Share Application money forfeited for non payment of call cannot be considered as income in the year of forfeiture

Last updated: 13 December 2011

Court :
Income Tax Appellate Tribunal

Brief :
) (A) That on the facts and circumstances of the case, the ld. CIT(A)-XII, has grossly erred in confirming the brought forward “SHARE APPLCIATION FORFEITURE ACCOUNT” as unclaimed credit and thus, confirming addition for ` 25,00,000/- to the declared income fo A.Y. 2007-08. (B) That the amount of ` 25,00,000/- which was received as SHARE APPLCATION MONEY in F.Y. 2003-04 and forfeited in December,2004 for non payment of Allotment Money is a CAPITAL RECEIPT and cannot be treated as income of A.Y. 2007-08. How can a capital receipt of previous year, be added to income of current year i.e. A.Y. 2007-08, when the money was received in A.Y. 2004-05 and forfeited in A.Y. 2005-06. (C) That the “SHARE APPLICATION FORFEITURE ACCOUNT” is a capital receipt and not liable to tax, be deleted in full”

Citation :
Sunita Gupta Share Brokers Limited VS Assistant Commissioner of I.Tax,