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TMI Blog2020 (11) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on any discrepancy found in the valuation, but is based on the reasoning that, the valuation is based on estimates. Remand this issue back to Ld.AO for scrutinising valuation report filed by assessee by following DCF method either by himself or by calling a determination from an independent valuer and to confront the same with assessee. Ld.AO shall not reject the DCF method as it is the appropriate method prescribed under Rule 11UA. Assessee is also directed to establish the correctness of the valuation report based on documents/evidences. Assessee has to satisfy the correctness of the projection of discounting factor with the help of empirical data or industry norm. - Decided in favour of assessee for statistical purposes. - Shri A.K Garodia, Accountant Member And Smt. Beena Pillai, Judicial Member For the Appellant : Smt. Tanmayee Rajkumar, Advocate For the Respondent : Shri Priyadarshi Mishra, JCIT (DR) ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against order dated 21/02/2019 passed by Ld. CIT (A)-2, Bangalore for assessment year 2015-16 on following grounds of appeal: On the facts and circumstances of the case and in law, the learned Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case and in law, the learned AO erred in initiating penalty proceedings under section 271 (1 )(c) of the Act. All the above grounds are without prejudice to each other. The Appellant craves for leave to add, amend, vary, omit or substitute or withdraw any of the aforesaid grounds at any time before or at the time of hearing of the matter with the Income Tax Appellate Tribunal. Brief facts of the case are as follows: 2. Assessee is a company and filed its return of income for year under consideration on 30/09/2015 declaring total income of Rs.Nil, and current year losses of ₹ 19,86,50,599/-. The case was selected for scrutiny and notices under section 143(2) was issued to assessee along with notice under section 142(1) of the Act. In response to statutory notices, representative of assessee appeared before Ld.AO and filed requisite details as called for. 3. Ld.AO noted that, assessee is engaged in providing highquality print and digital solutions to photographs. During the course of assessment proceedings, the Ld.AO noted that assessee has issued shares at face value of rupees one and the share premium of ₹ 1204/- including the face value. It was noted that, as per sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequently assessee started internally evaluating the ramifications of penalty proceedings initiated by Ld.AO for the year as well as other assessment years and took a decision to pursue the issue before this Tribunal. On coming to such conclusion assessee immediately appointed new tax consultants and requested to consider the case to be filed before this Tribunal. Ld.AR submitted that this cost the delay in filing the present appeal before this Tribunal. She placed reliance on decision of Hon ble Supreme Court in case of Collector, Land Acquisition and another vs Katiji and Ors., reported in (1987) 2 SCC 107. 10. Ld.Sr.DR though objected to the condonation of delay, could not controvert the submissions advanced by Ld.AR. 11. We have considered the rival submissions in the light of arguments advanced by both sides. 12. In our view, the delay caused in filing the present appeal would not stand in benefit of assessee. We also are of the view that substantial Justice must be granted as there was no malafide intention on behalf of assessee. We also note that there was sufficient and bona fides reasons that caused delay as expressed by assessee in its application for condonation of del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. in ITA No. 609/JP/2017 dated 31.01.2018. In this case, the tribunal held that if the assessee has opted for DCF method, the AO cannot challenge the same but the AC is well within his rights to examine the methodology adopted by the assessee and/or underlying assumptions and if he is not satisfied, he can challenge the same and suggest necessary modifications/alterations provided ITA No. 2541/Bang/2019 ITA No. 37/Bang/2020 S. P. Nos. 29 and 59/Bang/2020 the same are based on sound reasoning and rationale basis. In the same tribunal order, a judgment of Hon'ble Bombay High Court is also taken note of having been rendered in the case of Vodafone M-Pesa Ltd. vs. POIT as reported in 164 DTR 257. The tribunal has reproduced part of Para 9 of this judgment but we reproduce herein below full Para 9 of this judgment. 9. We note that, the Commissioner of Income-Tax in the impugned order dated 23rd February, 2018 does not deal with the primary grievance of the petitioner. This, even after he concedes with the method of valuation namely, NAV Method or the DCF Method to determine the fair market value of shares has to be done/adopted at the Assessee's option. Nevertheless, he does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. In our considered opinion and as per report of research committee of (ICAI) as reproduced above, most critical input of DCF model is the Cash Flow Projections. Hence, the assessee should be asked to establish that such projections by the assessee based on which, the valuation report is prepared by the Chartered accountant is estimated with reasonable certainty by showing that this is a reliable estimate achievable with reasonable certainty on the basis of facts available on the date of valuation and actual result of future cannot be a basis of saying that the estimates of the management are not reasonable and reliable. 13. Before parting, we want to observe that in the present case, past data are available and hence, the same can be used to make a reliable future estimate but in case of a start up where no past data is available, this view of us that the projection should be on the basis of reliable future estimate should not be insisted upon because in those cases, the projections may be on the basis of expectations and in such cases, it should be shown that such expectations are reasonable after considering various macro and micro economic factors affecting the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law by now that if two views are possible then the view favourable to the assessee should be adopted and with regard to various Tribunal orders cited by learned DR of the Revenue which are against the assessee we hold that because we are following a judgment of Hon ble Bombay High Court rendered in the case of Vodafone M-Pesa Ltd. Vs Pr. CIT (supra), these tribunal orders are not relevant In le case of Innoviti Payment Solutions Pvt. Ltd. Vs. ITO (supra). this judgment of Honble Bombay High Court was followed and the matter was restored back to the file of AO for a fresh decision with a direction that AO should follow DCF method only and he cannot change the method opted by the assessee as has been held by the Honble Bombay High Court. The relevant paras of this Tribunal order are already reproduced above which contain the directions given by the Tribunal to the AD in that case. In the present case also, we decide this issue on similar line and restore the matter back to the file of AO for a fresh decision with similar directions. Accordingly, ground No.3 of the assessee's appeal is allowed for statistical purposes. 18. From the above observations, under Rule 11UA assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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