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uncooked pressery: ITAT says no to addition of Rs 115 crore to RAW Pressery Earnings by I-T

In a major reduction for chilly press juice startup RAW Pressery, the Mumbai bench of the Earnings Tax Appellate Tribunal has put aside an addition of ₹115 crore to its earnings by the earnings tax division for the evaluation 12 months 2018-19.

The earnings tax division had questioned fund infusion within the firm by non-public fairness traders, Sequoia Capital India Investments and Saama Capital India Ltd, terming the valuation report submitted by RAW Pressery as unreliable. Tax authorities noticed that the corporate’s financials didn’t justify the excessive valuation at which the infusion was made.

The assessing officer within the case famous that the massive share premium obtained from overseas traders was ‘hawala’ and sought to use provisions of the Black Cash Act.

“In view of our… findings and having regard to the whole conspectus of the information of the case, we put aside the impugned order of the CIT(A)(Commissioner Earnings Tax Attraction) confirming the addition of Rs 115 crore made u/s 68 of the Act and restore the difficulty again to the file of AO,” the ITAT mentioned.

ET Bureau

The assessee, RAW Pressery Pvt Ltd, had filed its return of earnings on October 30, 2020, declaring a complete lack of Rs 41.85 crore. Subsequently, the case was chosen for scrutiny.

The corporate supplied a short background of the PE investors-Sequoia Capital India Investments and Saama Capital Ltd-along with their monetary statements. It additionally supplied copies of the related International Inward Remittance Certificates (FIRCs) to the Nationwide Faceless Evaluation Centre (NFAC).

The NFAC, nonetheless, disagreed with the corporate’s submissions and noticed that the valuation stories supplied weren’t dependable as its financials didn’t justify the excessive valuation arrived at by the chartered accountant.

The tax division additionally identified that the assessee had solely submitted acceptance letters issued by overseas subscribers however didn’t clarify as to why they’d agreed to a excessive premium when the corporate was making losses.

The bench noticed that through the 12 months, the corporate had obtained a share premium of Rs 52.24 crore from 5 shareholders, out of which 4 had been present shareholders who had infused capital in earlier years as effectively.

The fifth was a brand new shareholder, actress Jacqueline Fernandez, who was issued shares in lieu of her companies.

“With this resolution, the Mumbai tribunal has laid down rules for applicability of provisions of Part 68 in an elaborate method and has held that when the taxpayer has supplied all of the related paperwork it has in its possession, it’s for the tax authorities to clear their doubts, in the event that they nonetheless exist by doing its personal impartial investigation concerning the credit score worthiness of the funding firms,” mentioned Saurrav Sood, follow chief(worldwide tax) at SW India.

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