: Aabcv3687L) (Appellant) (Respondent) Assessee By : Dr. Rakesh Gupta, Advocate Revenue By : Shir Vivek K. Upadhyay, Sr. Dr. Date Of Hearing : 27.08.2024 Date Of Order : 11.10.2024 O R D E R Per S. Rifaur Rahman, Am : 1. This Appeal Is Filed By The Assessee Against The Order Of The Ld. Commissioner Of Income Tax (Appeals-10), New Delhi Dated 13.08.2018 For The Assessment Year 2012-13. Aggrieved With The Above Order, Assessee Is In Appeal Before Us By Raising Following Grounds Of Appeal :- I) The Ld. Cit(A) Has Erred In Law & On Facts In Upholding The Assessment Order Passed By The Deputy Commissioner Of Income Tax, Circle 26(1), New Delhi Under Section 143(3) Of The Act, By Making An Addition Of Rs. 7,23,72,000/- Without Appreciating The Facts & 2 Circumstances Of The Case, The Law As Applicable & The Submissions & The Supporting Evidence Produced By The Appellant. Ii) The Ld. Cit(A) Has Erred In Law & On Facts In Upholding The Disallowance / Addition Of Rs. 3,72,000/- Made By The Dcit As Notional Interest On Interest Free Loans Granted By The Appellant Out Of The Interest Expense Claimed By The Appellant Without Appreciating The Facts & Circumstances Of The Case, The Law As Applicable & The Submissions & The Supporting Evidence Produced By The Appellant. Iii) The Ld. Cit(A) Has Erred In Law & On Facts In Upholding The Addition Of Rs. 7,20,000/- Made By The Dcit By Treating The Share Capital Received By The Appellant During The Year As Unexplained Cash- Credit, Without Appreciating The Facts & Circumstances Of The Case, The Law As Applicable & The Submissions & The Supporting Evidence Produced By The Appellant.

For Appellant: Dr. Rakesh Gupta, AdvocateFor Respondent: Shir Vivek K. Upadhyay, Sr. DR

Section 143(3)

payments were received by them subsequently and the reasons for such late payments were explained and the issue involved in those cases are share application money and not share allotment. Thus, share application money was subsequently received and it was held that capacity should be analysed on the date ... realization. Even in the case of Deem Roll Tech Ltd., the issue involved in that case is relating to share application money not share allotment. However, in the present case, the issue involved is allotment of shares and the assessee has clearly indicated that the assessee has received the cheque

M/S Agrawal Trexim Pvt. Ltd., Kolkata vs. ITO, Ward-9(1), Kolkata

In the result, the appeal of the assessee stands dismissed

ITA 82/KOL/2024[2012-13]Status: DisposedITAT Kolkata10 Oct 2024AY 2012-13

Bench: Shri Sanjay Garg & Shri Rakesh Mishra

Section 131Section 250

brief facts of the case are that the Assessing Officer (in short “AO”) noticed that the assessee during the year had received huge share application money and share premium. On being asked to explain the identity and creditworthiness of the share subscribers and genuineness of the transaction, the assessee submitted ... Agarwal Trexim Pvt. Ltd. held that the assessee could not establish the justification of the receipt of huge amount of share application money and share premium when there was continuously meagre income of the assessee on account of interest on loans only and that there was no justification even

Nitin Vijay, Jaipur vs. ITO Ward 1(4), Jaipur

ITA 12/JPR/2024[2017-18]Status: DisposedITAT Jaipur10 Oct 2024AY 2017-18

For Appellant: Sh. Rohan Sogani, CAFor Respondent: Sh. Anup Singh, Addl. CIT

Section 115BSection 133(6)Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 44ASection 68

abundantly clear that it is not limited only to credits appearing in the books of accounts in the nature of loans and share application money but the same is applicable to each and every credit appearing in the books of accounts maintained by the appellant, in fact in the instant

