TaxTMI 
TaxTMI 
2023 (12) TMI 1302
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....er, due to the prevailing Covid pandemic, and restructuring of Income Tax Department and merger of erstwhile Circle - 16(2), Hyderabad with Circle - 5(1), Hyderabad, the appeal could not be filed on or before the due date. The appeal is being filed now with a delay of 125 days. Hence, it is requested that the delay in filing the appeal may kindly be condoned and appeal may kindly be admitted." 2.1. On the other hand, ld.AR reported no objection. 2.2. We have heard both the parties on this preliminary issue. There is no dispute that under section 253(5) of the Act, the Tribunal may admit an appeal filed beyond the period of limitation where it is satisfied that there exists a sufficient cause on the part of the assessee / Revenue for not presenting the appeal within the prescribed time. The moot point is as to whether such a long delay deserves condonation. In the letter Revenue has mentioned that it was failed to appear due to Covid - Pandemic situations prevailing in the country. At this stage, it is relevant to note the judgment of the Hon'ble Bombay High Court in Vijay Vishin Meghani Vs. DCIT & Anr (2017) 398 ITR 250 (Bom) holding that none should be deprived of an adjudic....
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....During the assessment proceedings, assessee was requested to furnish the details of increase in share premium along with confirmation from the investors, ITRs, bank statements reflecting the transactions, MoUs, Shares Valuation Report etc vide show cause notice dt.04.12.2019. In response, assessee company filed the documents as called for. Thereafter, Assessing Officer also issued show notice dt.13.12.2019 questioning as to why DCF method adopted should not be rejected. The contentions of the assessee company are examined and found untenable by the Assessing Officer as he found that the assessee Company has issued 35,00,000 shares of face value of Rs 10/- at the price of Rs19.90 per share thus receiving share premium of Rs. 3,46,50,000/-. Hence, the AO rejected the DCF method opted by the assessee. The AO used the NAV method and computed the fair market value of the share of the Company as Rs 10.87/-. Thus, the AO concluded that provisions of section 56(2)(viib) are attracted and he assessed the excess share premium of Rs.3,16,05,000/- received by the assessee company as its income from other sources. The AO also found that the employees' contribution to ESI of Rs 18,79,427/- w....
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....and profits of an enterprise for the future is made on the basis of various key factors, which include expectations regarding macro-economic conditions, technological factors, government policies, state of competition, demand factors, supply of raw materials, efficiency of the management etc. How close a projection comes to actual performance is dependent on various factors and a DCF valuation cannot be merely rejected based on the observation that projections were below actuals. In the appellant's case, the AO has failed to point out any outlandish assumption made by the valuer in the DCF computation which has given an absurd DCF value far removed from the FMV of the share. The AO has relied on the decision of Hon'ble ITAT, Delhi in case of Agro Portfolio Private Ltd vs. ITO, ITS-7311-ITAT- 2018(Delhi)-O] wherein it was held that in case the valuation under DCF is done on the projections provided by the Company management and the valuer who is doing the DCF valuation has categorically mentioned in the report as a disclaimer that the truthfulness, accuracy and completeness of the information and financial data has been provided by the Company and the valuer has relied on th....
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....o be taken as on the date of valuation. The NAV method wherein book value of assets has to be taken may not present a correct picture of the fair market value of the assets since it will fail to capture the correct fair market of the lands owned by a Company. In the instant case, the appellant Company was running a manufacturing facility at IDA Balanagar, Hyderabad, and a new plant was constructed in 2015 in 25 acres of land at Toopran which is approximately 35 kms from Hyderabad. The circle rates of these areas were revised upwards in the FY 2016-17 itself by the Sub-Registrar Office. In addition, the appellant Company has since the year 2002, when it launched its brand name `Teja', invested significantly in the development of a brand name and the value of the intangible asset thus created is not included in the balance sheet at all. Hence, the price at which the Company agrees to issue its shares to the equity investor is a decision based on numerous factors and the NAV method of computation is too simple a mathematical formula to cover all relevant concerns of a prudent business decision-maker. Therefore, the use of NAV method for valuing the share equity of the appellant Co....
