TaxTMI 
TaxTMI 
2026 (3) TMI 866
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....e Act in respect of Compulsorily Convertible Preference Shares (CCPS) issued at a premium by the appellant company 3. On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) ought to have held that the AO has grossly erred in rejecting the fair market value (FMV) of unquoted equity share as determined by a Chartered Accountant in his valuation report as per the Discounted Free Cash Flow (DCF) method in accordance with Rule 11UA(2) of the Income Tax Rules, without proper and justifiable reasons. 4. On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) ought to have appreciated that Rule 11UA(2) provides an option to the assessee to adopt either the NAV (Net Asset Value) or the DCF method for determining the FMV of the unquoted equity share and the FMV determined by the AO by applying a method which is not opted by the assessee is legally unsustainable since the AO has no power under the Act to change the method of valuation adopted by the assessee. 5. Without prejudice to the preceding ground, the Ld. CIT(Appeals) ought to have held that the adoption of face value of the equity share as the FMV of the share by the ....
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....est income requires to be capitalized, being incidental to the setting up of the manufacturing project and is not to be taxed as income from other sources. 12. Any other legal grounds or factual grounds that may be urged at the time of hearing of the appeal." 3. Ground No.1 is general in nature and does not require any specific adjudication. 4. Ground Nos.2 to 10 are regarding the addition made by the Assessing Officer and confirmed by the learned CIT(A) u/sec. 56(2)(viib) Income Tax Act [in short "the Act"], 1961. This issue is common for all three assessment years. For the purpose of recording the facts appeal for assessment year 2016-2017 is taken as "lead" case. 5. The assessee is a newly incorporated Company on 16.06.2015 and filed its return of income on 13.10.2016 for the assessment year 2016-2017 declaring loss of Rs. 60,39,321/- under normal provisions of the Act and book loss of Rs. 64,08,690/- under MAT provisions. The assessee company was incorporated with the primary business objective to manufacture and commercialize medical diagnostic products for early diagnosis of pre-eclampsia in pregnancy. The assessee also filed revised return of income on 30.1....
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....th Becton Dickenson (BD), a global diagnostic major, for manufacture and supply of a point of care test for early diagnosis of Pre-eclampsia in pregnancy. This diagnostic product was to be exclusively manufactured for global supplies by the assessee company. The other diagnostic products are point of care tests for auto immune diabetes and gestational diabetes. These products are innovative and first of its kind products. He submitted that the equity shares of the assessee company are held by Sri. K.I. Varaprasad Reddy (9000) shares, Sri Y. Sadasiva Rao (500 shares), Sri P. Vishnupriya Rao (500 shares) and M/s Ventureast Trust Company Pvt Ltd (10 shares). The assessee company has issued Compulsory Convertible Preference Shares [in short "CCPS"] of Rs. 10 each during the previous years relevant to assessment years 2016-17 to 2018-19 to a Venture Capital Fund i.e., Ventureast Life Fund-III and to Sri. K.I. Varaprasad Reddy, the promotor. The learned Authorised Representative of the Assessee has further submitted that the CCPS are convertible into equity shares on or before the initial public offer in the ratio of 1:1 at a conversion price which is equal to the price at which the CCPS....
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....tion report is clearly evident from the annexure to the valuation report itself and the same was omitted to be taken into consideration by the Assessing Officer. It may be seen on perusal of the said annexure that the revenue projections have been made in a scientific manner by considering the population base of the concerned category of the patients for the relevant diagnostic test, the size of the addressable market of such patients and the expected market penetration rate for the products of the appellant. The growth rate in the relevant population base from year to year has also been taken into account for making the said projections. He submitted that the projections have been made in this manner for each of the three types of diagnostic tests for which the assessee intended to manufacture diagnostic products. Hence, it is factually incorrect on the part of the Assessing Officer to state that the assessee failed to submit the basis for the projections considered for applying DCF method in the valuation report. The learned Authorised Representative of the Assessee further submitted that the assessee furnished detailed submissions to the Assessing Officer on this issue during th....
