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2023 (1) TMI 468 - ITAT CHENNAIAddition u/s.56(2)(vii)(b) - excess amount received by the Assessee company as share premium - difference between the issue price and the actual share price determined by the Assessing Officer as income of the Assessee - AO changed the method of valuation from DCF Method to Net Asset Value Method - sole basis for the AO to reject the DCF Method is that there is a huge difference between the projected financials and the actual financials for the relevant period considered by the Assessee for the DCF Method and thus, he was of the opinion that the DCF Method cannot give a true or a correct share price - HELD THAT:- AO has exceeded his powers and determined the share price of Rs.18.97 by changing the valuation method from DCF Method to NAV Method, even though as per law, the Assessing Officer cannot change the method followed by the Assessee for valuation of the shares as it is optional for the Assessee to choose a particular method for determining the share price. In this case, AO has changed the method of valuation from DCF Method to NAV Method without their being any observation with regard to the DCF Method followed by the Assessee. Therefore, we are of the considered view that the AO has erred in changing the method of valuation of the shares from DCF Method to NAV Method. No substance in the findings of AO for the simple reason that the Assessee has explained the difference between the projected operating profits and the actual financials for the financial years 2014 – 2015 to financial year 2018 – 2019 - Although there is a difference in the projected financials when compared with the actual financials, but projected financial figures is always a projection based on certain degree of estimation and which may not be equivalent to the actual. But, as long as there is a minor difference in the projected financials and the actual financials, there is no reason for the AO to reject the DCF Method adopted by the Assessee by stating that there is a difference in the projected financials considered by the Assessee. Assessee has justified the premium charged on the issuance of shares and thus, we direct the Assessing Officer to delete the additions made towards the difference between the issue price and the actual share price determined by the Assessing Officer as income of the Assessee u/s.56(2)(vii)(b) - Appeal of assessee allowed.
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