TaxTMI 
TaxTMI 
2024 (10) TMI 1782
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....Method") which is in accordance with Section 56(2)(viib) of the Act read with Rule 11UA of the Income Tax Rules, 1962 ("the rules") and instead applying Net Asset Value ("NAV") method. 3. On facts and circumstances of the case and in law, the learned Assessing Officer erred in levying interest under section 234D of the Act. 4. On facts and circumstances of the case and in law, the learned Assessing Officer erred in computing interest payable to the Appellant under section 244A of the Act." 2. This is the case of making addition in the hands of the assessee by the learned Assessing Officer (Ld.AO) for the A.Y. 2016- 17 on the premise that while making valuation of the shares issued by the assessee to its shareholders in the same pattern, the assessee instead of issuing shares on NAV method, issued shares on the basis of DCF method. The Ld.AR had drawn our attention to valuation report at Page No.52 of the paper book, on the basis of which, NAV valuation per share was calculated at Rs. 300.61/- rounded to Rs. 300/-. Further, the table shows details of shareholders to whom shares were allotted at Page No.52 of the paper book, which is as under shows that the share....
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....he Ld.AO, assessee preferred appeal before the ld. CIT(A), however, the Ld. CIT(A) also dismissed the appeal of the assessee and the reasons given by the Ld. CIT(A) are given in para 6.1. onwards, which is to the following effect : 6.1 The order of the Ld. AO passed u/s 143(3) of the I.T. Act, 1961 dated 29.12.2019 as well as the grounds of appeal, statement of facts and written submission citing several case laws filed by the appellant has been carefully considered. In essence, all the substantial grounds taken by the appellant relate to the action of the Ld. AO in adding Rs. 46,74,979/- on account of excess share premium. In this case, it was noticed by the Ld. AO that there was increase in share capital by Rs. 1,83,33,250/- and increase in share premium by Rs. 53,16,64,250/-. During the course of assessment proceedings it was observed that the assessee had issued shares to M/s Navayuga Engineering Company Limited (4,87,821 shares) and to M/s Navayuga Road Projects Pvt. Ltd. (13,45,504 shares). The shares were issued with face value of Rs. 10/- per share with a premium of Rs. 290/- per share and received total sum of Rs. 54,99,97,500/- including share premium. As per val....
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.... Ld.AO is bound by law to implement that method. The only option with Ld.AO as per law is to find out whether the assessee has correctly applied the formula for arriving at the correct valuation or not. In the present case, it was submitted that, the assessee has opted for DCF method and therefore, no option was available to the Ld.AO to change the method of valuation and adopt NAV method. Further, Ld. Counsel for the assessee submitted that the whole basis of finding and rejection of claim of the assessee by the Ld.AO/Ld. CIT(A) was that the actual results of the assessee's financials were not matching with the projections and it was submitted that in the subsequent three assessment years, the assessee company has not earned any revenue and therefore, the valuation method adopted by the Ld.AO was not correct and the addition made by the Ld.AO was not correct. It was further submitted that the issue is no more res integra and for that purpose, the assessee relied on the judgements as placed in paper book. It was submitted that even otherwise, there was difference of Rs. 2.55 per share between the valuation adopted by the assessee and the Ld.AO. It was submitted that this is mar....
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....he previous year in which such failure has taken place and, it shall also be deemed that the company has under reported the said income in consequence of the misreporting referred to in sub-section (8) and sub-section (9) of section 270A for the said previous year. Explanation .- For the purposes of this clause,- (a) the fair market value of the shares shall be the value- - (i) as may be determined in accordance with such method as may be prescribed; or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, whichever is higher; (aa) "specified fund" means a fund established or incorporated in India in the form of a trust or a company or a limited liability partnership or a body corporate which has been granted a certificate of registration as a Category I or a Category II Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alter....
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....lore - Trib/ (2019), and also of Hon'ble High Court of Delhi in the case of Agro Portfolio Private Limited Vs. PCIT reported in 161 Taxman.com 303 (Delhi) dt.04.04.2024. Coming to the contention of the Ld. DR that the DCF method should not be accepted in the case of infrastructure projects as it will not take into account various factors which are mentioned above. In my view, the law is clear on this aspect. Option is given to the assessee and there is no sub classification, whether assessee is in infrastructure or software company or other companies. Therefore, the objection of the Ld. DR is not sustainable and devoid of merits. I am of the opinion that the appeal of the assessee is required to be allowed and hence, allowed the same. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 17th October, 2024. ============= Document 1 Notes forming part of the fi- ancia statements Note 3 Share capital Particulars As at 31st March, 2016 |31st March, 2015 As at [a) Authorised 30,10,000 Equity shares of Rs. 10 ezer with your g rights (Previous year 30,10,000 Equity shares of ? 10 each with voting rights) . 3,01,00,000 3,0....