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.... a wholly erroneous basis. He has also relied upon the Judgment of Hon'ble Madras High Court in the case of CIT vs. VVA Hotels (P.) Ltd. vs. ITO [2020] 122 taxmann.com 106 (Madras) and submitted that the Hon'ble High Court has held that unless the Assessing Officer is able to bring out any evidence of abuse of the provisions with an intention to defraud the revenue, the option given to the assessee to adopt NAV or DCF method to arrive at the fair market value of the shares shall be held to be absolute. The learned Authorised Representative of the Assessee then relied upon the decision of ITAT, Delhi Benches, Delhi in the case of Savegenis E-Marketing (P.) Ltd v. ITO [2025] 180 taxmann.com 13 (Delhi-Trib) and submitted that the Tribunal has held that it is not legally permissible for the Assessing Officer to reject the valuation adopted by the assessee on the basis of the DCF method without pinpointing any specific inaccuracies or shortcomings in the DCF valuation report. The learned Authorised Representative of the Assessee has also relied upon the following decisions: a) PCCIT vs. A.H. Multisoft (P.) Ltd., [2025] 175 taxmann.com 46 (Del.) (HC); b) Autope ....
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....rt has held that "commencement of the business" may be different from the "engaged in the business" and a party engages itself in a particular business from the day it gets involved in setting up of the business. The Assessing Officer has given the findings in the remand report that the assessee is engaged in the business and is entitled to be treated as VCU. Thus, the learned Authorised Representative of the Assessee has submitted that the addition made by the Assessing Officer and confirmed by the learned CIT(A) are not sustainable in law and liable to be deleted. 9. On the other hand, the learned DR has submitted that the assessee is not a VCU as per the definition provided in Clause-(b) of Explanation to sec. 56(2)(viib) r.w.s.10(23FB) of the Act. Therefore, the provisions of sec. 56(2)(viib) are applicable in the case of the assessee. He has referred to the annual report of the assessee and submitted that the assessee be expected to commence the manufacturing by 2018 and therefore, for the assessment years 2016-2017 to 2017-2018 there was no commencement of business of the assessee. The valuation determined by the Valuer is based on the details provided by the assessee and ....
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....issued the shares at the price of Rs.720/- per share having face value of Rs. 10/- per share at a premium of Rs.710/- per share. In support of this issue price the assessee submitted the valuation report by a Chartered Accountant under Rule-11UA(2)(b) of the I.T. Rules, 1962 based on DCF method. During the assessment proceedings, the Assessing Officer did not agree with the valuation of the assessee particularly, on the point that the Valuer has determined the valuation on the basis of information supplied by the assessee without conducting an independent enquiry and exercise. The Assessing Officer rejected the valuation of the assessee and the DCF method adopted by the assessee. The Assessing Officer proceeded to determine the fair market value of the shares by adopting the NAV method. Therefore, two issues arise from the assessment order as well as the impugned order of the learned CIT(A) are- (i) Whether the Assessing Officer has the jurisdiction to substitute the method of valuation as prescribed and chosen by the assessee as per Rule 11UA(2) of Income Tax Rules, 1962 ? (ii) Whether the assessee falls in the exception provided in the proviso to Clause-(viib) o....
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....y of April, 2025.] 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 (Alternative Investment Funds) Regulations, 2012 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) for regulated under the "[Inter-national Financial Services Centre Authority (Fund Management) Regulations, 2022 made under the] In....
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.... by a merchant banker or an accountant as per the Discounted Free Cash Flow method; [I .- Determination of value of assets and apportionment of income in certain cases." 12. As it is clear from the Explanation to sec.56(2)(viib) that the fair market value of shares shall be determined in accordance with such method as prescribed. Rule-11UA(2)(b) of I.T. Rules 1962 prescribes the method for fair market value of CCPS as in the case in hand. Thus, the rule provides the determination of the fair market value in accordance with the methods enumerated in sub-clause (a) or (b) of sub-sec.(2) of Rule-11UA of I.T. Rules, 1962 at the option of the assessee. Thus, the option is given to the assessee to choose the method for determination of valuation, and no option or choice is given to the Assessing Officer to substitute or adopt any other method than the chosen by the assessee. Sec. 56(2)(viib) read with Rule-11UA(2) makes it clear that the fair market value of the shares determined as per the prescribed method or as per the NAV whichever is higher shall be considered. There is no quarrel that the Assessing Officer has the power and jurisdiction to reject the valuation so determ....
