2021 (12) TMI 557

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....ppeal:- "1. The order of the Ld. CIT(A) is contrary to the law and facts of the case. 2. The Ld. CIT(A) relied upon the decision of the CIT(A) in the assessee's own case in ITA No. 311/CIT (A) - 15/2016-17 dated 28-03-2018 for the AY 2014-15 and decided the issue in favour of assessee. 2.1. The Ld. CIT(A) failed to appreciate that the Revenue has filed an appeal before the Tribunal against the order of the Ld. CIT(A) on the same issue, which is still pending. 2.2. The Ld. CIT(A) has ignored the finding of the AO that the estimated cash flow of the assessee for the Discounted Free Cash Flow method was purely based on surmises and guess work and not supported by any cogent material. 2.3. The Ld. CI....

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....shares u/s.56(2)(viib) of the Act does not arise. The Assessing Officer, however, was not convinced with explanation furnished by the assessee and according to him, the assessee is not justified in fixing share price of Rs. 430/- per share, when price of share was determined by the assessee at Rs. 90/- per share in immediately preceding financial year, therefore, he has rejected explanation furnished by the assessee and adopted net asset method as prescribed under Rule 11(UA) of the Income Tax Rules, 1962, and determined excess consideration charged for issue of shares at Rs. 3,36,28,169/- and added back to the total income u/s.56(2) (viib) of the Act. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before le....

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....fficer is not correct in taxing excess consideration for issue of shares u/s.56(2)(viib) of the Income Tax Act, 1961. Aggrieved by the learned CIT(A) order, the Revenue is in appeal before us. 6. The learned DR submitted that the learned CIT(A) has erred in relied upon decision of his predecessor CIT(A) order for assessment year 2014-15 to delete additions made by the Assessing Officer towards excess premium charged on equity shares without appreciating fact that in the earlier financial year, the assessee has determined share price at Rs. 90/- per share, whereas in impugned assessment year share price was valued at Rs. 430/- per share, which is exorbitant and not supported by necessary financials and valuation. 7. The learned A.R for....

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....h flow method for determination of share price. Further, rules make it very clear that once the assessee chooses a particular method for valuation of shares, then the Assessing Officer cannot adopt different method for valuation of shares, but he can very well verify method selected by the assessee for valuation of shares. In this case, the assessee has adopted discounted free cash flow method for determination of share price, whereas the Assessing Officer has adopted net asset method. Therefore, if at all, the Assessing Officer is not satisfied with price determined by the assessee in any method, then he can verify methodology followed by the assessee for arriving at share price, but he cannot change different method altogether without any....