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....he valuation of shares to the satisfaction of the AO. 4. If the assessee is not able to substantiate the valuation before the AO, the excess of consideration received over the fair market value is taxable as income from other sources u/s 56(2)(viib) of the I.T. Act. 5. While granting relief to the assessee, Ld. CIT(A) at Para-5.1 erred in holding that addition u/s 56(2)(viib) is not sustainable unless the AO establishes that the share premium received by the assessee was out of its own unaccounted money which was laundered and received back by it in form of share premium. 6. The department submits that the requirement to establish that the share premium was out of unaccounted money is nowhere stipulated in the Finance Bill, 2012. 7. A requirement on the AO, during the course of scrutiny, to first prove the existence of unaccounted money, and then only go on to apply provisions of Section 56(2)(viib), will only render the statute inoperative, futile and defunct. 8. The department prays to draw the attention of the Hon'ble ITAT to the ratio laid down by the Hon'ble Supreme Court in H.S. Vankani vs. the state of Gujarat, wherein the....
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....11,00,000 Rs. 13,75,06,063/- Rs. 31,35,93,937/- 30.48% 2017-18 Rs. 120,01,50,000/- Rs. 13,43,35,218/- Rs. 106,58,14,782/- 11.19% 2018-19 Rs. 210,69,88,000/- Rs. 14,83,84,703/- Rs. 195,86,03,297/- 7.04% 8. As is clear from the tabulation, there is a vast difference between the financial projections and the actual financials of the company. 9. The vast divergence of the projections from actuals raises pertinent questions with regard to the assumptions made by the valuer and representations made by the management, on basis of which the projections were arrived at. 10. The department prays to draw the attention of the Hon'ble Bench to Pg. 13 of the material paper book, where the valuer states that: Assumptions for valuation 1. The Turnover of the company considered based on the Expected Market Prices as per available information with the company." "Future Projections We have made the future projections for a period of 5 years from 2016 based on through discussions with the management of the MLR Auto Limited. We have not carried out any feasibility study on the projects to substanti....
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....ubjected to inspection by the court. It is incompetent and improper to do so and, therefore, out of bounds. Nevertheless, the broad parameter of fairness in administration, bona fides in action and the fundamental rules of reasonable management of public business, if breached, will become justiciable. The court's obligation is to satisfy that the valuation has been in accordance with the law and the same has been carried out by an independent body" [Emphasis supplied] 17. The department submits that the valuation report fails miserably in establishing the reasonableness and fairness of share valuation and hence ought to be rejected. III. On decision of Hon'ble ITAT, Delhi Bench in case of Agro Portfolio vs. ITO. 1. The department submits that the AO at Para-3.1 of his order, had placed strong reliance on the judgement in case of M/s Agro Portfolio vs. ITO, wherein the Hon'ble Bench had upheld the stance of the AO in rejecting the valuation based on DCF and re-computing the FMV using NAV method. 2. The department prays to draw the attention of the Hon'ble Bench to the similarities between the instant case and the case of M/s Agr....
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....on arrived at, using DCF method. Finding faults with valuation using NAV is only a diversionary tactic to draw attention away from the faults of DCF. V. On subsequent amendment of the Act 1. Vide Notification No. 61/2017 dated 12.07.2017, Rule 11UA was modified to consider the value of immovable property adopted for payment of stamp duty instead of the book value. 2. The amendment of the Act was prospective and hence does not apply to the year in question." 10. The ld. DR has drawn our attention to the valuation report submitted by the assessee, which was filed along with the written submissions, based on the report it was contended, valuation report prepared by the auditor, was not in accordance with the law and he has drawn our attention to the valuation report dt.01.07.2016, which is to the following effect : "Valuation of equity shares : Selection of Valuation Methodology It is our opinion that the DCF approach would be an extremely appropriate valuation methodology for the Auto and Motor Industry as it captures the revenue streams based on the actual output and hence revenue streams of the company and linked costs ....