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.... thereof. 10. It was submitted that when the assessee has adopted a particular method of valuation as provided under the Act and Rules and in the absence of any material that such method was adopted to defraud the Revenue, merely because the Assessing Officer is of the view that NAV method alone has to be adopted is not a ground to reject the DCF method. The Tribunal upon consideration of the facts pointed out that the assessee has adopted the method of valuation as stipulated under Rule 11UA of the Rules and this accepted method of valuation does provide for estimation. Noting that the Assessing Officer had discarded the DCF method adopted by the assessee on the ground that the actual revenue varied from the projected revenue for four years, the Tribunal rightly noted that the projected value is an estimate and the variation in the estimate is marginal. Therefore, the Tribunal came to the conclusion that there was no material to hold that the assessee's projected sales revenues are fabricated or manipulated. 11. Furthermore, it was pointed out that the Assessing Officer did not point out any flaw in the method of calculation of the value of shares by adopting....
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....nd power on the part of the Assessing Officer which is not permissible. Even otherwise, the Assessing Officer cannot question the valuation as determined on the basis of prescribed method being DCF without pinpointing any specific inaccuracies or shortcomings. 12.2. Further, the Coordinate Bench of ITAT, Bangalore in the case of Pisces EServices (P.) Ltd. vs. DCIT [2024] 165 taxman.com 840 (Bangalore-Trib.) on identical facts has been held in Paras-20.2 to 20.4 as under: "20.2. From the perusal of the above rule, it is transpired that option to choose the method provided under clause (a) or clause (b) is available with assessee. Admittedly, the method adopted by the assessee i.e. DCF method for determining fair market value was one of the methods prescribed under the provisions of section 56(2)(viib) read with income tax rule 11UA of Income Tax Rule. The AO cannot interfere in the method selected for the valuation of the shares. However, the AO can scrutinize the contents or working of the method adopted by the assessee so as to find out the fair valuation. In case, the AO is not satisfied with the working of the assessee, then the AG may draw fresh valuation or get fre....
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.... not accepting the valuation report submitted by the assessee and only thereafter, he can go for own valuation or to obtain the fresh valuation report from an independent valuer and confront the same to 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. 2) For scrutinizing the valuation report, the facts and data available on the date of valuation only has to be considered and actual result of future cannot be a basis to decide about reliability of the projections. 3) The primary onus to prove the correctness of the valuation Report is on the assessee as he has special knowledge and he is privy to the facts of the company and only he has opted for this method. Hence, he has to satisfy about the correctness of the projections, Discounting 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. 20.4. Thus, we are of the view that the AO has exceeded his jurisdiction by rejecting the method adopted by the assessee and brought an....
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....V by averaging the valuation as per PECV method as well as net asset value method. He submitted that when the legislation has conferred an option on the assessee to choose a particular method of the valuation, the AO cannot find fault in the said recognized method and adopting the method of his own choice. In support of this, he relied on the decision of the Hon'ble Jurisdictional High Court in the case of Vodafone M-Pesa Ltd. v. PCIT [2018] 164 DTR 257[2018] 92 taxmann.com 73/256 Taxman 240 (Bombay) (HC). As far as the worth of food division is concerned, the Ld. Counsel for the assessee submitted that assessee has followed the method prescribed under section 50B(3) of the Act along with Explanation (2). He submitted that in the net worth computed by the assessee and in the AO, there is only one difference. It was submitted that the assessee following the Explanation-2 below section 50B(3) of the Act has adopted written down value of the block asset in case of the depreciable asset as per the proviso to section 43 of the Act, which the AO has omitted. 19. We have heard rival submissions on the issue in dispute and perused the material on record. We find that computati....
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....t not the method. In case, the AO rejected the valuation report, then the AO has to carry out a fresh valuation report by applying the same valuation method and determine the fair market value of the unquoted shares. 18. Therefore, in our view, the Assessing Officer was incorrect in concluding that the DCF method is "quite unrealistic and inapplicable" to the terms of the Income Tax Act. On the contrary, the DCF method is quite applicable and was required to be applied by the Assessing Officer to determine the FMV of the unquoted shares ... 20 A more detailed discussion on the issue which confronts us in this appeal is found in the judgment rendered by the Mumbai Bench of the ITAT in Dy. CIT v. Credtalpha Alternative Investment Advisors (P.) Ltd. [2022] 134 taxmann.com 223/193 ITD 502/ [2022] 94 ITR (Trib) 596 and the relevant parts whereof are reproduced hereunder- "15. Thus, the fair market value of the share shall be higher of the value as determined in accordance with the provisions of rule 11 UA or any other method, which can be substantiated by the assessee before the Assessing Officer. For the purpose of determining "fair market value of unquoted s....
