TMI Blog2019 (10) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... s of DCF method and the AO could not have substituted it by NAV method rather he should have arrived at another value, if any, by applying DCF method only. We also noted that the explanation and additional evidences produced before us shows that why projection has been made in that manner and have been substantiated by filing additional evidences/ 8. We noted that this issue has been considering by the Hon ble Bombay High Court and remanded back to the file of the AO the issue regarding considering the value of shares in term of section 56(2)(viib) of the Act on the basis of DCF method. Here, in this present case also, we direct the AO to consider these additional evidences and then can arrive at a correct value of share for charging of share premium in term of section 56(2)(VIIB) - Appeal of assessee is allowed for statistical purposes. - ITA No. 3521/Mum/2018 - - - Dated:- 22-8-2019 - SRI MAHAVIR SINGH, JM AND SRI M BALAGANESH, AM For The Appellant : Shri Prakash Jotwani, AR For The Respondent : Shri N. Hemlatha, DR ORDER PER MAHAVIR SINGH, JM: This appeal of assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... replied that the provisions of section 56(2)(viib) of the Act is applicable in regard to shares issued to resident but not to non-resident. It was contended that there has been amended being brought into Act vide Finance Act, 2012 by inserting a new proviso in the Act i.e. 56(2)(viib) pertaining to the issue of shares to resident shareholders. The assessee was also asked to substantiate as to how the projections have been taken for the purpose of valuation of shares and the basis of projection was also asked. The assessee submitted the valuation report dated 07.08.2012, wherein, value per share has been arising at ₹ 1,80,475/- per share under the DCF method. The AO noted that the assessee has not submitted the basis of the projections. Hence, the AO instead of DCF method of valuation adopted book value of the share for computing the premium accordingly, computed the fair market value of unquoted equity shares at ₹ 8640.40 per share. Therefore, added the differential sum of ₹ 5,32,68,570/- as income from other sources under section 56(2)(viib) of the Act by observing in Para 5.18 as under: - 5.18 From the discussions ad detailed in above paras, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,40,72,335 Total 442 4420 7,99,95,870 7,99,99,790 5. The learned Counsel for the assessee stated that during the course of assessment proceedings Narang Danone Access Private Limited filed letter dated 24.02.2016 and another letters dated 01.03.2016. He stated that the AO has referred these three letters in assessment order and said three letters be considered part of the present statement of fact. In spite of the submission with necessary supporting, the AO did not consider the submission of the company objectively while passing order under section 143(3) of the Act. As per the proviso read with explanation to Sec. 55(2)(viib) r.w.s. 56(2)(viib) of the Act are not applicable in case where company has valued the share at fair market value as prescribed method as per Rule 11UA i.e. DCF method. The company is Joint Venture Company between Narang Group and Danone Group. Danone is a French Multinational Food Beverages based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartmental Representative, he agreed that the matter has to be restored back to the file of the AO to examine the additional evidences and this cannot be verified or carried out proper examination at this level. 7. After hearing both the sides, we are in agreement of both the sides that these additional evidences require detailed examination at the level of the AO. Hence, this matter has to go back to the file of the Assessing Officer. 8. Now, the issue arises that in case the company issued shares to both resident and non-resident shareholders at a price of ₹ 1,80,195/- per share and the shares were issued to its existent shareholders on a proportionate basis, what method should be adopted for the purpose of valuation. The assessee has adopted the share valuation method i.e. DCF and valued the share at the rate of ₹ 1,880,470/- per share. It is also to be noted that in 2010, the shares originally were issued at a price of ₹ 1 lacs per share. The AO has valued shares on net asset valuation method and valued the share at the rate of ₹ 8,640.80 per share and added back the remaining share premium received from residential share ..... X X X X Extracts X X X X X X X X Extracts X X X X
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