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....sions reached by us are dependent on the information provided to us being complete and accurate in all material respects. Our scope of work is in the nature of equity / business valuation only. * Though prospective investors may have knowledge of the contents of this report, they need to exercise their judgment and may get their own due diligence done prior to making an investment." 13. The ld. DR further submitted that the valuation report prepared by the assessee at the time of allotting shares was not in accordance with law due to the following reasons : * as there is no independent verification of the variables / terminal values made by the auditor at the time of submitting the valuation report. * In fact, the valuation report was based on mere discussion with the management of the assessee, and no empirical data of the industry or growth trend of the assessee was considered. * Report was based on prices for raw material, demand and supply position of power generation industry and comparable industry, industrial growth that was examined by the auditor. 14. Therefore, in the absence of these data, it is not possible to accept the valuati....
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....en submissions in support of the case of the assessee at page 1 to 16 of the paper book which was mentioned as under: "1. The Respondent is a company registered under the Companies Act, -20.13; The Respondent is in the business of manufacturing Three Wheelers under the brand name "TEJA". The Respondent for the impugned assessment year 2017¬18, had filed-the return of income on 30/10/2017; admitting Rs. NIL as income and carrying forward current year loss of Rs. 14,32,93,315/-. The Respondent revised the return of income on 28/03/2018, admitting Rs. NIL as income and _carrying forward current year loss, of Rs. 14,32,93,315/-, the acknowledgment copies of the original return and revised return are enclosed herewith and marked as Annexure - 1 Et 2. 2. The Respondents case was selected for scrutiny and statutory notices under section 143[2] and 142[1] of the Act, was issued and served on the Respondent. In response to notices issued by the learned Assessing Officer, the Respondent submitted information and explanation through ITBA portal. 3. After examining the information and details furnished by the Respondent, the learned Assessing Officer completed th....
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....7-18, had issued 35,00,000 shares for a consideration of Rs. 19:90/- per share. The Respondent had received a total consideration of Rs. 6,96,50,000/-. 7.2 For the impugned assessment year 2017-18, the Income Tax Rule 11UA[2][b] provides for determination by an accountant fair market value of the unquoted equity shares as per thee DCF method. The Respondent had appointed an independent -accountant who vide report dated 01/07/2016, 'had determined the fair market value of the share of the Respondent company by applying DCF. method and arrived at a value of Rs. 19.90/- per share, the copy of the report is enclosed herewith and marked as Annexure - 3, 7.3 The Respondents case was selected for scrutiny and statutory notices under section 143[2j and 14211] of the Act; was issued and served on the Respondent. The learned Assessing Officer completed the assessment by dismissing the DCF method applied by the Respondent. The learned Assessing Officer applied the NAV method and arrived at the value of share at Rs. 10.18/- per share. The difference in the value of Rs. 9.03/7 (i.e.) Rs. 19.90 - Rs. 10.87/-, was charged by the learned assessing officer as income under the ....
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....whereas the Assessing Officer has taken the values as on 31/03/2016. Therefore, in view of the above discussion, it is held that the AO has erred in rejecting the. DCF valuation of FMV of the shares as submitted the appellant company and computing the FMV using NAV method. Accordingly, the addition of Rs.3,16,05,000/-, made by the AO u/s. 5612R-viibj is hereby deleted" (Emphasis Supplied) 7.5 Aggrieved by the order the Honorable CIT(A), the Department has preferred this appeal by raising various grounds. The Respondent files this- written submission denying the allegations levied' by the learned Assessing Officer and supporting the order of the Honorable CIT(A). 7.6 The Respondent submits that, the valuation report was obtained from Shri Machiraju Ramesh, of M/s. Machiraju & Associates, Chartered Accountants, Hyderabad, where the value of the shares of the Respondent Company was recommended at Rs.19.90/-, per share as per DCF method but the learned Assessing Officer adopted NAV method. 7.7 The learned Assessing Officer has discarded the valuation report of, the - Chartered Accountant mainly On the ground that valuation of the equity,....
