TMI Blog2020 (11) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... ore 19th February, 2019 if a recognised Startups has filed declaration in Form No. 2. In case the appeal against the assessment is pending before the Commissioner of Income-tax (Appeal)[CIT(A)], the appellate order should be passed by CIT(A) on or before 31st December, 2019 after taking into account the fact that the Startup has filed declaration in Form No. 2 and hence the provisions of section 56(2)(viib) of the Act are not applicable for the addition made under section 56(2)(viib) of the Act before 19th February, 2019. The Department shall not file further appeal on the issue of addition made under section 56(2)(viib) of the Act; Income-tax demand - It is reiterated that the outstanding income-tax demand relating to additions mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the order passed by the learned Commissioner of Income-Tax (Appeals) in so far it is prejudicial to the interests of the appellant is bad and erroneous in law and against the facts and circumstances of the case. 2. That the learned Commissioner of Income Tax (Appeals) ought to have held that the assessing officer has no jurisdiction to go beyond the valuation report issued by chartered accountant. 3. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in holding that the DCF method adopted by the appellant for valuation of shares is irrational and does not have relevance to the factual financial results of the assessee company. 4. That the learned Commissioner of Income Tax (Appeals) erred in law an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es arrived by the Chartered Accountant cannot be acceptable for following reasons; a. The DCF method is from the view point of shareholder however, this aspect is completely loll missing in the valuation report. b. Projections considered for valuation are irrational and do not match with the actual financial results. c. No evidences for estimates and projections adopted in the valuation report. d. The projections and estimations are provided by assessee and no verifications were made by the Chartered Accountant before adopting the same. Therefore, the Ld.AO adopted Net Asset Value Method (NAV) and arrived at Rs. -11.17 as fair market value per share. 5. Based on the above findings, the Ld.AO held that, value of share compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T and subsequent amendments if any, more particularly placed at page 2-3 of paper book. 10. Ld.AR submitted that, said notification was not available with assessee at the time of proceedings before Ld.CIT(A). He also placed reliance at page 36-37 which is a consolidated Circular for assessment of start-ups dated 30/08/2019, being Circular No.22/2019 issued by CBDT. Ld.AR submitted that, assessee has filed Form 2 which has not been verified by authorities below in light of the circulars referred and relied by Ld.AR herein above. 11. On the contrary, Ld.Sr.DR placed reliance on orders passed by authorities below, however could not controvert applicability of said circular referred to by Ld.AR placed at page 2 of paper book in case of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided for the following procedure for pending assessment of the Startups:- i. In case of Startup companies recognized by Department for Promotion of Industry and Internal Trade (DPIIT) which have filed Form No. 2 and whose cases are under limited scrutiny on the single issue of applicability of section 56(2)(viib) of the Income-tax Act, 1961 (the Act),the contention of the assessee will be summarily accepted. ii. In case of Startup companies recognized by DPIIT which have filed Form No. 2 and whose cases have been selected under scrutiny to examine multiple issues including the issue of section 56(2)(viib)of the Act, this issue will not be pursued during the assessment proceedings and inquiry on other issues will be carried out by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act are not applicable for the addition made under section 56(2)(viib) of the Act before 19th February, 2019. The Department shall not file further appeal on the issue of addition made under section 56(2)(viib) of the Act; ii. In case the case is pending before the ITAT, the Department shall not press the ground relating to addition under section 56(2)(viib) of the Act in these cases. 5. Income-tax demand It is reiterated that the outstanding income-tax demand relating to additions made under section 56(2)(viib) shall not be pursued and no communication with the assessee in respect of outstanding demand shall be made for this purpose. In respect of other income-tax demand, it is decided that the income-tax demand shall not be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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