https://www.taxtmi.com/caselaws?id=449453 The ITAT Mumbai upheld the assessee's valuation method for shares issued at premium under section 56(2)(viib). The assessee, a holding company, adopted the Net Asset Value Method for its own shares while using the Discounted Cash Flow Method for valuing its subsidiary company's shares. The AO rejected this approach, but the ITAT held that for holding companies dependent on subsidiary performance, proper valuation requires assessing the subsidiary on a futuristic basis using DCF method. Since the holding company's main asset was its subsidiary investment, the Net Asset Value Method incorporating the DCF-valued subsidiary was appropriate and complied with Rule 11UA. The ITAT emphasized that when introducing new investors, valuation must reflect goodwill and future prospects, not just historical costs. The appeal was allowed. en-us Fri, 09 Feb 2024 00:00:00 +0530 Mon, 05 Aug 2024 10:41:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=449453 The ITAT Mumbai upheld the assessee's valuation method for shares issued at premium under section 56(2)(viib). The assessee, a holding company, adopted the Net Asset Value Method for its own shares while using the Discounted Cash Flow Method for valuing its subsidiary company's shares. The AO rejected this approach, but the ITAT held that for holding companies dependent on subsidiary performance, proper valuation requires assessing the subsidiary on a futuristic basis using DCF method. Since the holding company's main asset was its subsidiary investment, the Net Asset Value Method incorporating the DCF-valued subsidiary was appropriate and complied with Rule 11UA. The ITAT emphasized that when introducing new investors, valuation must reflect goodwill and future prospects, not just historical costs. The appeal was allowed. Case-Laws Income Tax Fri, 09 Feb 2024 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=449453