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....ewed in retrospect. Further, the valuation is always made based on review of historical data and projected financial information provided by the management. Further report of expert will always include limitation and responsibilities but that does not make his report incorrect. Of course, if there are errors in the working of projected cash flow, estimating the projected revenue and projected expenditure as well as in adoption of cost of equity and discount factor, the learned Assessing Officer is within his right to correct it after questioning the same to the assessee. The learned Assessing Officer can also question the basic assumptions made by the valuer. If they are unreasonable or not based on historical data coupled with the management expectation, the learned Assessing Officer has every right to question it and adjust the valuation so derived at. However, if he does not find any error in those workings, he could not have rejected the same. Further the reason given by the learned Assessing Officer that the net asset value method and the discounted cash flow method for valuation of the shares of the company gives a wide variation between them, we do not find any reason to fin....
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....ation which has been opted by the Assessee. The decision of ITAT, Delhi in the case of Agro Portfolio Ltd. 171 ITD 74 has also been considered by the ITAT, Bangalore in the case of VBHC Value Homes Put. Ltd. (supra). 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 Put. Ltd., v. 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 which has been opted by the assessee. (ii) For scrutinizing the valuation report, the facts and data available on the date of valuation only has to be considered and actual result of future cannot be a basis to decide about reliability of the projections. The primary onus to prove the correctness of the valuation Report is on the assessee as he has special knowledge and he is privy to the facts of the company and only he has opted for this method. Henc....
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....rnings / growth potential. Accordingly, the underlying projections were made on such reasonable assumptions as reflected in the Annexure to the Valuation Report and the preference shares were issued at a Premium of Rs. 710 per share. Further, while making the projections of future cash flows under DCF method, all standard methods were applied, for instance Terminal value is calculated adopting perpetual growth model. 3. While issuing the CCPS to third party as well as promoters, the appellant had valued CCPS as per the Discounted Cash Flow ('DCF') method based on aforesaid business plan of manufacture and commercialization of novel medical diagnostic products relating to diabetes and pregnancy and the same was duly certified by a Chartered Accountant as being the most appropriate method for valuing a newly started company as it has very little or no capital base. A) Basis for valuation: The assessee has submitted the data used by the assessee company M/s Diabetomics Medical Private Limited (DMPL) for projections of its sales that it is going to make to the foreign company M/s Diabetomics Inc. USA. The company M/s Diabetomics Inc. USA has given the....
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....ted. 13. The second issue arises is regarding non- applicability of sec.56(2)(viib) of the Act in view of the proviso carving out an exception in case of a Venture Capital Undertaking. The term "Venture Capital Undertaking" is defined in clause-(b) of Explanation-2 Clause-(viib) of sub- sec.(2) of sec.56 as quoted in the foregoing part of this order. Thus, the Venture Capital Company and Venture Capital Undertaking shall have the meaning respectively assigned to them in clause-(a) to (c) of Explanation to sec. 10(23FB) of the Act which reads as under: "(23FB) any income of a venture capital company or venture capital fund [from investment] in a venture capital undertaking: Provided that nothing contained in this clause shall apply in respect of any income of a venture capital company or venture capital fund, being an investment fund specified in clause (a) of the Explanation i to section 115UB, of the previous year relevant to the assessment year beginning on or after the 1st day of April, 2016.] Explanation. For the purposes of this clause,- (a) "venture capital company" means a company which- (A) has been granted a certificate of registratio....
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....rtaking; (ii) it has not invested in any venture capital under-taking in which its trustee or the settler holds, either individually or collectively, equity shares in excess of fifteen per cent of the paid-up equity share capital of such venture capital undertaking: [ *** ]; (iii) the units, if any, issued by it are not listed in any recognized stock exchange; [and]; (iv) any other condition as may be prescribed37a; or] (B) operating as a venture capital scheme made by the Unit Trust of India established under the Unit Trust of India Act, 1963+ (52 of 1963); (c) "venture capital undertaking" means- (i) a venture capital undertaking as defined in clause (n) of regulation 2 of the Venture Capital Funds Regulations; or (ii) a venture capital undertaking as defined in clause (aa) of sub-regulation (1) of regulation 2 of the Alternative Investment Funds Regulations;]" 14. Thus, as per Clause-(c) of Explanation to sec. 10 (23FB) a Venture Capital Undertaking means a Venture Capital Undertaking as defined in Clause-(n) of Regulation- (2) of Venture Capital Fund Regulation or Venture Capital Undertaking as defined in Clause-....
