TMI Blog2021 (12) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... o net asset method contrary to position of law. At the same time, although, the assessee claims that it has justified issue of shares at ₹ 430/- per equity share, but on perusal of details filed by the assessee before the learned CIT(A), we find that learned CIT(A) has deleted additions made by the Assessing Officer by following his predecessor CIT(A) order for assessment year 2014-15, where the assessee has issued share at premium of ₹ 90/- per equity share.Since there is abnormal increase in premium charged by the assessee when compared to previous assessment year, we are of the considered view that the learned CIT(A) has completely erred by following his predecessor CIT(A) order, without examining share price arrived at by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flow of the assessee for the Discounted Free Cash Flow method was purely based on surmises and guess work and not supported by any cogent material. 2.3. The Ld. CIT(A) failed to appreciate that in the facts and circumstances of the case, it is necessary to invoke rules 11UA(2) of the Rules to arrive at the valuation of unquoted equity shares. 3. Brief facts of the case are that the assessee M/s. Specsmaker Opticians Pvt.Ltd. is engaged in the business of retail outlet chain for eye care services. The assessee has filed its return of income for assessment year 2015-16 on 30.09.2015 declaring current year loss of ₹ 77,24,828/-. During financial year relevant to assessment year 2015-16, the assessee had issued shares at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue of shares at ₹ 3,36,28,169/- and added back to the total income u/s.56(2) (viib) of the Act. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before learned CIT(A). Before the learned CIT(A), the assessee has challenged additions made by the Assessing Officer towards share premium on two counts. The first and foremost argument of the assessee was that as per rules prescribed for valuation of shares, it is for the assessee to choose a particular method and thus, once the assessee chooses a particular method, then the Assessing Officer can verify veracity of such method, but he cannot adopt different method for determination of share price. The assessee had also justified valuation of share price with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 90/- per share, whereas in impugned assessment year share price was valued at ₹ 430/- per share, which is exorbitant and not supported by necessary financials and valuation. 7. The learned A.R for the assessee, on the other hand, supporting order of the learned CIT(A) submitted that the learned CIT(A) has apprised facts in right perspective on the basis of evidences placed on record by the assessee, as per which, share price on the basis of actual financial position was higher than share price charged by the assessee for issue of shares on the basis of projection and thus, there is no reason for the Assessing Officer to make additions towards excess share premium u/s.56(2)(viib) of the Act, by changing method of valuation of eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied with price determined by the assessee in any method, then he can verify methodology followed by the assessee for arriving at share price, but he cannot change different method altogether without any valid reasons. In this case, although the assessee has followed discounted free cash flow method, but the Assessing Officer has changed to net asset method contrary to position of law. At the same time, although, the assessee claims that it has justified issue of shares at ₹ 430/- per equity share, but on perusal of details filed by the assessee before the learned CIT(A), we find that learned CIT(A) has deleted additions made by the Assessing Officer by following his predecessor CIT(A) order for assessment year 2014-15, where th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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