very urgent friends

a) No boss... Share application money can never be treated as Income... There is a case law for it...

Seond question, i did not understand... kindly clarify it...

Originally posted by : Vivek
	a) No boss... Share application money can never be treated as Income... There is a case law for it...

a money recd from an undisclosed source can always be treated as undisclosed income.

also penanlty for violation of sec 269SS can be levied if Share application money is accepted in cash.

Dear Atul.. Kindly refer the following case law:

Can the amount of share application money be treated as undisclosed income if it was found that the subscribers to the share capital were not genuine?

CIT v. Electro Polychem Ltd. (2007) 294 ITR 661 (Mad)

Relevant Section: 68

       The assessee-company filed its return of income for the relevant assessment years.  The Assessing Officer found that the assessee had brought share capital by way of share applications in fictitious names.  Accordingly, he made additions under section 68 in respect of the share application money.

The issue under consideration in this case is whether the amount of share application money can be treated as undisclosed income if it is found that the subscribers to the share capital are not genuine.

       The Madras High Court applied the ratio of the decision of the Delhi High Court in CIT v. Stellar Investment Ltd. (1991) 192 ITR 287 in this case.  In that case, it was held that even if it be assumed that the subscribers to the increased share capital were not genuine, under no circumstances the amount of share capital could be regarded as undisclosed income of the company.  This observation of the Delhi High Court was confirmed by the Apex Court in CIT v. Stellar Investment Ltd. (2001) 251 ITR 263.

Dear Shri Vivek, the second qn. was:  X has to effect TDS, but did not do so and paid the amount in full to the payee Y.  X was asked to remit tax due as per TDS but the payee Y says, he remitted the payment on behalf of the payer X.  Is it acceptable to the Deptt ?   My opinion is that TDS being mandatory in this case, should have been paid by the payer i.e., X.  Liability of X to pay tax (as per TDS) will have to be satisfied by remitting the tax by him only, including interest/penalty  etc. u/s 234B, 234C etc..    Once this happened, the payee Y may claim refund for the TDS amount paid by him.   Is is correct?  Kindly advise.

Dear Vekanta,

Vivek has clarifiedd ur first query that Share application money cannot be added to income even if it is from ficticious subscribers..

Regarding second query YES, Interest can be imposed on the payer because of defaault in deduction of TDS, since it involves delay in remittance to the Department..

Ok... First thing in section 234A, 234B are applicable for non-payment or deferrment of advance tax... So, i cant understood how it can come in TDS...

Anyway, If the payer pays without deducting TDS, then the payment made will be disallowed will computing the income of the payer.... However, if the payer proves that payee has paid the tax on such income, then disallowance will not come...

This is the thing i read somewhere long back... But i am not sure... i my be wrong...

Hi Amir... i have read many of your posts... U r providing to the point answers... I also visited your profile... I that u have written, knowledge increases by sharing.... I 100% agree with you.... Thank u...

Dear Vivek,

Thanks for appreciating yaar..

Trust me the above reply is based on incedent that I had faced..Ao made us liable to pay Interest........

Oh... Ok Amir.... many times, what is in theory is not in practice...& What is in practice is not in theory.. & thanks for sharing practical experience...

Interest cannot be levied u/s.201 if the recipient of money has paid tax by due date,even if the deductor has ommitted to deduct tax from payment,  thereby not causing any revenue loss to the dept. View supported by Guj HC in CIT Vs.Rishikesh Apartments Co-op Housing Society Ltd  

Dear Venkat Sir,

U were rite in quoting the case law that interest u/s 201 cannot be levid where payee has beeen made payment in  DUE DATE.

 But Sir, question was regarding 234 B & 234 C which deals with the cases other than where Tax has been paid in DUE DATES...

Therefore in the present case Interest can be imposed on the PAYER on account of default on deduction of TDS...

Dear This case cover the relevent second point.

 Hindustan Coca Cola Beverage P. Ltd. v. CIT (2007) 293 ITR 226(SC)

       Relevant Section : 194-I

       The assessee treated warehousing charges paid to Pradeep Oil as a contract payment and deducted tax at 2% on the same.  The Assessing Officer, however, treated the warehousing charges as rent as defined in section 194-I and asked the assesee to pay the difference and interest on the amount of tax short deducted.  This view was upheld by the Appellate Tribunal and also the High Court, which dismissed further appeal therefrom.  Thereafter, the assessee filed a miscellaneous application before the Appellate Tribunal contending that since Pradeep Oil had paid the tax on the said income, the same could not be recovered from the assessee.  The Tribunal observed that there was a mistake in its earlier order and recalled it for the limited purpose of deciding the specific ground raised by the assessee.  The Department did not challenge this order of the Tribunal.  The Tribunal held that although the assessee was rightly held as an assessee-in-default, tax cannot be recovered from him since the tax had already been paid by the recipient of income, namely, Pradeep Oil.   On appeal, the High Court held that since the original order had become final on account of dismissal by the High Court of the appeal filed therefrom, the Appellate Tribunal could not have reopened the matter. 

       The Supreme Court, on appeal, observed the Department did not challenge the order of the Tribunal recalling its earlier order.  Therefore, the order had attained finality and the High Court could not interfere with the final order.  Further, there was no dispute that the tax payable had been paid by the recipient of income.  Therefore, in view of Circular No.275/201/95-IT(B) dated 29.1.97 and payment of interest under section 201(1A) by the assessee, the Supreme Court held that the tax could not once again be recovered from the assessee.

thanx for sharing..................