COMMISSIONER OF INCOME TAX Vs. TULIP FINANCE LTD.

JUDGEMENT

(1.) THE present appeal under s. 260A of the IT Act, 1961 (hereinafter referred to as the 'said Act') has been preferred by asst. yr. 1994 -95.

(2.) THE learned counsel for the Revenue challenged the said order of the Tribunal on four issues. The first issue was with relation to the deletion of the addition of Rs. 33 lacs, which had been made by the AO on account of unexplained share capital under s. 68 of the said Act. The second issue pertains to the deletion made by the Tribunal of the addition of Rs. 35,06,292 by the AO on account of alleged unexplained security deposits under s. 68 of the said Act. The third issue relates to the disallowance of depreciation by the AO amounting to Rs. 15 lacs in respect of cast iron moulds. The disallowance has been set aside and the Tribunal has allowed the said depreciation. The fourth issue also pertains to disallowance of depreciation of Rs. 6,11,145, which had been claimed by the assessee in respect of rolls which were machinery items less than Rs. 5,000 each on which, at the relevant point, 100 per cent depreciation was allowable.

(3.) WE have heard the learned counsel for the parties and have also examined the orders passed by the AO, the CIT(A) and the impugned order passed by the Tribunal. Insofar the first issue is concerned, we find that the CIT(A) had considered the issue in detail and had found that one of the parties, namely, Sh. S. P. Garg and Mrs. Raj Garg, who had introduced a sum of Rs. 2 lacs by way of share capital, had appeared before the AO and had furnished their returns of income. They had also filed copies of their bank statements evidencing issuance of cheques to the assessee company towards share capital. Even the proof and details of dividend paid and TDS had been filed by the assessee. With regard to the other party, namely, Magadh Leasing & Finance Ltd. and the associate parties, Mr. D. N. Sahai, Ms. Sushila Sahai and Daya Engineering Works Ltd. who had collectively introduced share capital to the extent of Rs. 16 lacs, it had been noticed that the assessee had furnished their PANs, places of their assessment and confirmations from them, before the AO. The said information was also filed before the CIT(A). The amounts received from these shareholders were through cheques, which had been duly credited in the bank account of the assessee and these shareholders were also income - tax assessees, who had also received dividends in respect of the shares. It was also noted that the assessee company had also filed TDS certificates along with bank statements to show the evidence of remittance of dividend. As regards the remaining shareholder, that is, Dr. S. P. Srivastava, it was noted that he was an NRI and the share capital of Rs. 15 lacs received from him was through his NRE account maintained in ANZ Grindlays Bank. The remittances were through three separate cheques, of which details were available. The assessee had also filed bank certificates submitted to the RBI presumably for the purpose of remittance of dividend to the said Dr. Srivastava.