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....arket 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, licenses, 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 of a company or a limited liability partnership or a body corporate which has been granted a certificate of registration as a Category 1 or a Category II Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Funda) Regulations, 2012 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) 42(or regulated under the "[International Financial Services Centre Authority (Fund Management) Regulations, 2022 made under the] International Financial Services Centres Authority Act, 2019 (50 of 2019)); (ab) "trust" ....
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....roceedings. Both the valuation reports were prepared by V.B. Desai Financial Services Ltd, a Category I Merchant Banker. 6.2. The Ld. AO rejected the said valuation report on the following grounds. As per the Balance Sheet submitted by the assessee company, significant amount of debt is taken by the assessee company. However, while computing the weighted average cost of capital in the valuation, report, it is not evident whether cost of debt is considered and if it is, what is debt equity ratio that is considered. Weighted Average cost of capital (WACC) is computed on the basis of the actual debt equity ratio in the balance sheets which is applied to the cost of equity and cost of debt. Thus, is absence of any explanation, the WACC at 20% is not acceptable. For the purpose of calculating terminal value of the business, the valuation report suggests that a growth rate of 5% is taken. Again, it is an assumption. It is imperative to understand that growth rate should be correlated with the date of valuation and the industry in which the appellant is operating as on the date of valuation. The CAGR for the sector of beauty products is less than 4% especially i....
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....tion 56(2)(viib), the terms "venture capital company", "venture capital fund" and "venture capital undertaking" shall have the meanings respectively assigned to them in clause (a), clause (6) and clause (c) of Explanation to clause (23FB) of section 10. As per Clause (c) of Explanation to clause (23FB) of section 10 of the Act. 'venture capital undertaking' shall be a venture capital undertaking as defined in clause (n) of regulation 2 of the Venture Capital Funds ('VCF) Regulations; OR clause (aa) of sub-regulation (1) of regulation 2 of the Alternative Investment Funds ('AIF') Regulations. As per clause (aa) of the AlF Regulations (prior to amendment), "venture capital undertaking" means a domestic company: (i) which is not listed on a recognised stock exchange in India at the time of making investment, and (ii) which is engaged in the business for providing services, production or manufacture of article or things and does not include following activities or sectors: 1) non-banking financial companies, 2) gold financing. 3) activities not permitted under industrial policy of Government of India. 4)....
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....tion 56; (ii) "venture capital company", "venture capital fund" and "venture capital undertaking shall have the same meaning assigned to them in clause (b) of Explanation to clause (viib) of sub-section (2) of section 56. Illustration: If a venture capital undertaking receives a consideration of fifty thousand rupees from a venture capital company for issue of one hundred shares at the rate of five hundred rupees per share, then such an undertaking can issue one hundred shares at this rate to any other investor within a period of ninety days before or after the receipt of consideration from venture capital company." 6.6. The appellant has relied on the case of Hon'ble ITAT Delhi Bench in the case of ACIT v. Drishti Sofi Solutions Put. Ltd. (ITA No. 8523/Del/2019) wherein it was held that section 56(2)(vii) (b) would not be applicable where consideration for issued of shares is received by a venture capital undertaking from a venture capital company or venture capital fund. Further, reliance is also placed on the decision of the Kolkata bench of the Hon'ble ITAT in the case of Milk Mantra Dairy Put. Ltd. v. Deputy Commissioner of Income- tax (ITA N....
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.... source of the investment is duly explained along with relevant documentary evidences and the shares have been issued at Fair Market Value arrived at by the Registered Valuer applying Discounted Cash Flow method, we deem it appropriate that the issue deserves to be restored back to the file of Id. CIT(A) for afresh adjudication in light of the details filed before this Tribunal." 15. Thus, as per Clause-(n) of Regulation-2 of the Venture Capital Fund Regulation or Clause-(aa) of sub-regulation-(1) of Regulation-2 of Alternative Investment Fund [AIF] Regulations, a Venture Capital Undertaking means, 'a domestic company' which is not listed on a recognized stock exchange in India at the time of making the investment and which is engaged in the business of providing services, production or manufacture of article or thing and does not include the activities in the negative list provided by the SEBI such as NBFC, gold financing and any other activity not permitted under Industrial Policy of the Government of India or which may be specified by the SEBI in consultation with Government of India. In case in hand as per the particulars of CCPS issued to the Venture Capital Fund it....
