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2019 (1) TMI 104 - AT - Income TaxValuation of shares - Auditor’s acceptance as Accountant for the purposes of Rule 11UA (2) - valuation report given by a Chartered Accountant - FMV determination - Held that:- The second report dated 15.11.2013 is not acceptable because the same is not certified by a person who is accepted as Accountant as per Rule 11U(a) of IT Rules, 1962. The AO accepted the fair market value of ₹ 100/- per share as per certificate dated 02.12.2012 and accepted the receipt of ₹ 90/- per share and taxed only the excess receipt of ₹ 300/- per share out of total receipt of ₹ 400/- per share and hence, the order of AO is in line with the earlier valuation report given by a Chartered Accountant who can be accepted as accountant as per Rule 11U(a) because this valuer has not been appointed as auditor of the assessee company. Hence in Assessment Year 2014-15, find no reason to interfere in the order of CIT(A). In Assessment Year 2015-16, there is no report of any Chartered Accountant who can be considered as accountant as per Rule 11U(a) of IT Rules, 1962. AO in this year has worked out the fair market value of assessee company at ₹ 714.38/- on the basis of NAV in the absence of any valuation report of any valuer who can be accepted as an Accountant as per Rule 11U(a) and taxed the excess amount of premium received by assessee over and above the permissible amount at ₹ 714.38/- per share in respect of 36957 shares and taxed the excess amount received of ₹ 1,32,29,088/- u/s. 56(2)(viib) of IT Act. In the facts of the present case, find no reason to interfere in the order of CIT(A) on this issue in this year also. Restriction as per Rule 11U(a) on the auditor’s acceptance as Accountant for the purposes of Rule 11UA (2) is well founded. Hence, find no merit in this argument of the learned AR of the assessee that only because the certificate is given by the auditor, it should not be held that the value certified by him is not acceptable. - Decided against assessee.
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