9911796707
TMI Blog2023 (12) TMI 1393X X X X Extracts X X X X X X X X Extracts X X X X ..... . ITA No. 329/Jodh/2023 3. The assessee has taken the following grounds which are reproduced as below: "1. The order passed by the ld.CIT(A) confirming the order passed by the ld. AO is bad in law and bad on facts. 2. a. The Id. CIT(A) has erred in confirming addition of Rs. 1,71,22,500/- ma- made 56(2)(viib) on account of share premium received of allotment of shares. The addition so made is bad in law and bad on facts. b. The authorities below had erred in not accepting the valuation of the Shares made by Technical Expert as required under Rule 11DA of the Income Tax Rules. c. The variation made in the valuation of shares was without any material basis or evidence and was bad in law. d. The contribution was from promoters which was duly explained and treating the same as income was bad in law." 4. Brief fact of the case is that the assessee-company incorporated under the Companies Act, 1956. In impugned assessment year, the assessee allotted share@ 100 per share (Rs. 10/- + Rs. 90/-) to the director and the son of director. The assessee was assessed u/s 143(3) and addition was confirmed for contravening section 56(2)(viib) r.w. Rule 11 UA of Income Tax Rule 1962 ( he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director. Hence, the Assessing Officer came to the conclusion that the issue of share premium is very disproportionate looking to the financial position of the appellant company. The Assessing Officer has analyzed how Discounted Cash Flow method (DCF) as relied upon by the appellant cannot be applied here. Hence. I agree with the contention of the appellant. The addition of Rs. 1.71,22,500/- is confirmed and the appeal of the appellant is dismissed on this ground. 6. In the result, the appeal of the appellant is dismissed." 5.1 The ld. AR placed that the assessee followed the "DCF Method" under Rule 11UA and the share was valued amount to Rs. 158.93 per share whereas assessee allotted the share @ Rs. 100 per share. The ld. AR placed that relied on the order of ITAT Mumbai Bench in the case of Crown Chemicals Pvt. Ltd. [TS-1017 ITAT-2022 (Mum)] date of judgment 23.12.2022, held: "Even the prescribed Rule 11UA(2) does not give any power to the Assessing Officer to examine or substitute his own value in place of the value determined or requires any satisfaction on the part of the Assessing Officer to tinker with such valuation." 5.2 The ld. AR invited our attention in the valuat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be appropriately left to the consideration and wisdom of experts in the field of accountancy, having regard to the imponderables which enter the process of valuation of shares. The Appellant-Revenue is unable to demonstrate that the methodology adopted by the Respondent-Assessee is not correct. The AO has simply rejected the valuation of the Respondent-Assessee and failed to provide any alternate fair value of shares. Furthermore, as noted in the impugned order and as also pointed out by Mr. Vohra, the shares in the present scenario have not been subscribed to by any sister concern or closely related person, but by outside investors. Indeed, if they have seen certain potential and accepted this valuation, then Appellant-Revenue cannot question their wisdom. The valuation is a question of fact which would depend upon appreciation of material or evidence. The methodology adopted by the Respondent-Assessee, accepted by the learned ITAT, is a conclusion of fact drawn on the basis of material and facts available. The test laid down by the Courts for interfering with the findings of a valuer is not satisfied in the present case, as the Respondent-Assessee adopted a recognized method o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the revenue authorities. Further, The ld. DR relied on the order of ITAT Delhi Bench in the case of Agro Portfolio (P.) Ltd., vs. Income Tax Officer, Ward 1 (4), New Delhi, [2018] 94 taxmann.com 112 (Delhi - Trib.) The relevant paragraph is reproduced as below: - "16. For all these reasons, we are of the considered opinion that there has not been any possibility of verifying the correctness or otherwise of the data supplied by the assessee to the merchant banker, in the absence of which the correctness of the result of DCF method cannot be verified. This left no option to the AO but to reject the DCF method and to go by NAV method to determine the FMV of the shares. Without such evidence, it serves no purpose even if the matter is referred to the Department's Valuation Officer. We, therefore, do not find any illegality or irregularity in the approach of conclusions are by the authorities below. While confirming the same, we dismissed the appeal as devoid of merits." 8. We heard the rival submission and considered the documents available in the record. The assessee has taken the DCF method for valuation of share which is followed by the Rule 11UA the Rule. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained and treating the same as income was bad in law. 3. The Id. CIT(A) has erred in sustain the addition of R.S. 15,00,000/- u/s 68 of the Act. The addition so sustained is bad in law and bad on facts. 4. The Id. CIT(A) has erred in sustaining disallowance of Rs. 4,72,08s/- on account of depreciation. 5. The appellant crave liberty to add, amend, alter, modify or delete any of the ground of appeal on or before its hearing before your honour." 11. In this case, we heard the rival submission and considered the documents available in the record. The addition was made Rs. 15 lacs u/s 68 for non-furnishing of the identity and PAN of the creditors. Further the amount of Rs. 4,72,088/- was added for contravening of section 40A (2)(b), the appellant has claimed the depreciation Rs. 4,72,088/-. The entire depreciation was on non-existence asset related to building of R.S. Petroleum one of the relative of the director. The ld. AR vehemently argued on the contrary, per contra, the ld. DR invited our attention in the relevant part of the appeal order which is reproduced as below: "5.2 Ground No. 2 is the addition of Rs. 15,00,000/- as unexplained credit entry in the list of sund ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
