TaxTMI 
TaxTMI 
2025 (12) TMI 415
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....3(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") dated 24.12.2018 by the Assessing Officer, ITO, Ward-12(3), Delhi (hereinafter referred to as "ld. AO"). 2. Though the assessee had raised several grounds of appeal before us, the effective issue to be decided in this appeal is a s to whether the Learned CITA was justified in upholding the addition u/s 56(2)(viib) of the Act in the sum of Rs 8,39,55,840/- in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the materials available on record. The assessee had filed its return of income on 13-9-2016 declaring total income of Rs 15,68,350/-. During the year under consideration, the assessee company issued equity share....
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....shing of valuation report to the Assessee company. He also confirmed that the data for the preparation of the valuation report was provided by the management, together with the projected details of sales and profitability thereon. The valuer had adopted Discounted Cash Flow (DCF) method for valuing the shares of the Assessee company by using the discounted rate of 18%. The valuer, in response to question number 5, also justified the adoption of discounting rate of 18 % before the Learned AO in the statement given on oath recorded on 15-12-2018. When queried about the difference between the projections and the actual figures, the valuer responded that it depends on industry to industry and company to company and facts and circumstances of ea....
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....hares may be calculated as per Rule 11UA of the Income Tax Rules and difference of valuation of shares may be added under Section 56(2)(viib) of the Act. The assessee in response, vide letter dated 16-11-2018 replied that Himanshu Bansal is a qualified chartered accountant and had conducted the valuation exercise using DCF method. DCF is a globally accepted standard valuation methodology used for companies with high growth rates and used by all Venture Capital and Private Equity Firms investing in Indian Companies. Further, the responsibility of providing future projections to both the valuer and the investor is responsibility of the management and the same is captured under the terms and conditions of the Investment Agreement. DCF methodol....
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....ethod which is also one of the recognized method under Rule 11UA of the Income Tax Rules and arrived at the fair market value of Rs 200 per share. Accordingly, by using NAV method, the Learned AO proceeded to add the differential sum of Rs 8,39,55,840/- (8,96,69,640 minus 57,13,800) as consideration received over and above the fair market value under section 56(2)(viib) of the Act and completed the assessment. This action of the Learned AO was upheld by the Learned NFAC. 7. It is not in dispute that the assessee had valued the shares from an approved valuer using DCF method, which is also one of the recognized methods prescribed under Rule 11UA of the Income Tax Rules. We hold that the Learned AO was not justified in rejecting the DCF me....