Sections 28(iv), 68 – The fact that premium is abnormally high as per test of human probabilities is not sufficient. The AO has to lift the corporate veil and determine whether any benefit is passed on to the shareholders/directors.
Jagdish D. Shah | Jagdish T. Punjabi Chartered Accountants
9.Bharathi Cement Corporation Pvt. Ltd. vs. ACIT (Hyderabad) Members: P. Madhavidevi, JM and S. Rifaur
Rahman, AM ITA Nos.: 696 & 697/Hyd./2014 A.Y.s: 2009-10 and 2010-11 Dated: 10th August, 2018 Counsel for assessee / revenue: Nageswar Rao
/ M. Kiranmayee
Sections 28(iv), 68 – The fact that premium
is abnormally high as per test of human probabilities is not sufficient.The AO has to lift the corporate veil and
determine whether any benefit is passed on to the shareholders/directors.
During the previous
year relevant to the assessment year under consideration, the assessee company,
filed its return of income declaring total income of Rs. 2,91,01,250.This income comprised of interest on fixed
deposits which was offered for taxation under the head `Income from Other
Sources’. The Company had not commenced its business activity of manufacture
and sale of cement at its manufacturing unit in Andhra Pradesh and did not have
any income chargeable under the head `Profits and Gains of Business or Profession’.
Officer (AO) in the course of assessment proceedings observed that the share
capital of the assessee company was held by Y S Jagmohan Reddy (66.43%) and
Silicon Builders (P.) Ltd. (33.15%), a company was owned and controlled by Y S
Jagmohan Reddy.The directors of the
Company were Y S Jagohan Reddy; Harish C. Kamarthy,J Jagan Mohan Reddy, Ravinder Reddy and V. R.
previous year relevant to assessment year 2009-10 the