DCIT Cenral Circle - 8, New Delhi vs. Artline Vinimay Private Limited, New Delhi

In the result, the appeals of the Revenue are dismissed

ITA 722/DEL/2021[2012-13]Status: DisposedITAT Delhi10 Oct 2024AY 2012-13

Bench: Shri Shamim Yahya & Shri Sudhir Kumara.Yr. : 2012-13 Dy. Commissioner Of Artline Vinimay Private Income Tax, Vs. Limited, Central Circle-8, H.No. 8, Ground Floor, New Delhi Todarmal Lane, Bengali Market, New Delhi – 110 001 (Pan: Aacca5237E) (Appellant) (Respondent) Appellant By : Sh. Amit Goel, Ca & Sh. Pranav Yadav, Adv. Respondent By : Sh. N.K. Bansal, Sr. Dr Date Of Hearing : 08.10.2024 Date Of Pronouncement : 10.10.2024 Order

For Appellant: Sh. Amit Goel, CA & Sh. PranavFor Respondent: Sh. N.K. Bansal, Sr. DR

Section 142(1)Section 143(2)Section 147Section 148

holding that necessary document evidences have been filed by the assessee to prove identify, creditworthiness or genuineness with respect to refund of share application money invested in earlier years as well as during the year under consideration and at the same time ignoring the fact that the assessee company ... submitted by the appellant. Firstly, it is observed that in the entire assessment order there is no mention of the parties from- whom share application money was received back. He has only relied upon figure of Rs. 2,44,68,000/- given by Investigation Wing, Kolkata. Secondly, in para

The Dy. Commissioner of Income Tax, Circle-2(1)(1), Baroda vs. M/S. Sun Pharma Laboratories Ltd., Mumbai

In the result, the Department’s appeal is partly allowed

ITA 741/AHD/2019[2015-16]Status: DisposedITAT Ahmedabad09 Oct 2024AY 2015-16

Bench: Smt. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 115JSection 143(3)Section 14ASection 36(1)(va)Section 37(1)Section 80Section 80I

submission of the Ld. Authorized Representative. Undisputedly, average value of investment resulting into exempt income is Rs.121.02 Crores against which share capital & share application money etc. amounted to Rs.90 Crores only (excluding revaluation capital reserve). Since investment was more than the own interest free funds available, it is clear that

Sun Pharma Laboratories Ltd., Mumbai vs. The Dy. Commissioner of Income Tax, Circle-2(1)(1), Baroda

In the result, the Department’s appeal is partly allowed

ITA 712/AHD/2019[2015-16]Status: DisposedITAT Ahmedabad09 Oct 2024AY 2015-16

Bench: Smt. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 115JSection 143(3)Section 14ASection 36(1)(va)Section 37(1)Section 80Section 80I

Lemongrass Dealtrade Pvt. Ltd., Kolkata vs. DCIT, Cir. -5(1), Kolkata

In the result, the appeal of the assessee is allowed

ITA 947/KOL/2024[2012-13]Status: DisposedITAT Kolkata09 Oct 2024AY 2012-13

Bench: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]

Section 143(3)Section 147Section 148Section 148(2)Section 264Section 68

received information that the assessee is beneficiary of bogus accommodation entry to the tune of Rs. 59,00,000/- in the form of share application money received from M/s Bhagyashree Vincome Pvt. Ltd. and accordingly the case of the assessee was reopened u/s 147 of the Act by issuing notice

M/S. Star Dealcom Pvt. Ltd., Birbhum vs. I.T.O., Ward - 3(1), Suri, Birbhum

ITA 1415/KOL/2024[2011-2012]Status: DisposedITAT Kolkata09 Oct 2024AY 2011-2012

Bench: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]

Section 133(6)Section 143(1)Section 147Section 148

during the year, the assessee has not received any loan from Hecter Dealers Pvt. Ltd. but received money from two related parties as share application money namely Abhijit Das Rs. 13,78,000/-, Ajit Das Rs. 1,30,000/- aggregating to Rs. 15,80,000/- which was duly shown ... balance sheet a copy of which is filed at page 4 to 9. We find that the share application money received by the assessee was received from two allottees the details whereof is given in the balance sheet itself at page 8 of PB. We have also examined the allotment