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....ture in introducing such a deeming provisions and submitted that such a provision cannot be invoked on a normal business transaction of issuance of shares unless it has been demonstrated by the Revenue authorities that the- entire motive for such issuance of shares an higher premium was for the tax 'abuse with the laundering the Respondents own unaccounted money. 7.12 The Respondent wishes to reproduce Rule 11UA of the Income-tax ,Rules, 1962, as under: Rule 11UA of the Income-tax Rules, 1962, prescribes the following method for determining the valuation of unquoted shares: (1) For the purpose of section 56 of the Act, the fair market value of a property, other' than immovable property shall be determined in the following manner, namely:- (a)......... (b)........ (2) Notwithstanding anything contained in sub-clause (b) of clause (c) of sub-rule (1) the fair market value of 'unquoted equity shares for the purposes of sub-clause (i) of clause (1) of Explanation to clause (viib) of sub-section (2) of section 56 shall be the value, on the valuation date, of such unquoted equity shares as determined in the following....
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....he case of Securities and Exchange Board of India arid Other in Company Application No. 124, 125 of 2013, dated 10/09/2015, where it was held that: "48.6 Thirdly, it is a well settled position of law with regard to valuations, that valuation is not an exact science and can never be done :with arithmetic precision. The attempt on- the part of SE81 to challenge the valuation which is by its very nature based on projections by applying what is essentially a hindsight view that the performance did not match the projection is unknown to the law on valuations.. Valuation being an exercise required to be conducted at a particular point of time has of necessity to be carried out on the basis-Of whatever information is available on the date of the valuation and a projection of future revenue that 'the valuer May fairly make on the basis of such information." (Emphasis Supplied) 7.17 Reliance is 'placed on the judgment of the Honorable Income Tax Appellate Tribunal, Delhi Bench in the case of Mantram Commodities (P) Ltd., Vs. ITO [2021] 188 ITD 687, where it was held that : "However, in the instant case, the assessee has issued the shares at fair m....
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....er or learned Commissioner (Appeals) is trying to evaluate the accuracy of the valuation at the time of assessment, factors subsequent adoption of projection and valuation. Accordingly, we are not in a position to accept the - method adopted by learned Commissioner (Appeals)." (Emphasis Supplied). 7:19 Reliance is placed on the judgment of the Hon'ble Income Tax Appellate Tribunal Jaipur Bench, in the case of Rameshwaram Strong Glass Private Limited Vs. ITO 2018 TaxPub (DT) 5780 (JpTrib), where it held that : "4.5.2 Before examining the fairness or reasonableness of valuation report submitted by the, assessee, we have to bear in mind that the DCF Method, and is essentially based on the projections (estimations) only and hence these projection cannot be. compared with the actuals, to expect the same figures as were projected. The valuer has to make forecast on the-basis of some material but to estimate the exact figures is beyond its control. At the time of making a valuation for the purpose of determination of the fair Market value, the past, history may or may not be available in a given case and therefore, the other relevant factors may be considered. The pro....
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....e as per the valuation in accordance with rule 11UA (2)(B) was Rs.189 and the assessee had issued shares at Rs.180 including premium of Rs.170, which is less than the fair market value, no amount was required to be taxed as income from other sources 'under section 56(2)(viib) of the Act. As per rule 11UA(1)(c)(b) of the Rules, it is the prerogative of the assessee to estimate the fair market value of the shares issued by it adopting one method out of two methods i.e. discounted cash flow method or book value, method. The, revenue authorities cannot force the assessee to adopt particular method for valuing the fair market value of the, share especially when rule 11UA(1)(c)(b) provides that it is the option of the assessee to chase any method-either discounted or book value 'method for estimating the fair Market value of the shares issued by it during the relevant financial period. In this case, the assessee has adopted the discounted free cash flow, method as prescribed under rule 11 UA(2)((b) of the Act." (Emphasis Supplied) 7.23 - Without prejudice to the above, the Respondent submits that the land Available. in the books of account maintained by the Respondent....
