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2019 (6) TMI 925 - AT - Income TaxAddition of share premium u/s 56(2)(viib) - valuation of the projected cash flow - Valuation method prescribed viz Discounted Cash Flow(DCF) method - AO as well as the CIT(A) both certainly could not understand the valuation method prescribed under the rule 11UA(2)(b) i.e. DCF method and found out various discrepancies in the valuation report submitted by the assessee which was made by an expert , Chartered Accountant - CIT(A) considered himself an expert and made his own valuation HELD THAT:- AO as well as the CIT(A) observed that projected figures are not verifiable. But during the course of assessment proceedings, the assessee had provided the clarifications dated 16.12.2016 as to from where the projected figures were taken. As per the contentions of the AR, the projected cash flows were based on the various reports/data gathered by the analyst and management and after analyzing and verifying the same by the valuer. But the same was not considered either by the AO as well as by the CIT(A). From the records it can be seen that the AO as well as the CIT(A) never asked for furnishing the data from the Assessee at any point of time. Thus, they have not given any opportunity to the assessee to further clarify the projected cash flows. It is agreed that valuation is not mechanical process but, determined from market trends and other factors and after considering them, the valuer can determine the value of share. Even if the said is doubted, the AO should have given proper opportunity to the assessee for allowing the assessee to clarify the aspects of the valuation of the projected cash flow, which the AO failed to do so as well as the CIT(A) also did not take into account the submissions made by the Assessee. Thus, it will be appropriate to remand back all the issues contested herein to the file of the Assessing Officer with a direction to decide the same afresh - appeal of the assessee is partly allowed for statistical purpose.
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