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TMI Blog2024 (6) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment Year 2018-19. 2. The respondent-assessee is engaged in the business of Generation and Distribution of Hydro Electricity in the State of Himachal Pradesh. 3. It filed a Return for the Assessment Year 2018-19 on 15.10.2018, declaring loss of Rs. 67,15,30,280/-. 4. The assessee had issued 2.25 crores equity shares with face value of Rs. 10/- per share for a premium of Rs. 90/- per share to M/s Shri Bajrang Power & Ispat Ltd. and Shri Bajrang Energy Private Ltd. 5. In its reply to the Notices issued u/s 143 of the Act, the assessee stated that prior to 23.02.2017, both the share subscribers were partners in the assessee-firm and the balances were showing as Partners Capital Account. 6. The assessee-company was having opening bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(Appeals), National Faceless Assessment Centre. 12. The CIT(Appeals) deleted the additions made by the Assessing Officer, in its order dt. 13.05.2022. The Appellate Authority held that since no money/consideration was received by the assessee on issue of shares and the shares are allotted merely on account of conversion of outstanding loans received in earlier years and source whereof was accepted to be satisfactorily explained into share capital, Section 56 (2) (viib) of the Act in absence of receipt of consideration, is not applicable. It also held that the valuation is done by the assessee as per DCF method, which is an internationally accepted method of valuation of shares, and is a permissible methodology as per Rule 11UA (2)(d) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer is not authorized to pick and choose a particular method of valuation of shares, since the option in that regard is specifically given only to the assessee as per Rule 11UA (2) of Income Tax Rules,that the AO can only verify method of valuation adopted by the assessee, but the same cannot be substituted by the AO by a different method i.e., NAV method, once the assessee has exercised option for the DCF valuation method. It held that the Assessing Officer was not correct in rejecting the DCF method and proceeding to value the shares by NAV method merely on the ground that there was a huge difference in projected figures and actual results available for some years. 15. It relied on the judgment of Mumbai Income Tax App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year and therefore will attract the provisions of Section 56 (2) (viib) of the Income Tax Act, 1961? iv) Whether the Hon'ble ITAT is right in law and on the facts and the circumstances of the case in holding that the unsecured loans were verified during the assessment in previous year and there is no abuse of tax laws although, the color of unsecured loans was changed from liability to ownership only upon allotment of shares in the year under appeal and therefore the provision of Section 56 (2) (viib) will be applicable in the current assessment year? v) Whether the Hon'ble Tribunal is right in law in holding that as the valuation of shares had been based upon the valuation report. The same could not be doubted by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X
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