2019 (3) TMI 1816 - AT - Income Tax

Delayed Revenue appeals favor CIT(A) orders for AYs 2013-14 & 2014-15

The appeals filed by the Revenue against the Commissioner of Income Tax (Appeals)-11, Chennai, for AYs 2013-14 & 2014-15 were delayed by 14 days, ... Addition of share premium u/s 56(2)(viib) - income from other sources - Method of valuation of shares - assessee has adopted Rule 11UA for the purpose of valuing its shares and the share premium received - HELD THAT:- Assessee has adopted Rule 11UA for the purpose of valuing its shares and the share premium received. This is accepted method of valuation and the said method of valuation does provide for estimation. AO has adopted the NAM and for the purpose of the same has proceeded to re-value the assets of the assessee being the valuation of the land. AO has discarded the assessee’s method of DCF by holding that the actual Revenues varied from the projected Revenues for the four Assessment Years. Admittedly, when a projected value is taken, it is an estimate. The variation in the estimate is also less than 10%. Therefore, it cannot be said that the projected revenues are fabricated or manipulated. Further, the fact that the assessee has adopted a method prescribed under the Act and no error in respect of the said method has been specifically pointed out. Just because, there is a minor variation in the estimate, that method cannot be rejected. This being so, we find no reason to interfere in the order of the Ld.CIT(A) on this issue as recorded. - Decided in favour of assessee. Inordinate delay in service of the Assessment Order making the Assessment Order barred by limitation - HELD THAT:- Time limit of six months available to the AO u/s.142A to hold that the Assessment Order got time barred on 30.10.2016. The argument by the Ld.DR that 30.10.2016 was a Sunday and therefore, the Assessment Order was passed on 31.10.2016, admittedly is a valid issue and on this ground the assessment cannot be annulled as the assessment order has been allegedly passed on 31.10.2016 being the day immediately after the holiday being 30.10.2016. However, the Revenue has not been able to give any justifiable reason for the inordinate delay of nearly one and a half months for the service of the order by hand on 14.12.2016. This being so, admittedly the claim by the Revenue that the Assessment Order has been passed on 31.10.2016 itself is questionable. Issues:1. Delayed appeals by Revenue against CIT(A) Order for AYs 2013-14 & 2014-15.2. Grounds raised by Revenue in the appeals.3. Issue of limitation of time for assessment.4. Issue of share premium valuation.Analysis:1. The judgment pertains to two appeals filed by the Revenue against the Order of the Commissioner of Income Tax (Appeals)-11, Chennai, for AYs 2013-14 & 2014-15. The appeals were delayed by 14 days, which the Revenue sought condonation for, and the delay was accepted. The appeals were then disposed of on merits.2. In the Revenue's appeals, various grounds were raised related to the assessment process and valuation methods. The issues included the valuation of shares, treatment of part valuation reports, variation in share value, and the adoption of different valuation methods. The Revenue sought to set aside the CIT(A) order and restore that of the Assessing Officer.3. The primary issues discussed were the limitation of time for assessment and the common issue of share premium valuation for both AYs. The AO valued shares using the Net Asset Method (NAM) while the assessee applied Rule 11UA(2) for valuation. The CIT(A) held the Assessment Order for AY 2013-14 as barred by limitation and favored the assessee's valuation method using the Discounted Cash Flow method (DCF).4. The valuation methods used by the assessee were considered acceptable, and the minor variations in estimates were not deemed significant enough to reject the chosen method. The judgment highlighted that the assessee had the right to select the valuation method and supported the CIT(A)'s decision to delete the additions made by the AO based on the valuation differences.5. Regarding the issue of limitation for AY 2013-14, the CIT(A) analyzed the time limit available to the AO and concluded that the Assessment Order was time-barred. The argument about the Assessment Order being passed on a Sunday was acknowledged, but the delay in serving the order raised questions about the actual date of assessment. Ultimately, the appeals filed by the Revenue were dismissed based on the findings in favor of the assessee on both the limitation and valuation issues.