TMI Blog2022 (8) TMI 1468X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual results depends upon various marketing/economic/social conditions and even otherwise, projections in the instant case, on the basis of which the valuation was determined has been made while taking into consideration the historical performance of the company and not held contrary to the provisions of the Act, as applicable to the instant case, by the AO. DCF analysis is an important tool or method to value a project and the statute itself gives an option to choose either of the two method, i.e., book value method or discounted cash flow method to the Assessee for determining the value of its shares. From the figures as mentioned by the ld. Commissioner and not denied by the ld. DR that there is a growth in the turnover of the Assessee for F.Y. 2016-17 and 2017-18 and doubled to 44.18 Crs. In F.Y. 2014-15, from 22.70 Crs. in F.Y. 2013-14 despite not matching the PAT with the actual. Therefore, we are in agreement with the findings of the ld. Commissioner that there is no infirmity in the valuation report, as the same is appropriate, detailed and provide the necessary basis of computation of projection and growth factors etc. The valuation arrived at by the expert unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition is compensatory in nature and there can be no manner of doubt that in view of the decision of Apex Court, the interest payment for delayed payment of tax is deductible under section 37. Thus Commissioner deleted the addition that qua payment of interest for delay in payment of Service Tax or Sales Tax . Decided against revenue. - DR. B.R.R. KUMAR, ACCOUNTANT MEMBER AND SHRI N.K. CHOUDHRY, JUDICIAL MEMBER For the Appellant : Sh. Ravi Kant Choudhary, Ld. Sr. DR For the Respondent : Sh. R.K. Mehra, Ld. CA. ORDER PER N.K. CHOUDHRY, J.M. This appeal has been preferred by the Revenue against the order dated 28.03.2018, impugned herein, passed by the learned Commissioner of Income-tax (Appeals)-4, New Delhi (in short Ld. Commissioner ) u/s. 250 of the Income-tax Act, 1961 (in short the Act ) for the assessment year 2014-15. 2. The Revenue Department has raised the following grounds of appeal: 1. Whether on the facts and the circumstances of the case, Ld. CIT(A) was correct in deleting the addition made of Rs. 6,25,44,292/- u/s 56(2)(vii)(b) of the Act? 2. Whether on the facts and the circumstances of the case, Ld. CIT(A) is correct in ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are premium was Rs. 3,47,88,600/-. Thus, the total of Rs. 6,98,08,344/- was received by the assessee. The book value was Rs. 345.48, implies a premium of Rs. 335.48 on the face value of Rs. 10 per share and the premium charged was Rs. 3224/- Therefore, the premium to the extent of Rs. 335.48/Rs.3224 = 0.10405 x 69808344 = 7264051 is allowed as per the book value and the balance being Rs. 6,25,44,292/- is considered as the income of the Assessee u/s. 56(2)(viib) as per the explanation to the section which gives the power to the Assessing Officer to adopt the value after taking due substantiation from the company and accordingly, the Assessing Officer while holding the method adopted by the Assessee is incorrect, considered the sum of Rs. 6,25,44,292/- as income u/s. 56(2)(viib) of the Act and added the said amount in the income of the Assessee. 4.2 The ld. Commissioner on appeal, while taking into consideration the claim of the Assessee and analysing the issue under consideration allowed the contention raised by the Assessee and deleted the addition in hand by concluding as under: 6.3. Having regard to the aforesaid valuation, it is apparent that one of the methods prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hyderabad Bench in the case of DQ (international) Limited v ACIT reported in 72 taxmann.com 142 and also in the case of Social Media India Ltd vs. ACIT reported in ITA No. 1711/Hyd./2012. Similar view has been taken in the case of Tally Solutions (p) Ltd v DCIT (2011) 14 Taxmann.com 19 (Bang). 6.6 Further, before me the appellant has submitted the same report of accountant. The basis of the report was further called for. From the perusal of the detailed backup, it is discernable that the projections on the basis of which the valuation is determined is not arbitrary and have been computed keeping in consideration the historical performance of the company, the performance of the industry and on another scientific basis. Further, the appellant company has submitted detailed industry analysis and the basis of determination of growth factor of revenue studying the trend of revenue in the past and future projections made by the industry. Thus, in such a scenario, wherein the basis of projections was scientific and the appellant has the basis of justifying each and every number with proper reasoning and basis of figure appearing in the projected income statement and balance sheet, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there is a growth of the company as would be evident from chart hereunder: Financial Year Turnover PAT PAT as per return 2016-17 3,29,14,035/- 2017-18 (upto February) 4,34,12,120/- 6.13 Thus, on the basis of my above finding, it is held that where there is no infirmity in the valuation report and the same is properly detailed and provide the necessary basis of computation of projections, growth factor etc., the valuation arrived at by an expert under the scheme allowed under I T. Act needs to be accepted. 6.14 Having regard to the above, addition made of Rs. 6,25,44,292/- is deleted. The ground of appeal is allowed. 4.3 The Revenue department challenged the deletion of the said addition. The ld. DR submitted that the decision of the ld. Commissioner is not only contrary to law, but also perverse and suffers from impropriety and liable to be reversed with the decision of the Assessing Officer. 4.4 On the contrary, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings of the ld. Commissioner that there is no infirmity in the valuation report, as the same is appropriate, detailed and provide the necessary basis of computation of projection and growth factors etc. The valuation arrived at by the expert under the scheme allowed under the IT Act needs to be accepted. We observe that Hyderabad Bench of Tribunal in the case of Social Media India Ltd. (supra) has held that the Assessee s valuation has to be accepted as it was supported by an independent valuer. In the cumulative effect, we are inclined not to interfere in the conclusion drawn by the ld. Commissioner on the instant issue. Consequently, ground No. 1 2 stand dismissed. 5. Ground No.3 :Ld. DR did not raise this ground specifically. Even we also failed to co-relate the ground No. 3 with the impugned order, hence, the same do not require any independent adjudication. 6. Ground No.4 relates to deletion of addition made by the Assessing Officer on account of late deposit of employees contribution towards PF u/s. 36(1)(va) of the Act. It is an admitted fact that in the instant case, the Assessee has paid the contribution towards PF amounting to Rs. 2,04,120/- after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration in this appeal. The legislative intent was/is to ensure that the amount paid is allowed as expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee s Provident Fund (EPD) and Employee s State Insurance Scheme (ESI) as deemed income of the employer under section 2(23)(x) of the Act. 6.5 Hence considering the facts in totality and the dictum of the jurisdiction High Court on the issue in hand in the cases referred above, we are inclined to uphold the decision of the ld. Commissioner in deleting the addition made by the Assessing Officer on account of delay in depositing the employees contribution towards PF but deposited prior to the due date of filling of return of income u/s 139(1) of the Act. Consequently, ground No. 4 stands dismissed. 7. By ground No. 5, the Revenue challenged the deletion of the addition made by the Assessing Officer on account of interest on delayed payment of indirect tax liabilities. The ld. DR submitted that the delayed payment of indirect tax liability is penal in nature and therefore, the order of the ld. Commissioner to the extent of dele ..... X X X X Extracts X X X X X X X X Extracts X X X X
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