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TMI Blog2019 (5) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... see as per the discounted cash flow method . In so far the adoption of the discounted cash flow method for valuation of shares by the assessee is concerned, we find that the same has been accepted by the A.O while framing the assessment u/s 143(3) in the case of the assessee for the immediately succeeding year i.e. A.Y 2014-15, wherein too the shares had been issued at a premium of ₹ 140/- per share. No infirmity does emerge from the determining of the FMV of the shares by the assessee company as per the recognized method of valuation i.e discounted cash flow method envisaged in Sec. 56(2)(viib) r.w Rule 11UA of the Income tax Rules, 1962. Apart therefrom, we are unable to comprehend that now when the revenue itself has accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of ₹ 2,80,00,000/- made by the AO under section 53(2) (viib)(a)(i) of the Income Tax Act, 1961. 2. The Ld. CIT(A) has erred in ignoring the AO s finding that the assessee failed to produce supporting evidence to substantiate the method of valuation adopted by him. 3. The Ld. CIT(A) has erred in ignoring the fact that the AO had specifically asked the assessee to file supporting evidence with regard to Discounted cash flow method adopted to value shares, vide order sheet entry dated 17.03.16, which is a specific show cause in this respect, to which the assessee file no explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e IT Act. As no separate balance sheet on the date of issue of shares was made available by the assessee, therefore, the A.O due to lack of information calculated the FMV of the shares, as under:- CLOSING (31.03.2013) (Without considering New Issue) OPENING (01.04.2012 Capital 2100000.00 100000.00 R S 19648303.00 (76359.00 Total 21748303.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O had applied the book value method whereas the assessee company had exercised the option of valuing the shares based on discounted cash flow method , which was supported with a report from an accountant. Interestingly, it was observed by the CIT(A) that the issue was also examined in the course of the assessment proceedings in the case of the assessee for the immediately succeeding year i.e. A.Y 2014-15, wherein too the shares were issued by the assessee at a premium of ₹ 140/- per share, which alongwith the method of valuation of the shares as per discounted cash flow method was accepted by the A.O. It was observed by the CIT(A) that an option was available to the assessee under Rule 11UA of the I.T. Rules to issue share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion i.e A.Y 2013-14, no reply was furnished by the learned D.R. 6. Per contra, the ld. Authorised representative (for short A.R ) relied on the order of the CIT(A). It was vehemently submitted by the ld. A.R that now when the revenue had accepted the discounted cash flow method for determining the FMV of the shares of the assessee company and issuance of the same at a premium of ₹ 140/- per share in the immediately succeeding year i.e A.Y 2014-15, thus it was incorrect on the part of the A.O to have adopted an inconsistent approach during the year under consideration. 7. We have deliberated at length and have given a thoughtful consideration to the issue before us. As per Section 56(2)(viib) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a premium of ₹ 140/- per share. 8. In our considered view, no infirmity does emerge from the determining of the FMV of the shares by the assessee company as per the recognized method of valuation i.e discounted cash flow method envisaged in Sec. 56(2)(viib) of the IT Act r.w Rule 11UA of the Income tax Rules, 1962. Apart therefrom, we are unable to comprehend that now when the revenue itself has accepted the said method of valuation of shares and the issuance of the same at a premium of ₹ 140/- per share in the assessment framed in the case of the assessee for the immediately succeeding year viz. A.Y 2014-15, then how in the absence of any distinguishing facts it could have whimsically declined to accept th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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