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2022 (10) TMI 217 - ITAT MUMBAIAddition u/s 68 or 56(2) - Unexplained cash credit u/s 68 - Bogus share transactions - genuineness and creditworthiness of the transactions were not proved - CIT(A) has considered the facts of the share valuation u/s 56(2)(viib) and came to a conclusion that the addition of the fair market value is correct - HELD THAT:- Both the revenue authorities have has different opinion one being addition u/s 68 and other U/sec 56(2)(viib) - AO has called for various details and assessee has substantiated with the material information and judicial decisions which cannot be disputed and the A.O. was satisfied with the applicability of section 56(2)(viib) - CIT(A) has not upheld the addition u/s 68 but u/s 56(2)(viib) of the Act that shows that there is no doubt on the investors as well as genuineness of the transaction and the shares were issued at a premium considering the fair market value(FMV). We find that the valuation aspect of the shares is made on the Discounted cash flow method (DCF) and these facts are mentioned by the A.O. and it clearly indicates that the assessee has submitted the working of cash flow statement for F.Y 2014-15 to 2018-19 and the AO has not made adverse comments that the cash flow statements are false and not in accordance with the accounting principles. The cash flow statements are estimates of business and also it is not the case of the revenue that future results of the assessee is wayward compared to the projections. At this stage, there is no point in referring back to the old track record and to examine the future projections of the company. There cannot be a direct relation of assets base of the assessee company with financial future cash flows from business operations as the assessee is engaged in the business of trading in shares and derivatives transactions. The projected future financials are prepared by the management persons, who understands the business operations and the duty of the valuer is to perform due diligence of such estimates and apply the relevant criteria based on the business of the assessee. Therefore we are of the considered view that the rejection of valuation of shares as per the DCF method is also without any evidence on record. Accordingly, we set aside the order of the CIT(A) and direct the assessing officer to delete the addition and allow the grounds of appeal.
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