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2024 (4) TMI 341 - ITAT KOLKATAAddition u/s 56(2)(viib) - share premium receipts - Correct method of calculating the fair market value - as per AO fair market value of unquoted shares has not been determined by a merchant banker or by accountant as per the discounted free cash flow method and noted that the valuation of fair market value of the shares was done by the Govt. registered valuer which is contradictory to the provisions of the Act - HELD THAT:- We note that the assessee’s balance sheet is comprised of both movable and immovable properties. We note that immovable property comprised of land and building which houses the rice mill. As is apparent from the AO as well as Ld. CIT(A) orders that both the authorities have failed to point out any defect in the valuation report furnished by the assessee. We note that the AO has valued the fair market value of the equity shares based on the book value which is totally incorrect and erroneous method of calculating the fair market value as the assessee owns movable as well as immovable properties valuing the equity share at Rs. 23.20 per share whereas the fair market value of the equity share was much higher. AO has not referred the issue to valuation expert and therefore the said act of AO is not acceptable as the assessee has furnished valuation before the AO which was done by registered valuer. The valuer is also registered with the Department as valuer. While contrary to this even the immovable properties were valued at book value by the AO which is blatantly anomalous. Under the circumstances we are not in an agreement with the conclusion drawn by the authorities below for the reasons that valuation obtained by the assessee from a registered valuer cannot be brushed aside by simply citing technical reasons without pointing out any discrepancy or defect in the said valuation. Thus assessees case deserves to be treated with leniency and accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Appeal of the assessee is allowed.
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