Fresh valuation is required for share premium under section 56(2)(viib) when earlier valuation does not cover the relevant year.

Section 56(2)(viib) requires the fair market value of unquoted equity shares to be determined under the prescribed Rule 11UA method for the relevant year of issue, and the issue price must be supported by valuation material applicable to that year. A valuation report accepted in an earlier year does not automatically govern a later year, and where no fresh report is available for the year under consideration, the factual basis is incomplete. The matter must then be examined afresh on proper scrutiny of the valuation under the prescribed method, rather than being decided solely on the existing material.

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Issues: Whether the addition made under section 56(2)(viib) on account of share premium could be sustained where no fresh valuation report was obtained for the year under consideration and the matter had to be examined afresh.

Analysis: The issue turned on the scheme of section 56(2)(viib) and Rule 11UA of the Income-tax Rules, 1962, under which the fair market value of unquoted equity shares has to be determined by the prescribed method and the assessee must support the issue price with a valuation relevant to the year of issue. The prior valuation report accepted in an earlier year could not automatically govern the subsequent year, and the absence of a fresh report for the relevant year made the factual foundation incomplete. At the same time, the determination of fair market value required proper scrutiny under the prescribed method and could not be concluded merely on the existing material without fresh examination by the Assessing Officer.

Conclusion: The addition was not finally upheld or deleted on merits and the matter was remitted to the Assessing Officer for fresh valuation and reconsideration.

Final Conclusion: The Revenue's challenge succeeded only to the extent that the dispute was sent back for a fresh decision, and the earlier deletion was not sustained as a final adjudication on the valuation issue.

Ratio Decidendi: For section 56(2)(viib), the fair market value of unquoted equity shares must be determined with reference to the prescribed valuation method for the relevant year, and a fresh adjudication is required where the existing valuation material does not adequately support the issue price for that year.

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