TaxTMI 
TaxTMI 
2021 (10) TMI 1197
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.... correctly appreciating the rationale for introduction of this section to "curb the practice of closely held companies bringing in undisclosed money of promoters/directors by issuing shares at a high premium and levy tax on the same" and not substantiating how this order upholding the addition/dismissal achieves the objective. 2. Because the learned Commissioner of Income Tax (Appeals) cites economic decisions of the business (i.e. "keeping share capital low", "breakup value and market value is high", "low cost of servicing", "premium in future", "IPO", etc.), which are not within the scope of Income Tax statue. 3. Because the learned Commissioner of Income Tax (Appeals), failed to recognize that the investor is a successf....
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....2), New Delhi [2019] 106 taxmann.com 300 (Delhi - Trib.) has held that "If IT Act provides assessee to get valuation done from a prescribed expert as per prescribed method, then same cannot be rejected because neither Assessing Officer nor assessee have been recognized as expert under law". 7. Because the learned Commissioner of Income Tax (Appeals) has not appreciated that the shares have been subsequently sold to foreign investors at a higher price and the valuation done using DCF method stands justified. 8. Because the learned Commissioner of Income Tax (Appeals) has relied on the decision of the jurisdictional ITAT, without quoting the citation of the decision. 9. Because the learned Commissioner of Income Tax....
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....uring the relevant financial year and issued shares based on share valuation report from CA which valued as per discounted cash flow method (DCF). 4. The Ld. AO on perusal of the share valuation report, noticed that, shares of the company was overvalued. Ld. AO asked assessee to justify, why the share premium/preference received, cannot be taxed as "income from other sources" by invoking provisions of section 56 (2) (viib) of the Act. The Ld. AO after considering the submissions of assessee, the Ld. AO was of the opinion that, the valuation only provided computation and not mentioned any other details. Ld. AO also opined that the cash flow shown in the valuation report was estimated arbitrarily, based on the projections and estimations a....
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..../Bang/2019 order dated 12-06-2020, after relying on the decision of the Hon'ble Bombay High Court in the case of Vodafone M-Pesa Ltd. Vs Pr. CIT 164 DTR 257 and decision of the ITAT, Bangalore Bench in the case of Innoviti Payment Solutions Pvt. Ltd., Vs ITO (2019) 102 Taxmann.com 59 held as follows:- "9. We have considered the rival submissions. First of all, we reproduce paras 11 to 14 from the Tribunal order cited by learned AR of the assessee having been rendered in the case of Innoviti Payment Solutions Pvt. Ltd., Vs. ITO (supra). These paras are as follows: "11. As per various tribunal orders cited by the learned AR of the assessee, it was held that as per Rule 11UA (2), the assessee can opt for DCF method and if....
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....as to be done/adopted at the Assessee's option. Nevertheless, he does not deal with the change in the method of valuation by the Assessing Officer which has resulted in the demand. There is certainly no immunity from scrutiny of the valuation report submitted by the Assessee. Therefore, the Assessing Officer is undoubtedly entitled to scrutinise the valuation report and determine a fresh valuation either by himself or by calling for a final determination from an independent valuer to confront the petitioner. However, the basis has to be the DCF Method and it is not open to him to change the method of valuation which has been opted for by the Assessee. If Mr. Mohanty is correct in his submission that a part of demand arising out of the a....
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....l determination from an independent valuer and confront the same to the assessee. But the basis has to be DCF method and he cannot ITA No. 2541/Bang/2019 ITA No. 37/Bang/2020 S.P. Nos. 29 and 59/Bang/2020 change the method of valuation which has been opted by the assessee. In our considered opinion and as per report of research committee of (ICAI) as reproduced above, most critical input of DCF model is the Cash Flow Projections. Hence, the assessee should be asked to establish that such projections by the assessee based on which, the valuation report is prepared by the Chartered accountant is estimated with reasonable certainty by showing that this is a reliable estimate achievable with reasonable certainty on the basis of facts available ....