2025 (8) TMI 351

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....preferred this appeal. 2. Brief facts of the case are that the assessee is engaged in the business of software development applications. It filed its original return of income for the relevant A.Y 2015-16 on 21/11/2015 claiming a loss of Rs. 6,49,325/-. It was processed u/s 143(1) of the Act on 09/01/2016 accepting the returned loss. Subsequently certain information was received by the learned Assessing Officer from the DIT (I&Cl) to the effect that the assessee issued 3,42,500 shares at a premium of Rs. 190/- per share of face value Rs. 10/- and that the assessee has introduced an amount of Rs. 6,85,00,000/- as share capital, which includes share premium of Rs. 6,50,75,000/- in its business. Further according to the learned Assessing Offi....

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.... not carry any weight to support the valuation at Rs. 200/- per equity share for the shares of Rs. 10/-each. He concurred with the findings of the learned Assessing Officer in rejecting the valuation holding that such a valuation was based upon totally unrealistic projections which are just given by the company and not vouched by the value of, by arranging and re-engineering the facts and figures as provided by the assessee in the form or format and formally so as to suit the prescription of the Act/Rules. Hence this appeal by the assessee. 5. The main plank of argument advanced on behalf of the assessee in this appeal is that rule 11 UA (2) of the Income Tax Rules 1962 ("the Rules") enables the assessee to determine the fair market value ....

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....nd determine the fair market value on the basis of the method adopted by the assessee, the DCF method in this case, the learned Assessing Officer may be permitted to conduct his own valuation and determine the FMV by requiring the assessee to furnish such other material as will be required by the learned Assessing Officer. 7. We have gone through the record in the light of the submissions made on either side. Law is well settled now and the consistent view taken by the Hon'ble Delhi High Court in the cases referred to above is that while it is open for the learned Assessing Officer to doubt or reject a valuation that he submitted for his consideration by the assessee, is not open for the learned Assessing Officer to reject the matter of va....

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....g Officer on the lines indicated in the decision in VBHC homes Pvt. Ltd. Hon'ble Delhi High Court referred to this decision in the case of Agra portfolio private limited (supra). Relevant observations in this regard are that,- "12. In view of the above legal position, we are of view that the issue with regard to valuation has to be decided afresh by the AO on the lines indicated in the decision of ITAT, Bangalore in the case of VBHC Value Homes Pvt. Ltd, Vs ITO (supra) ie., (i) the AO can scrutinize the valuation report and he can determine a fresh valuation. either by himself or by calling a 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 wh....