Navnita Dealcomm Pvt. Ltd., Kolkata vs. I.T.O., Ward - 6(3), Kolkata

In the result, the appeal of the assessee is allowed

ITA 1369/KOL/2024[2012-2013]Status: DisposedITAT Kolkata09 Oct 2024AY 2012-2013

Bench: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]

Section 131Section 143(1)Section 68

notices were duly issued and served upon the assessee during the course of assessment proceedings. The AO noted that the assessee has received share application money of Rs. 1,21,50,000/- by issuing 6075 equity shares of face value of Rs. 10/- each at a premium ... names, addresses PANs of the investors, copies of share allotment advice, copies of share application forms, bank statements, statement giving complete details of share application money received during the year, copy of Form 2 evidencing Return of Allotment and Copy of Form 5 for increase in Authorized capital. We also

Sri Utpal Das, Burdwan vs. ITO, Ward-1(3), Burdwan

In the result, appeal of the assessee is allowed

ITA 820/KOL/2023[2012-13]Status: DisposedITAT Kolkata08 Oct 2024AY 2012-13

Bench: Shri Rajpal Yadav, Vice- & Shri Rajesh Kumar]

Section 143(3)Section 147Section 148Section 148(2)

short, according to the Assessing Officer, the information received from the Investigation Wing, was confined to the fact that, the assessee had received share application money to the tune of Rs.49.99 Crores from First land. 15. This information is not something new to the Assessing Officer. The fact that ... assessee had received such share application money from First land was part of the assessee's return. It is not as if the Assessing Officer did not notice this information during scrutiny assessment. As noted above through series of correspondence between the assessee and the Assessing Officer, this information

Aries Agro Limited, Mumbai vs. Dy. Commissioner of Income Tax Circle 14(1)(1), Mumbai

Accordingly, the transfer pricing addition of INR.103,26,939/- is deleted. Ground No. 1 raised by the Appellant is allowed

ITA 4731/MUM/2023[2020-21]Status: DisposedITAT Mumbai07 Oct 2024AY 2020-21

Bench: SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Firoze B. Andhyarujina Sr. AdvocateFor Respondent: Shri Uodal Raj Singh

Section 143(1)Section 143(1)(a)Section 143(3)Section 144BSection 144CSection 144C(5)Section 154Section 92C

According to the TPO, the Appellant had advance funds to its AE [i.e. Golden Harvest Middle East (FZC)] under the grab of share application money and there was inordinate delay in allotment of shares. Therefore, treating the share application money as interest free loan/advance to AE, the TPO proposed transfer ... pricing adjustments of interest of INR 1,03,26,939/- computed @ 5.10% on the share application money of INR 20,24,89,000/- remitted by the Appellant to AE. The Assessing Officer incorporated the aforesaid transfer pricing adjustment in the Draft Assessment Order, dated 15/12/2022, passed under Section 144C

Ace Cabs Limited, Delhi vs. ACIT, Circle-1(2), Delhi, C R Building

In the result, appeal filed by the assessee is allowed

ITA 443/DEL/2024[2017-18]Status: DisposedITAT Delhi04 Oct 2024AY 2017-18

Bench: Shri Saktijit Dey, Hon’Ble & Shri S.Rifaur Rahmanace Cabs Limited, Vs. Acit, Circle 1 (2), 562, Silver Oak Lane, Delhi. M.G. Road, Ghitorni, Delhi – 110 030. (Pan : Aaica4494R) (Appellant) (Respondent) Assessee By : Shri Gaurav Jain, Advocate Ms. Bharti Sharma, Advocate Revenue By : Shri Kanv Bali, Sr. Dr Date Of Hearing : 23.07.2024 Date Of Order : 04.10.2024 Order Per S.Rifaur Rahman,Am: 1. This Appeal Has Been Filed By The Assessee Against The Order Of Ld. Commissioner Of Income Tax (Appeals), New Delhi [“Ld. Cit(A)”, For Short]/ National Faceless Appeal Centre (Nfac) Dated 12.12.2023 For The Assessment Year 2017-18. 2. The Assessee Submitted An Application Under Rule 29 Of The Itat Rules For Admitting The Additional Evidences & The Contents Thereof Are Reproduced Below:-

