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2023 (2) TMI 1186 - ITAT DELHIAddition u/s 56(2) (viib) - fair market value of the shares sold to non resident company on very high premium - AO treating the share premium received does not represent the fair market value of shares, AO added back the amount to the income of the assessee - HELD THAT:- On a reading of section 56(2)(viib), it becomes very much clear that it is applicable to resident investors and not to non-residents. That being the statutory provision, the addition made in respect of investment made by M/s. NBM Investment Fund ALP by invoking the provisions of section 56(2)(viib) is unsustainable. Investment made by M/s. H.T. Digital Media Holding Ltd. - On a reading of section 56(2)(viib), it is observed that any consideration received for issue of shares which exceeds the fair market value of the shares can be added. As per explanation to section 56(2)(viib), fair market value of the shares shall be the value as may be determined applying such method as may be prescribed or may be substantiated by the company to the satisfaction of the Assessing Officer based on the value on the date of issue of shares or its assets including intangible assets, whichever is higher. Rule 11UA, prescribes the method for determination of fair market value. It is nobody’s case that the valuation of shares by the independent valuer is not in accordance with the statutory provisions. In fact, the departmental authorities have accepted the position that the DCF method is an accepted method under the statutory provisions. Therefore, merely because the actual sales are not matching with the estimated projected figures considered for DCF method, the fair market value determined by the independent valuer cannot be rejected. See CINESTAAN ENTERTAINMENT P. LTD. [2019 (6) TMI 1367 - ITAT DELHI] - Decided in favour of assessee.
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