Financial planning

Wise Investment Section 68 India
Compliance and filing guide

Expert brief on Wise Investment Section 68 India for businesses, promoters, and individuals. Reconcile with latest notifications before filing.

Last fact-checked: 2026-06-26

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Official-source cautious

India specific

Dispute Details

Facts & Lower Court History

Facts: The Assessing Officer made tax additions u/s 68 on share premium received by a company, relying on the Delhi High Court's NR Portfolio judgment to demand source-of-source verification.
Lower Court History: The ITAT deleted the addition. The Revenue appealed to the Calcutta High Court in PCIT v. Wise Investment Pvt. Ltd.
Key Issues: Whether the strict source-of-source verification required under Section 68 applies universally, even when the taxpayer has proved the identity and genuineness of the investor.

Court Ratio

Onus Discharged: The Calcutta High Court ruled that the NR Portfolio precedent is not applicable where the assessee has successfully proved the investor's identity and creditworthiness.
Section 68 Limits: The taxpayer is not required to prove the source of the source of funds under Section 68 if the primary transaction is verified and shown to be genuine.
Genuineness Test: Share premium additions are invalid if the company provides bank statements, PANs, and tax filings of the investing entities.

Key Evidence

Investor PAN & ITR: Income tax returns and PAN details of the shareholders investing the share premium.
Bank Statement Ledger: Bank records showing the movement of funds through regular banking channels.
Share Allocation Log: Board resolutions and Form PAS-3 showing the allotment of shares.

Action Points

Collect Shareholder KYC: Obtain ITRs, bank statements, and PANs of all shareholders investing in share premium.
Discharge Section 68 Onus: Provide investor tax filings and banking channel proof to prove identity and creditworthiness.
Challenge Unreasonable Onus: Object to additions u/s 68 if the AO demands source-of-source verification despite primary proof being submitted.