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2021 (3) TMI 17 - AT - Income TaxAddition u/s 56(2)(b)(viib) - rejecting the justification of Share Premium on the basis of Discounted Cash Flow (DCF) method - Share Premium has been charged on the basis of Valuation Report by qualified Chartered Accountant following Discounted Cash Flow (DCF) method - as submitted assessee had issued new shares at a price lower than that computed as per the DCF Method i.e. at the rate of ₹ 43/- per share against DCF value of ₹ 218.49 per share arrived at in the said valuation report.Revenue disregarded the valuation report mainly on the ground that valuation of equity shares was based on projection of revenue which did not match with the actual revenue during the subsequent years - HELD THAT:- In absence of any specific inaccuracies or short comings in the DCF valuation report other than stating that yearwise results as projected are not matching with the actual results declared in the final accounts, the Assessing Officer cannot substitute his own value in place of the value determined either on DCF method or NAV method. Therefore, we are of the considered opinion that the Lower Authorities were not justified in rejecting the valuation report as submitted by the assessee in this regard. Observation of the Ld. CIT (A) that the Chartered Accountant has relied on the data supplied by the assessee in this regard is irrelevant in as much as the Chartered Accountant has carried out the valuation in accordance with the prescribed method as per Rule-11UA of the Income Tax Rules, 1962 and, therefore, such valuation report, in absence of specific defects being pointed out, has a binding value. We note that neither the Ld. CIT (A) nor the Assessing officer have evaluated the valuation report in light of the relevant material but have only rejected the same on assumptions and presumptions and the same cannot be upheld - AO should examine the issue afresh after giving due opportunity to the assessee to present its case in this regard. Thus, this ground is allowed for statistical purposes. Disallowance of ROC fees paid by the assessee company - HELD THAT:- It is settled law that ROC fees paid are to be considered as preliminarily expenditure within the meaning of Section 35D of the Act. The same is directed accordingly. Accordingly, this ground stands allowed.
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