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....low Method. 7.26 Thus, as per the first method, the assets are to be taken as per the book value of the assets shown In the Balance Sheet and, therefore, this method does not prescribe the fair market price of the asset. The fair market value of the shares as per clause [ii] of Explanation [a] to section 56[2][viib] of the Act; has to be taken based on the value .of -the .assets including intangible assets of the company as on the date of issue of shares which connotes that the value as on the date of issue and not as per the book value or at cost. Hence, the fair market value of the shares has to be computed by taking the market value of the assets of the Respondent company as on the date of issue of shares. 7.27 As per the statement tabulated supra as against the fair value of share at Rs. 24.16 per share, the-Respondent has issued the shares at Rs. 19.90 per share which includes Rs. 10/- per share as par value and 'a premium of Rs.9.90 per share, therefore, no addition under section 56[2][viib] of the Act, is called for. It is further submitted that valuation of shares has to take into consideration various facts and not simply on the basis of financial sta....
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....;s shares were valued by an independent Chartered Accountant who had given the valuation report by opting-DCF method; c. the shares of the assessee company were issued at a rate of Rs. 19.90 per share, which is as per the valuation report; d. It is the prerogative of the Assessee Company to adopt one method out of two methods, the learned. Assessing Officer cannot force the Assessee to adopt particular method for valuing the fair market value nor the learned Assessing Officer can adopt different method to arrive at the addition of Rs.3,16,05,000/-, by invoking the provisions of section 56[2][viib] of the Act, the addition made by the learned Assessing Officer is wrong and does not have legs to stand the test of law; e. the Honorable CIT(A)'s has rightly deleted the addition made by the learned Assessing Officer of an amount being Rs. 3,16,05,000/-, by invoking the provisions of section 56[2][viib]of the Act; f. without prejudice to the above, the valuation of shares should be made on the basis of various facts and 'not merely on the basis of financials; g. the value of the land has to be calculated as per the current fair market valu....
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....res shall be the value- (i) as may be determined in accordance with method as may be prescribed9; or (ii) as may be substantiated by the company satisfaction of the Assessing Officer, based value, on the date of issue of shares, of its a including intangible assets being goodwill, know patents, copyrights, trademarks, licences, fran or any other business or commercial rights of nature, whichever is higher; (b) "venture capital company", "venture capital fund "venture capital undertaking" shall have the me respectively assigned to them in clause (a), clause ( clause (c) of Explanation to clause (23FB) of section 10; "Meaning of expressions used in determination of fair m value. 11U. For the purposes of this rule and rule 11UA,- 1** ** ** (b) "balance-sheet", in relation to any company, means, 17.1. The conjoint reading of Section 56(2)(viib) and Rule 11U and 11UA makes it abundantly clear that in case assessee exercised his option for determination of the fair market value of the shares and exercise then such decision of the assessee shall be final and binding on the assessing officer. The opti....
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....nes issued by research committee of The Institute of Chartered Accountants of India (ICAI) as reproduced by CIT (A) in Para 4.6 of his order. We first reproduce the provisions of section 56 (2) (viib) and Rule 11U & 11UA as under:- "Income from other sources. 56(2) --- .......... 8. Now we reproduce Para 4.6 from the order of CIT (A) because in this Para, learned CIT (A) has reproduced the relevant portion of 'Technical guide on Share valuation (issued in 2009) by research committee of The Institute of Charted Accountants of India (ICAI). The same is as under:- "4.6 In order to examine this issue of valuation, it is important to know as to what is Discounted Cash Flow method. Relevant part of the information available on this issue in 'Technical Guide on share valuation' (Issued in 2009) by research committee of the institute of chartered accountants of India is reproduced as follows: "1.1 The valuation of the shares of a company involves use of judgement, experience and knowledge. The accountant undertaking this work should possess knowledge of the analysis and interpretation of financial statements backed by a prac....
