2022 (12) TMI 753

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..... CIT(A)] in ITA No. 10465/2019-20/CIT(A)- 1/VSP/2020-21, dated 17/09/2020 arising out of the order passed U/s. 143(3) of the Act dated 20/12/2019 for the AY 2017- 18. 2. Brief facts of the case are that the assessee is a domestic company, engaged in rendering financial services filed its return of income admitting a total income of Rs. 2,03,15,000/- on 25/10/2017 for the AY 2017-18. Subsequently, the case was selected for scrutiny under CASS to examine (1) expenses incurred for earning exempt income and (2) share capital / capital. Subsequently, notice u/s. 143(2) was issued on 13/08/2018 and notice U/s. 142(1) was issued electronically on 31/8/2019 calling for information from the assessee. Further, the Ld. AO also issued letters on 25....

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.... The Ld. AO then proceeded to add the difference of Rs. 9.59 per share for 32,20,000 CCCPS shares issued and made an addition of Rs. 3,08,79,800/- as income of the assessee U/s. 56(2)(viib) of the Act. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)-1, Visakhapatnam. Before the Ld. CIT(A), the assessee filed same information and submitted that reliance is place on the following case laws viz., (i) Karmic Labs Private Limited vs. ITO in ITA No.3905/Mum/2018, dated 28/07/2020 and (ii)Vodafone M Pesa Limited Vs. DCIT [2020] 114 taxman.com (Mum. Trib.). The Ld. CIT(A) considering the submissions made by the Ld. AR and relying on the decision in the case of Karmic Labs Private Limited (supra) allowed the ....

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....opinion on the achievability of forecast relating to performance of business by the assessee. The Ld. DR therefore pleaded that under these circumstances the valuation report given by M/s. Lily & Geetha Associates, Chartered Accountants, Chennai (Valuers) cannot be relied upon and hence the addition made by the Ld. AO be sustained. The Ld. DR also further submitted that there is a difference between the actual results and the projected results used for the purpose of valuation. The Ld. DR also further pointed out that the decision of the Ld. CIT(A) relying on the case viz., Karmic Labs Private Limited vs. ITO in ITA No.3905/Mum/2018, dated 28/07/2020 (supra) is distinguishable on facts that the decision in that case is with respect to secti....

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....he Act. The contention of the Ld. DR relying on the book value adopted by the Ld. AO cannot be accepted because as per section 56(2) of the Act, the assessee has option to use either the fair market value determined as per Net Asset Value or the value determined as per the DCF method. It is a settled principle that the Assessing Officer has no power to change the valuation method adopted by the assessee. In the instant case, the Assessing Officer has rejected the valuation under DCF method solely on the ground that the actual performance did not match the projections. The determination of the valuation under DCF method was carried by the valuers on the basis of information or material available on the date of valuation and the projections o....