2023 (1) TMI 669

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....s a company stated to be engaged in the business of manufacturing cum-trading in herbal cosmetics products under the brand name of "JOVEES". The assessee electronically filed its return of income for A.Y 2014-15 on 29.11.2014 declaring total of income at Rs. NIL, after set off of brought forwarded loses of Rs. 66,31,819/- under the normal provisions and book profit of Rs. 32,59,762/-. The case was selected for scrutiny and thereafter assessment was framed u/s. 143(3) vide order dated 16.12.2016, and the total income under the normal provisions of Income Tax Act was determined at Rs. 1,68,82,680/- and book profit of Rs. 32,59,762/-. 2.2. Aggrieved by the order of the A.O. assessee carried the matter before the Ld. CIT(A) who vide order da....

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.... method which is an accepted method by CBDT for determining fair market value of the unquoted shares. The contentions of the assessee was not found acceptable to AO. AO was of the view that the valuation of shares as per discounted cash flow method is unfounded and not supported by any cogent facts more so as assessee had made projections of turnover and profit which were far away of reality. AO was further of the view that provisions of section 56(2) (viib) states about the receipt of money in any previous year and thus according to him the year of receipt of consideration was not a criteria. AO thereafter rejected the working of premium as made by assessee and he thereafter at para 4.6 of the order worked out the fair market value of each....

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....at the amount exceeding the fair market value of shares has to be treated as income. As per explanation, the fair market value shall be as per the value determined in accordance with the method prescribed or as substantiated by the company based on the value of shares, goodwill etc., whichever is higher. 7.6 The working provided as per Rule 11UA(2) has 2 limbs either at FMV of unquoted equity share as per formula (A-L)*(PV)/(PE) or as per the FMV worked out for the unquoted shares determined by merchant banker as per discount free cash flow method. It is at the option of assessee to choose between two. In the present case, the appellant has opted for the second option for working out the fair market value of shares duly supported b....

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....o shares has to be taken. However, the credence of such depositors has not been doubted by the AO. Be it as it may, since, the addition has been deleted on the merits as discussed above, this has only academic discussion value and not relevant now. Accordingly, the appeal is decided in favour of appellant on this issue. 6. Aggrieved by the Ld. CIT(A), Revenue is now before us. 7. Before us Ld. DR supported the order of A.O. Learned AR on the other hand reiterated the submissions made before the lower authorities and supported the order of Ld. CIT(A). 8. We have heard the rival submissions and perused the materials available on record. The issue in present ground of Revenue is with respect to the addition made by AO u/s. 56(2) (viib....