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....#39;s ability to continue earning profits. 2.4 The Income Approach indicates the value of a business based on the value of the cash flows that a business is expected to generate in future. This approach is appropriate in most going concern situations as the worth of a business is generally a function of its ability to earn income/cash flow and to provide an appropriate return on investment. 2.5 The Income approach includes a number of models/techniques, such as Discounted Cash Flow, Maintainable Profits Basis, Dividend Discount Model, and others, which are discussed in detail in the following paragraphs. 2.6 Discounted Cash Flow model indicates the fair market value of a business based on the value of cash flows that the business is expected to generate in future. This method involves the estimation of post-tax cash flows for the projected period, after taking into account the business's requirement of reinvestment in terms of capital expenditure and incremental working capital. These cash flows are then discounted at a cost of capital that reflects the risks of the business and the capital structure of the entity. 2.7 Discounted Cash Flow is....
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....he business. Some of the important points to be kept in mind with regard to cash flow projections based on the projection of the profitability are stated below: (a) Cash flow projections should reasonably capture the growth prospects and earnings capability of a company. The earning margins of a company should be determined based on its past performance, any envisaged savings, pressure on margins due to competition, etc. (b) Discontinuation of a part of the business, expansion programmes and any major change in the policies of the company may provide occasions for making a break with the past. (c) The discontinuation of a part of the business can be easily dealt with by a valuer. A part of the profits earned by such business in the past will have to be excluded from the projections. (d) The effect of expansion schemes can present more complex problems. For these, the valuer will have to use his judgment about their profitability. The state of execution at the time of valuation should be given due consideration. Mere paper plans for expansion should not be taken into account. If reasonable indications of expected future profit are available, then ....
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....ertake activities on which tax incidence is lower. Where such rates are not available, the current rates of taxes may be considered a good indicator. Tax benefits due to accumulated losses, accumulated development rebates or allowance, investment allowance, unabsorbed depreciation etc. should not generally be adjusted to the tax rate; instead, these should be considered separately. The past unabsorbed tax shelter is valued by using discounted cash flow method, for the actual years in which the tax shelter would be availed of a reduction in the effective tax rate due to exemptions for new industrial unit relief export profits etc., should be very carefully considered, depending on the period for which they would be available. A cautious valuer would perhaps compute an effective tax rate each year for the forecast period, based on the current year's tax rate and statutory deductions available and a reasonable view of profits. Discount Rate 2.11 The next step in the Discounted Cash Flow model is the determination of an appropriate rate to discount future cash flows. Discount rate is the aggregate of risk-free rate and risk premium to account for riskiness of the ....
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....ss value too. Various factors like the size of a company, existing growth rate, competitive landscape, profit reinvestment ratio, etc. have to be kept in mind while estimating the stable growth rate. (b) Multiple approach involves the determination of an appropriate multiple to be applied on perpetuity earnings or revenues. Multiple is estimated by an analysis of the comparable companies. Though this approach is simpler and brings in the advantages of market approach, it does not qualify as a preferred approach because it mixes the discounted cash flow approach which provides intrinsic or company-specific valuation with the market approach. (c) In valuations that assume a finite life of a business, terminal value is estimated to be the liquidation value, which is based on the book value of the assets adjusted for inflation. But this does not reflect the earning power of the assets. Alternatively, discounting expected cash flows from sale of such assets at an appropriate discount rate would provide a better estimation of liquidation value. ** ** ** 6.1 Selection of an appropriate approach - Income, Market, or Net Assets - as well as the tech....
