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2019 (5) TMI 836 - AT - Income TaxIncome from other sources u/s 56(2)(viib) - shares issued at premium - discounted cash flow method for valuation of shares - FMV of the shares as per Rule 11UA of the Income tax Rules, 1962 or as may be substantiated by the company to the satisfaction of the AO, based on the value on the date of issue of shares of its assets, including intangible assets being goodwill, know how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature, whichever is higher - HELD THAT:- Admittedly, the value of the shares was determined by the assessee as per the “discounted cash flow method”. In so far the adoption of the discounted cash flow method for valuation of shares by the assessee is concerned, we find that the same has been accepted by the A.O while framing the assessment u/s 143(3) in the case of the assessee for the immediately succeeding year i.e. A.Y 2014-15, wherein too the shares had been issued at a premium of ₹ 140/- per share. No infirmity does emerge from the determining of the FMV of the shares by the assessee company as per the recognized method of valuation i.e ‘discounted cash flow method’ envisaged in Sec. 56(2)(viib) r.w Rule 11UA of the Income tax Rules, 1962. Apart therefrom, we are unable to comprehend that now when the revenue itself has accepted the said method of valuation of shares and the issuance of the same at a premium of ₹ 140/- per share in the assessment framed in the case of the assessee for the immediately succeeding year viz. A.Y 2014-15, then how in the absence of any distinguishing facts it could have whimsically declined to accept the same for the year under consideration. No infirmity emerges from the well reasoned order of the CIT(A), who had rightly deleted the addition made by the A.O u/s 56(2)(viib) during the year under consideration. We thus finding ourselves to be in agreement with the view and the reasoning adopted by the CIT(A) while deleting the addition of ₹ 2,80,00,000/- made by the A.O, uphold his order - Decided against revenue
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