V.R. Global Energy Pvt. Ltd. v. Ito

PER N.R.S. GANESAN, JUDICIAL MEMBER: The assessee filed the present miscellaneous petition on the ground that there is an error in the order of this Tribunal.

2 M.A. No. 289/Mds/2016

2. Shri R. Vijayaraghavan, the Ld. counsel for the assessee submitted that shares were allotted against the liability that has accrued to the assessee on account of transfer of assets being receivables and preference shares of equal value. According to the Ld. counsel, the assets are transferred to the company by the respective shareholders. The increase in asset of the company by way of receivable and investments was recorded in the balance sheet. According to the Ld. counsel, allotment of share was nothing but settlement of real liability, which can be explained as arising out of transfer of equal value of receivables and shares. In fact, shares were allotted in proportion to the value of the assets brought in. According to the Ld. counsel, the liability of the company which was converted in to share capital, to three persons was genuine. Therefore, it cannot be said that it is colourable device.

3. On the contrary, Shri Shiva Srinivas, the Ld. Departmental Representative submitted that this Tribunal examined the entire facts of the case and found that for revaluation, the net worth of the company has to be examined. This Tribunal found that how shares was revalued at 5400/-. After referring to the agreement between

3 M.A. No. 289/Mds/2016 the assessee and M/s. Shriram Auto Finance and one Mrs. Vathsala Ranganathan, this Tribunal found that these agreements are only colourable device, deviced by the assessee to reduce the tax liability. This Tribunal specifically found that by way of introducing cash credit in the name of share premium and share capital, the assessee company is making attempt to reduce the tax liability. Therefore, the addition made by the Assessing Officer was rightly confirmed by this Tribunal. Hence, there is no error in the order of this Tribunal.

4. We have considered the rival submissions on either side and perused the material available on record. Admittedly, there was a credit entry in the books of accounts to the extent of 90.18 lakhs. The assessee claimed before the authorities that 90.18 lakhs was the share premium and share capital was 16.70 lakhs. The assessee also claimed before the Assessing Officer that the shares were revalued at 5,400/-. In fact, the face value of the shares are 10/- per share. After referring to the agreement between the assessee and M/s. Shriram Auto Finance and one Mrs. Vathsala Ranganathan with M/s. Carcare and M/s. VROne Energy Pvt. Ltd. and M/s. Trilok Vincom Pvt. Ltd., this Tribunal found that this is

4 M.A. No. 289/Mds/2016 nothing but the colourable device to reduce the tax liability of the assessee.

5. Now, the assessee claims that the liability of the company was converted in to share capital to three persons. This was examined by this Tribunal in detail and found that there was a colourable device to reduce the tax liability. Therefore, reexamining the matter would amount to review of the earlier order. This Tribunal is of the considered opinion that this Tribunal is empowered to rectify the prima facie error which is apparent from the record. However, it has no authority to review its earlier order. The claim made by the assessee would amount to review of the earlier order which is not permissible under the scheme of the Income Tax Act. Therefore this Tribunal do not find any error much less prima facie error in the order dated 01.09.2006. Hence there is no merit in the miscellaneous petition filed by the assessee.

6. Therefore the miscellaneous petition filed by the assessee is dismissed.

5 M.A. No. 289/Mds/2016 Order pronounced in the open court on 30th December, 2016 at Chennai. Sd/- Sd/- (. ) (... ) (A. Mohan Alankamony) (N.R.S. Ganesan) /Accountant Member  /Judicial Member /Chennai, /Dated, the 30th December, 2016.   "/Copy to:

1. Applicant

2. /Respondent

3. % ()/CIT(A)

4. %/CIT,

5. /DR

6.  /GF.