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....ares is also affected by factors such as war, embargo or other restrictions on international trade or disruptions in international trade. 9.2 While preparing a Report, it is important that one states its purpose explicitly and ensures that the facts are presented with clarity so that the reader of the Report appreciates it in that context. 9.3 The factors that have been considered for arriving at the ultimate valuation should be clearly spelt out. 9.4 While it is difficult to specify the exact form of the Report, the following illustrative outline may be useful. (a) Introduction/purpose of valuation This may contain background information about the report and its purpose, say, merger. share buy back, etc. (b) Valuation date The valuer may state the valuation date clearly at the outset. As the valuation is time-specific, this information is critical for the reader of the report. (c) History This section may deal with the history of a company (or companies, in case of merger). The matter may be divided into sub-sections that deal with the date of incorporation, whether listed or not, authorised, and paid....
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....ple, of the discounting due to restriction on transfer of shares; reduction made in the net maintainable profit due to changed circumstances; or weightage given to certain recent years in arriving at the fair value, etc. (i) Computation Usually, the report should also contain annexures giving information regarding the working of the approaches employed for valuation. (j) Limiting conditions This paragraph should contain the appropriate caveats which limit the scope of valuation. Few indicative caveats are; (i) The valuer should state any scope limitations and also the non-availability of any pertinent information and its possible effect on valuation. (ii) It is important to draw reader's attention to the fact that the valuation is specific to the time and purpose of valuation. It should also be mentioned that the valuation is not an exact science and the conclusions arrived at in many cases will be subjective and dependent on the exercise of individual judgment. (iii) It is also important to mention the extent of reliance placed by the valuer on the information provided by the management and information available in....
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.... be made of the amount of the obligation. If these conditions are not met, no provision can be recognized." 10. From this Para of this judgment, it is seen that it was held that if a reliable estimate cannot be made than the provision cannot be recognized. In the present case in connection with DCF, we have seen that estimate/projection of future cash flow has to be made and as per Para 2.10 of this report of research committee of (ICAI) as reproduced above, the first and most critical input of DCF model is the Cash Flow Projections. Hence, in our considered opinion, by the same analogy, it has to be seen and ensured that such projection is estimated with reasonable certainty and if it is not established by the assessee that this is a reliable estimate achievable with reasonable certainty, the same cannot be recognized and if the future cash flow cannot be recognized than the DCF method is not workable. 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 the assessee has so opted for DCF method, the AO cannot discard the same and adopt other method i.e. NAV me....
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....re, the demand in the facts need to be stayed." 12. As per above Para of this judgment of Hon'ble Bombay High Court, it was held that the AO can scrutinize the valuation report and he can determine a fresh valuation either by himself or by calling a final determination from an independent valuer to confront the assessee. But the basis has to be DCF method and he cannot change the method of valuation which has been opted by the assessee. Hence, in our considered opinion, in the present case, when the guidance of Hon'ble Bombay high Court is available, we should follow this judgment of Hon'ble Bombay High Court in preference to various tribunal orders cited by both sides and therefore, we are not required to examine and consider these tribunal orders. Respectfully following this judgment of Hon'ble Bombay High Court, we set aside the order of CIT (A) and restore the matter to AO for a fresh decision in the light of this judgment of Hon'ble Bombay High Court. The AO should scrutinize the valuation report and he should determine a fresh valuation either by himself or by calling a final determination from an independent valuer and confront the same to the as....
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....ing factor and Terminal value etc. with the help of Empirical data or industry norm if any and/or Scientific Data, Scientific Method, scientific study and applicable Guidelines regarding DCF Method of Valuation. 15. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page." 19. In the light of the above, if we examine the case of parties before us, then it is quite clear that the Assessing Officer was incorrect in rejecting the DCF method adopted by the assessee. 20. Now, if we come to the second aspect of the matter that once we hold that the DCF method is correct method, which is required to be applied by the Assessing Officer to determine FMV, our duty is to see whether the valuation report based on which the valuation was arrived by the assessee was in accordance with law or not. As pointed out by the ld. DR that there are some patent defects in the valuation report, which are reproduced above, as there is no verification of the facts or financial projection by the auditor before giving the valuation report. Further, the valuation report was conspicuously silent abo....