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2022 (11) TMI 577 - ITAT AHMEDABADAddition u/s 56(2)(viib) - Method of FMV determination - A.O. has not accepted the valuation made under DCF method by the assessee and adopted the formula as per Rule 11UA and valued the Fair Market Value of shares at Rs. 10/- per share and treated the premium as excess consideration on issue of share premium received which is covered u/s. 56(2)(viib) of the Act and added the same as “income from other sources” of the assessee company - HELD THAT:- Rule 11UA provides for “Determination of Fair Market Value”. As per Rule 11UA(2), FMV of unquoted equity shares for the purposes of Section 56(2)(viib) shall be the value of unquoted shares as determined under Clause (a) namely as per prescribed formula or Clause (b) as per Discounted Free Cash Flow method, at the option of the assessee. Thus DFCF method is a prescribed method for determining the FMV of shares as per Rule 11UA(2). As per Rule 11UA(2) Fair Market Value of unquoted equity shares for the purpose of Section 56(2)(viib) shall be the value determined under prescribed formula or as per DCF method which is at the option of the assessee. Thus the DCF method adopted by the assessee for determining the Fair Market Value of shares as per Rule 11UA does not requires any interference. Therefore the additions made u/s. 56(2)(viib) are not sustainable in law and the Ld. CIT(A) correctly deleted the same. Thus the Grounds of Appeal raised by the Revenue are devoid of merits and the same are hereby rejected.
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