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2023 (6) TMI 1282 - ITAT DELHIAddition u/s 56(2)(viib) - share capital and premium received by the assessee - revenue dismissing the DCF method of valuation as adopted by assessee - HELD THAT:- Usage of DCF method for the purpose of valuation of shares is an approved method in Rule 11U and 11UA of the Income Tax Rules. On perusal of the said Rules, an option is given to the assessee to choose either of the methods prescribed therein. Hence, the rejection of valuation report submitted by the assessee using DCF method by the lower authorities is hereby dismissed. As per DCF method of valuation, the fair market value of the shares have been arrived at Rs. 1136.92 and Rs. 992 per share by Chartered Accountant namely Sh. A.K. Agarwal and Sh. Deepak Kumar Agarwal respectively. Assessee had ultimately issued shares to the aforesaid five share holders at a price below the fair market value of shares determined by the valuers in the valuation report. Obviously, the fair market value determined in the valuation report by the valuers represent the maximum value beyond which the shares could not be issued by any company. Hence, we do not find any justification in the action of the lower authorities in dismissing the DCF method of valuation and substitute it with any of the method of valuation and making addition u/s 56(2)(viib) of the Act. Issue in hand is squarely covered by the decision of this Tribunal in the case of Cinestaan Entertainment (P.) Ltd.[2019 (6) TMI 1367 - ITAT DELHI] wherein it was held as per section 56(2)(viib) of the Act read with Rule 11U and 11UA of the Rules, the assessee has an option to do valuation of shares and determine fair market value either using DCF method or NAV method and Assessing Officer cannot examine or substitute his own value in place of value determined. When shares were issued at premium based on valuation report from prescribed expert using DCF method of valuation, the said sum cannot be disregarded merely because the projection of revenues thereon did not match with actual revenues of subsequent years. We direct the Ld. AO to delete the addition made u/s 56(2)(viib) - Ground raised by the assessee is allowed.
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