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2023 (6) TMI 426 - AT - Income TaxMethod of valuation of shares - Addition u/s 56(2)(viib) - AO Rejected the DCF method of valuation on the ground that the same is not based on any scientific method and that since the assessee is making a loss, there is no possibility of valuing the shares of the assessee at a premium - CIT(A) upheld the addition made by the AO on the ground that the assessee has not employed any scientific method for determining the valuation of shares and the valuation is done solely with an intention to arrive at the higher value of issue of shares at the premium. HELD THAT:- Lower authorities have not gone into the details used by the assessee under DCF method to arrive at the valuation and rejected the entire methodology as adopted by the assessee - one of the reasons as quoted by the AO for not considering the valuation report is that the Director during the survey proceedings has stated that there is no valuation report. We are unable appreciate this reason for rejection as the satisfaction to be recorded by the AO should not be objective satisfaction exercised at his discretion, but a subjective satisfaction based on the facts of the case. The lower authorities have not examined the basis on which the valuation is done and from the perusal of facts, no details in this regard have been called for by the lower authorities. The valuation report is rejected based on the objective satisfaction and not based on detailed examination. As respectfully following case of Town Essential Private Limited Ltd. [2021 (7) TMI 17 - ITAT BANGALORE] we hold that the valuation done by the assessee cannot be rejected without recording any finding to the contrary by the lower authorities and therefore we delete the addition made in this regard. Disallowance u/s. 40(a)(i)/(ia) - tax deduction u/s. 194J should have been made on the payments of Management Fees,Outsourcing Expenses and License Fees - AR submitted that the details and evidence with regard to applicability of TDS provisions are already submitted before the lower authorities which have not been examined and payees have included these payments as their income and paid taxes on the same - HELD THAT:- We are of the view that the issue needs to be verified factually based on evidence submitted by the assessee and also whether the payees have included the payments as their income and paid taxes on the same. We therefore remit the issue back to the AO to look at the issue afresh and decide after examining the evidences submitted by the assessee with regard to the applicability of TDS provisions on the impugned payment and wherever TDS provisions are applicable to verify whether the payees have included the said amount in their income and paid tax on the same. The assessee is directed to produce the necessary details before the AO and cooperate in the proceedings before the AO.
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