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2020 (11) TMI 115 - AT - Income TaxAddition u/s 56(2)(viib) of the Act read with rule 11UA(2)(b) - excess fair market value - AO computed value of share premium at ₹ 51.32 per share and disallowed excess share premiumand treated as excess fair market value under section 56(2)(viib) - disregarding the valuation report prepared under the Discounted Cash Flow ("DCF") method, and adopting the Net Asset Value ("NAV") method for computation of the fair market value ("FMV") of shares - HELD THAT:- As under Rule 11UA assessee has option to determine fair market value being NAV method or DCF method. As per observation of Hon’ble Bombay High Court in case of Vodafone M-Pesa [2018 (3) TMI 530 - BOMBAY HIGH COURT]. If assessee determines the fair market value in any one method as prescribed under Rule 11UA, the assessing officer can not dispute the method so adopted. In the present case, we note that assessing officer has not rejected the DCF method followed by assessee based on any discrepancy found in the valuation, but is based on the reasoning that, the valuation is based on estimates. Remand this issue back to Ld.AO for scrutinising valuation report filed by assessee by following DCF method either by himself or by calling a determination from an independent valuer and to confront the same with assessee. Ld.AO shall not reject the DCF method as it is the appropriate method prescribed under Rule 11UA. Assessee is also directed to establish the correctness of the valuation report based on documents/evidences. Assessee has to satisfy the correctness of the projection of discounting factor with the help of empirical data or industry norm. - Decided in favour of assessee for statistical purposes.
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