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TMI Blog2023 (8) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... n actuals and projection done by the valuer. As decided in INDIA TODAY ONLINE PVT. LTD. VERSUS ITO, WARD-12 (2) NEW DELHI [ 2019 (4) TMI 1646 - ITAT DELHI] DCF method is a recognised method where future projections of various factors by applying hindsight view and it cannot be matched with actual performance, and what Ld. CIT (A) is trying to do is to evaluate from the actual to show that the Company was running into losses, therefore, DCF is not correct. Valuation under DCF is not exact science and can never be done with arithmetic precision, hence the valuation by a Valuer has to be accepted unless, specific discrepancy in the figures and factors taken are found. Determination of value of shares on the basis of financial statement of a Company or the book value does not have much relevance under DCF method, because it is based upon, fair expected revenue growth and fair expected cash flow for a period of five years; discount rate and terminal growth rate; and terminal value, etc. are the factors which are taken in the consideration. Therefore, to reject the valuation mainly on the basis of losses shown in the financial statement would not be correct, until and unless some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .15 Abhishek Surana CCPS 383 6,520.60 W3830/- 24,9'2,170/- 5 30.09.15 Sudha Surana CCPS 383 6,520.60 3,830/- 24,92,170/ 6 30.09.16 Akash Setia CCPS' 307 6,520.60 3,070/- 19,96,930/- 7 30.09.15 Vikas Setia CCPS 230 6,520.60 2,3007 14,97,700/ 8 30.09.16 Chelan Todi CCPS 230 6,520/- 2,300/- 14,97,700/- 9 30.09.15 500 Startup III L.P. CCPS 997 6,520.67 9.970/ 64,90,030/ 10 30:09.15 M'FO'I III GBR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port without any basis. 10. Strong reliance was placed on the decision of the coordinate bench in the case of India Today Online Pvt. Ltd 176 ITD 459 and Cinestaan Entertainment (Pvt) Ltd 177 ITD 809. 11. Per contra, the ld. DR strongly supported the findings of the ld. CITA and read the operative part. 12. We have given thoughtful consideration to the orders of the authorities below. There is no dispute that the assessee has supported its valuation by a valuer s report as per the relevant provisions of the Act. It is also true that the lower authorities have not pointed out any error or infirmity or defect in the said valuation report. The said valuation report has been rejected only because there were differences between actuals and projection done by the valuer. 13. The coordinate bench in the case of India Today Online Pvt Ltd [supra] on similar issue has held as under: 31. One of the cardinal principles of interpretation of fiscal statute is that they should be strictly construed and so long as the provision is free from any ambiguity, there should be no need to draw any analogy. A deeming provision on the other hand is intended to enlarge the meaning of a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en done under DCF method and the valuation of assessee share has been done on NAV method. The reason being, the valuation report for the valuation of the shares by the Mail Today as on 20.7.20012 was shown under DCF method, wherein Rs. 40 per share were determined. Such a valuation of the shares has been accepted by the revenue in the case of Mail Today under scrutiny proceedings, which cannot be discarded. Determination of value of shares on the basis of financial statement of a Company or the book value does not have much relevance under DCF method, because it is based upon, fair expected revenue growth and fair expected cash flow for a period of five years; discount rate and terminal growth rate; and terminal value, etc. are the factors which are taken in the consideration. Therefore, to reject the valuation of the Mail Today mainly on the basis of losses shown in the financial statement would not be correct, until and unless some discrepancy has been out either in the DCF method or in the Valuation Report furnished by an independent Valuer of Mail Today. 33. Accordingly, in view of the reasoning given above, we do not find any justification for reducing the value of sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the company, have chosen to make investment as an equity partners in a start-up company like assessee, then can it be said that there is any kind of tax abuse tactics or laundering of any unaccounted money. It cannot be the unaccounted or black money of investors as it is their tax paid money invested, duly disclosed and confirmed by them; and nothing has been brought on record that it is unaccounted money of assessee company routed through circuitous channel or any other dubious manner through these accredited investors. If such a strict view is adopted on such investment as have been done by the Assessing Officer and by ld. CIT(A), then no investor in the country will invest in a start-up company , because investment can only be lured with the future prospects and projection of these companies. 15. Respectfully following the decision of the coordinate benches [supra], we do not find any merit in the addition made by the Assessing Officer. The findings of the ld. CITA are set aside and Assessing Officer is directed to delete the impugned addition. 16. In the result, the appeal of the assessee in ITA No. 7353/DEL/2019 is allowed. The order is pronounced in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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