Minimum alternate tax exclusions for pre-amendment banking companies and expatriate Indian branch salaries remain outside head office expenditure limi...
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The ITAT held that the AO erred in substituting the discounted cash flow (DCF) method with the net asset value (NAV) method under Rule 11UA for valuation of shares allotted to the assessee's promoters, as no new funds were introduced and no unaccounted income was generated. The AO's reliance on discrepancies in projections was insufficient to question the genuineness of the transaction. The subsequent sale of shares to a third party at a higher price supported the valuer's DCF-based valuation. The Tribunal reaffirmed that projections, though not perfectly accurate, cannot be disregarded in favor of NAV, and AO cannot arbitrarily replace the valuation method. Accordingly, the addition under section 56(2)(viib) was deleted, and the assessee's valuation method was upheld.
The ITAT held that the AO erred in substituting the discounted cash flow (DCF) method with the net asset value (NAV) method under Rule 11UA for valuation of shares allotted to the assessee's promoters, as no new funds were introduced and no unaccounted income was generated. The AO's reliance on discrepancies in projections was insufficient to question the genuineness of the transaction. The subsequent sale of shares to a third party at a higher price supported the valuer's DCF-based valuation. The Tribunal reaffirmed that projections, though not perfectly accurate, cannot be disregarded in favor of NAV, and AO cannot arbitrarily replace the valuation method. Accordingly, the addition under section 56(2)(viib) was deleted, and the assessee's valuation method was upheld.
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