For Appellant: Shri Gaurav Jain, AdvocateFor Respondent: Shri Kanv Bali, Sr. DR

Section 142(1)Section 143(2)

assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed ... Bombay)[29-01-2020] whereby it has been held that to justify the creditworthiness, it is not necessary that the share application money should be invested out of taxable income only. It may be brought out of borrowed funds. Relevant paras of the decision are reproduced hereinunder

Shankar Traders & Distributors Pvt. Ltd., Kolkata vs. ITO, Ward-5(1), Kolkata

In the result, the appeal of the assessee is allowed

ITA 199/KOL/2024[2012-13]Status: DisposedITAT Kolkata03 Oct 2024AY 2012-13

Bench: Shri Sanjay Garg & Dr. Manish Boradi.T.A. No. 199/Kol/2024 Assessment Year: 2012-13 Shankar Traders & Income Tax Officer, Ward-5(1), Distributors Pvt. Ltd. Vs Aaykar Bhawan, A-Block, 1St Floor, Mercantile P-7, Chowringhee Square, Building, 9, Lal Bazar Street, Kolkata-700, West Bengal Kolkata-700001, [Pan: Aadcs8907L] West Bengal अपीलार्थी/ (Appellant) प्रत्‍यर्थी/ (Respondent)

For Appellant: Shri Manish Tiwari, ARFor Respondent: Shri Susanta Saha, DR

Section 133(6)Section 143(2)Section 143(3)Section 144Section 14ASection 68

past 11 years. Now, the issue in dispute is about the applicability of Section 68 of the Act on the share capital and share application money totalling to ₹2,30,00,000/- received from 13 share applicants named above. Section 68 of the Act has a direct bearing ... assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed

Balhanuman Commodeal Pvt. Ltd., Kolkata vs. ITO, Ward-5(4), Kolkata

ITA 116/KOL/2024[2012-13]Status: DisposedITAT Kolkata03 Oct 2024AY 2012-13

Bench: Shri Sanjay Garg & Shri Rakesh Mishraassessment Year: 2012-13

For Appellant: NoneFor Respondent: Shri Vineet Kumar, Addl. CIT, Sr. DR

Section 131Section 143(2)Section 143(3)Section 14ASection 250Section 68

same. A show cause notice was issued to the assessee on 18-03-2015 informing the said facts and cause as to why share application money received by it should not be treated as bogus and treated as unexplained cash credit as per section ... show-cause letter was issued to the assessee on 18-03-2015 informing the said facts and to show cause as to why share application money received by it should not be treated as bogus and why the same should not be treated as its unaccounted money introduced books

Amar Pratap Steels Private Limited, Jaipur vs. ITO, Ward-7(2), Jaipur

In the result, appeal of the assessee is partly allowed

ITA 108/JPR/2024[2013-14]Status: DisposedITAT Jaipur03 Oct 2024AY 2013-14

Bench: DR. S. SEETHALAKSHMI (Judicial Member)

For Appellant: Sh. Rohan Sogani, CAFor Respondent: Sh. Monisha Choudhary, Addl. CIT

Section 143(2)Section 143(3)Section 36Section 68

assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed ... companies in which public are not substantially interested receives any money in 8 Amar Pratap Steels Pvt. Ltd. vs. ITO the form of share application money, share capital, share premium or any such amount is only necessitates the creditor to explain his source and creditworthiness. Thus in the instant case