TaxTMI 
TaxTMI 
2019 (10) TMI 707
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....14 vide dated 28.03.2016, under section 143(3) of the Income-tax Act, 1961 (hereinafter 'the Act'). 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in valuing the share premium on the basis of book value of shares as reasonable value instead of valuing on the basis of Discounted Cash Flow (DCF) method and accordingly adding the share premium at Rs. 5,32,68,570/-. For this assessee has raised the following two grounds: - "In the facts and the circumstances of the case and in law, the learned Commissioner of income Tax (A) erred in confirming fair market value per share of the Company at Rs. 8650.80 as calculated by the Assessing Officer instead of value per share of Rs. ....
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....nance Act, 2012 by inserting a new proviso in the Act i.e. 56(2)(viib) pertaining to the issue of shares to resident shareholders. The assessee was also asked to substantiate as to how the projections have been taken for the purpose of valuation of shares and the basis of projection was also asked. The assessee submitted the valuation report dated 07.08.2012, wherein, value per share has been arising at Rs. 1,80,475/- per share under the DCF method. The AO noted that the assessee has not submitted the basis of the projections. Hence, the AO instead of DCF method of valuation adopted book value of the share for computing the premium accordingly, computed the fair market value of unquoted equity shares at Rs. 8640.40 per share. Therefore, add....
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....nbsp; Face value Premium Total 1. 5.12.12 Rahul Narang 309 10 1,80,985 3900 5,59,24,365 5,59,27,455 2. 5.12.12 Myen Pte Ltd. Singapore 133 10 1,80,985 330 2,40,71,005 2,40,72,335 Total 442 4420 7,99,95,870 7,99,99,790 5. The learned Counsel for the assessee stated that during the course of assessment proceedings Narang Danone Access Private Limited filed letter dated 24.02.2016 and another letters dated 01.03.2016. He stated that the AO has referred these three letters in assessment order and said three letters be considered part of the present statemen....
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....a company if such company has valued the shares as per DCF method but AO ignored the proviso read with explanation to Sec.56(2)(viib) of the Act. The explanation to Sec. 56(2)(viib) of the Act defines the term the fair market value as stated hereinabove. Further explanation provides that higher of (i) and (ii) would be considered the fair market value of the shares of unlisted Company. The Assessing Officer ignored the mandate of Sec. 56(2)(viib) of the Act and erroneously calculated the value of shares on the basis of book value as per Balance Sheet and determined the value of shares of Rs. 8604.80 which is not the method prescribed under Sec. 56(2)(viib) of the Act. 6. He also argued that the documents filed as additional evidences rea....
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....880,470/- per share. It is also to be noted that in 2010, the shares originally were issued at a price of Rs. 1 lacs per share. The AO has valued shares on net asset valuation method and valued the share at the rate of Rs. 8,640.80 per share and added back the remaining share premium received from residential shareholders as income from other sources under section 56(2)(viib) of the Act. We also noted that the co-ordinate Bench decision of this Tribunal has categorically held that while valuing the share premium and to determine the fair market value of shares in terms of section 56(2)(viib) of the Act, the assessee has option for adoption of valuation method and the basis of valuation has to be DCF method. We noted that even Hon'ble Bombay....