TaxTMI 
TaxTMI 
2026 (8) TMI 768
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....anding Counsel for the Department had resigned and the case files remained in his office for a considerable time before the same were handed over to the present counsel. And since a lot of appeals were to be filed through his chambers, a substantial time was consumed, resulting in the present delay in filing the appeal. 5. Learned counsel for the respondent/assessee opposed the present application. 6. Having heard learned counsel for the parties, we find that though delay of 600 days is substantial but considering that most of the time was elapsed in the chambers of the previous Standing Counsel for the Department whereafter, and the files were transferred in bulk to the present Standing Counsel, which took some more time. The delay in filing the appeal thus, stands sufficiently explained. 7. We are, therefore, persuaded to allow the present application. The delay of 600 days in filing the appeal is, therefore, condoned. 8. Application is allowed. ITA 160/2026 9. By way of instant appeal filed under Section 260A of the Income Tax Act, 1961(hereinafter referred to as 'the Act of 1961'), the appellant-Department has challenged the order dated 12.09.2023 passed by th....
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....sment order is reproduced hereinfra:- "4. However, without prejudice to determination of FMV under NAV method as per pre-amended Rule 11UA, determination of FMV under DOF method as per valuation report of M. Mehta & Co. has also been considered. It has been observed that Cost of Capital of 9.4% has been worked out by taking ridiculously low Risk Premium of 0.49%and Expected Return on Equity of 9.05%, No satisfactory explanation is forthcoming either from the Valuer or the assessee, Therefore, Cost of Capital has been worked out at 14.68% by taking Risk Premium of 3.58% and Expected Return on Equity of 12.14%.As a result Present Value of the DCF at the end of the Concession Period in May, 2028 comes to (-) Rs.625.17 crore. After adding Cash Equivalents ofRs.100.01 crore, the resultant DCF comes to (-) 525.16 crore. As a result of apportionment of DCF of(-) 525.16 crore amongst 10016074 shares, the FMV would be a negative figure and thus the same is treated as Zero under Rule 11UA(2)(b), However, in view of provisions of Expl. (a)(ii) to section 56(2)(viib) FMV of Rs. 10/- as per NAV method being higher of the two valuations has been adopted as FMV in assessee's case. Fa....
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....ause (b) was inserted w.e.f. 29.11.2012 and accordingly, DCF method was introduced/recognised by the Central Government on 29.11.2012, whereas the assessee had issued its shares on 29.08.2012, based on the valuation as per DCF method. His argument in essence was that since DCF method was not a recognised method of valuation on the date of issuance of shares, the valuation based on such method could not be accepted. And was therefore, rightly rejected by the AO. 19. He argued that the expression 'shall', used both in Rule 11UA of the Rules of 1962 and in Clause (b) thereof, is mandatory in nature and whenever the shares are to be valued, the same are to be valued as per the method provided in Rule 11UA of the Rules of 1962. 20. Mr. Rajat Navet, learned Counsel for the respondent, on the other hand submitted that the argument advanced by Mr. Vipul Agarwal is untenable in law. Taking the Court through the legislative history, he submitted that though Section 56(2) of the Act of 1961 already existed in the statute book, while Clause (viib) was introduced in Section 56(2) w.e.f. 01.04.2013. And when Rule 11UA of the Rules of 1962 was framed, the Government in its wisdom conceded o....
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....annot be oblivious of the fact that Rule 11UA of the Rules of 1962 was amended on 29.11.2012 providing the DCF method of valuation of shares and Clause (viib) was inserted under Section 56(2) of the Act of 1961 w.e.f. 01.04.2013. 29. Maybe for ignorance or otherwise, the Government provided only one method of valuation under the Rules, while the other recognised method of valuation including the DCF method was not included, which, as a matter of fact, was introduced by way of subsequent amendment in the Rules of 1962 on 29.11.2012. 30. The Assessing Officer cannot ignore the financial and corporate world and the fact that in the case of a newly incorporated company, the method of valuation of shares cannot be based on the NAV method. 31. The assessee in the instant case had adopted a recognised mode of valuation of shares (Discounted Cash Flow Method) and issued shares at a premium of Rs. 90/- which did not find favour with the AO. 32. According to this Court, the fact that such method is a known method of valuation can be discerned from the fact that the Government, in the very same year has brought an amendment in the Rules of 1962 and adopted such method to be a vali....