Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 1468 - AT - Income TaxAddition u/s 56(2)(vii)(b) - determining value of shares - CIT(A) deleted addition holding DCF method is in place, which was rejected by the AO being not backed by scientific method or by any data - Assessee in the instant case adopted DCF method on the basis of report determining the fair market value by Accountant as per the discounted free cash flow method - HELD THAT:- We observe that the Assessee has adopted one of the method available for valuing its shares u/s. 56(2)(viib) of the Act, on the basis of the valuation report certified by the Ld. Chartered Accountant, which is not only based upon scientific valuation and financial position for the next seven years in the normal market/business scenario but also prepared in accordance with the prescribed Rules as applicable thereto. AO rejected the method adopted by the Assessee mainly on the ground that figures adopted in the F.Y. 2014-15 and 15-16 did not match with the actual performance of the company, whereas varying of actual results depends upon various marketing/economic/social conditions and even otherwise, projections in the instant case, on the basis of which the valuation was determined has been made while taking into consideration the historical performance of the company and not held contrary to the provisions of the Act, as applicable to the instant case, by the AO. DCF analysis is an important tool or method to value a project and the statute itself gives an option to choose either of the two method, i.e., ‘book value method’ or ‘discounted cash flow method’ to the Assessee for determining the value of its shares. From the figures as mentioned by the ld. Commissioner and not denied by the ld. DR that there is a growth in the turnover of the Assessee for F.Y. 2016-17 and 2017-18 and doubled to 44.18 Crs. In F.Y. 2014-15, from 22.70 Crs. in F.Y. 2013-14 despite not matching the PAT with the actual. Therefore, we are in agreement with the findings of the ld. Commissioner that there is no infirmity in the valuation report, as the same is appropriate, detailed and provide the necessary basis of computation of projection and growth factors etc. The valuation arrived at by the expert under the scheme allowed under the IT Act needs to be accepted. We observe that in the case of Social Media India Ltd. [2013 (10) TMI 414 - ITAT HYDERABAD] has held that the Assessee’s valuation has to be accepted as it was supported by an independent valuer. In the cumulative effect, we are inclined not to interfere in the conclusion drawn by the ld. Commissioner on the instant issue. Consequently, ground No. 1 & 2 stand dismissed. Late deposit of employees’ contribution towards PF u/s. 36(1)(va) - Assessee has paid the contribution towards PF after the due date prescribed under the relevant statute but before the due date of filing the return u/s. 139(1) - CIT(A) deleted addition - HELD THAT:- We are inclined to uphold the decision of the ld. Commissioner in deleting the addition made by the Assessing Officer on account of delay in depositing the employees’ contribution towards PF but deposited prior to the due date of filling of return of income u/s 139(1) of the Act. Consequently, ground stands dismissed. Addition of interest on delayed payment of indirect tax liabilities - Whether allowable expense u/s. 37(1)? - DR submitted that the delayed payment of indirect tax liability is penal in nature and therefore, the order of the ld. Commissioner to the extent of deleting the addition on account of delay in deposit of interest on tax liabilities (service tax, Sales Tax and TDS) is not justified - HELD THAT:-Commissioner by considering the issue in hand observed that there is nothing on record to suggest that these payments of interest on sales tax and Service tax were penal in nature. The ld. Commissioner also quoted the judgments of the Tribunal in the case of DCIT vs. Messee Dusseldorf of India Pvt. Ltd [2009 (12) TMI 1034 - ITAT, DELHI] and in the case of Remfry & Sugar Consultants Pvt. Ltd [2012 (9) TMI 190 - ITAT DELHI] wherein it was held that interest on service tax is compensatory in nature and has the same characters as service tax and therefore, it is an allowable deduction - Hon’ble Apex Court in the case of Prakash Cotton Mills P. Ltd. [1993 (4) TMI 3 - SUPREME COURT] held that where the payment of interest is automatic for the delayed payment, the imposition is compensatory in nature. Prakash Cotton Mills Pvt. Ltd. [1993 (4) TMI 3 - SUPREME COURT] also held “where the payment of interest is automatic for delayed payment, the imposition is compensatory in nature and there can be no manner of doubt that in view of the decision of Apex Court, the interest payment for delayed payment of tax is deductible under section 37.” Thus Commissioner deleted the addition that qua payment of interest for delay in payment of Service Tax or Sales Tax . Decided against revenue.
|