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2022 (3) TMI 208 - ITAT DELHIAddition u/s 56(2)(vii)(b) - alleged excess value of unquoted equity shares as issued by the Appellant at a premium over fair market value as determined by the AO - HELD THAT:- As decided in INTELLIGRAPE SOFTWARE PVT. LTD. VERSUS INCOME TAX OFFICER, WARD-12 (3) , NEW DELHI [2020 (10) TMI 403 - ITAT DELHI] AO was not able to pinpoint any specific inaccuracies or short comings in the DCF valuation report of the Chartered Accountant/Valuer other than stating that year-wise results as projected are not matching with the actual results declared in the final accounts. Before the ld. CIT(A), reasons for variation between projected and actuals were duly explained. The ld. CIT(A) has accepted such explanation but rejected the DCF valuation report as submitted by the assessee. Accordingly, in the absence of any defect in the valuation of shares arrived by the assessee on the basis of DCF method, impugned addition as made on the basis of net asset value method is liable to be deleted. The rejection is unjustified as the valuation report is required under Rule 11UA of The Income Tax rules is based on the future aspects of the company at the time of issuing the shares, it may vary from the actual figures depending on the market condition at the present point of the time. Thus keeping in view the entire facts of the case, the reports of the valuer, the comparison of the actual and projected revenues, provisions of Section 56(2)(viib) and keeping in view the order of Cinestaan Entertainment Pvt. Ltd. [2019 (6) TMI 1367 - ITAT DELHI] wherein it has been held that the Assessing Officer cannot substitute his own value in place of the value determined either on DCF method or NAV method, the appeal of the assessee is hereby allowed.
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