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....N LICENCE was obtained from the Drugs Control Authority, Kerala. (Licence #46/28A/ 16, dated 4 October, 2016). However, due to unforeseen business developments, BD did not commercialise the product as projected due to their internal constraints. Therefore, Diabetomics INC did not get the products manufactured by DMPL as initially planned. Subsequently, DMPL manufacturing facility was created and licenses were obtained. From the above events it is clear that the appellant company is engaged in the business and therefore entitled to be treated as venture capital undertaking. 3.2. The Ventureast Funds which has invested in the appellant company is registered as a venture capital fund by SEBI as per the regulation 7(3) of the Securities and Exchange Board of India (Venture Capital Funds) regulations, 1996 vide certificate of registration number IN/VCF/09-10/144 dated 29.05.2009. Therefore, the investment made by this fund in the appellant company is not hit by the provisions of the section 56(2)(vii)(b). Therefore, the investment by this venture fund in the shares of the appellant company which is a venture capital undertaking of Rs.6,60,69,050/- cannot be treated as income of....
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....ed as not pressed. Accordingly, ground no. 11 of the assessee's appeal is dismissed being not pressed. ITA.No.2148/Hyd./2025 - A.Y. 2017-2018 : 19. The assessee has raised the following grounds in the instant appeal: 1) "The order of the Ld. CIT(Appeals) is erroneous on the facts of the case and contrary to the provisions of law. 2) On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) erred in sustaining the addition of Rs. 69,51,024/- made u/s 56(2)(viib) of the Act in respect of Compulsorily Convertible Preference Shares (CCPS) issued at a premium by the appellant company. 3) On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) ought to have held that the AO has grossly erred in rejecting the fair market value (FMV) of unquoted equity share as determined by a Chartered Accountant in his valuation report as per the Discounted Free Cash Flow (DCF) method in accordance with Rule 11UA(2) of the Income Tax Rules, without proper and justifiable reasons. 4) On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) ought to have appreciated that Rule 11UA(2) provides an option to....
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....he Ld. CIT(Appeals) erred in sustaining the addition of interest on bank deposits of Rs.7,43,992/-under the head income from other sources. The Ld. CIT(A) ought to have held in the facts of the case that the said interest income requires to be capitalized, being incidental to the setting up of the manufacturing project and is not to be taxed as income from other sources. 11) Any other legal grounds or factual grounds that may be urged at the time of hearing of the appeal." 20. Ground No.1 is general in nature and does not require any specific adjudication. 21. The issue raised in ground nos.2 to 9 is common to the issue raised in assessment year 2016-2017 which has been decided by us in favour of the assessee in foregoing paras hereinabove and hence, for this assessment year 2017- 2018 also, our observations made for assessment year 2016- 2017 in preceding paragraphs hereinabove shall follow mutatis mutandis. 22. For the assessment year 2017-2018, the learned Authorised Representative of the Assessee has stated at Bar that the assessee does not press ground no. 10 and the same may be dismissed as not pressed. The learned DR has submitted that he has no objection i....
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....llowance of depreciation of Rs. 11,15,834/-. The Ld. CIT(A) ought to have held in the facts of the case that the appellant is eligible for the depreciation since the assessee has set-up the business, though business has not commenced. 8) Any other legal grounds or factual grounds that may be urged at the time of hearing of the appeal. 24. Ground No.1 is general in nature and does not require any specific adjudication. 25. The issues raised in ground nos.2 to 6 are common to the issue raised in assessment year 2016-2017 which has been decided by us in favour of the assessee in foregoing paras hereinabove and hence, for this assessment year 2018-2019 also, our observations made for assessment year 2016- 2017 in preceding paragraphs hereinabove shall follow mutatis mutandis. 26. Grounds of appeal no.7 are regarding the disallowance of depreciation. 27. The learned Authorised Representative of the Assessee has submitted that the assessee reported loss in the return of income and depreciation was part of the loss declared by the assessee. The Assessing Officer has disallowed the loss as declared in the return of income by treating the business income at Rs. NIL and ....