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TMI Blog2023 (7) TMI 1447X X X X Extracts X X X X X X X X Extracts X X X X ..... has proceeded to calculate the market value of the shares as per clause (a) of Rule 11UA(2)(a), where as, the assessee has opted fair market value of the shares under Rule 11UA(2)(b) of the I.T. Rules. As been specifically provided u/r 11UA(2) that the fair market value of the shares can be determined either in the manner as prescribed in clause (a) or clause (b) at the option of the assessee. Therefore, since it was the option of the assessee to follow either clause (a) or clause (b), the assessee has followed the method prescribed under clause (b) of Rule 11UA(2), therefore, the action of the AO in determining the fair market value by following the method under clause (a) cannot be held to be justified. Therefore, the impugned additions m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such method as may be prescribed, or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, Whichever is higher; 4. The case of the assessee is that the fair market value of the shares was determined by the method prescribed under Rule 11UA of the Income Tax Rules 1962. The relevant part of which is reproduced as under: [(2) Notwithstanding anything contained in sub-clause (b) of clause (c) of sub-rule (1), the fair market value of unquoted equity shares for the purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax payable with reference to the book profits in accordance with the law applicable thereto; (v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities; (vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares; PE = total amount of paid up equity share capital as shown in the balance-sheet; PV = the paid up value of such equity shares; or (b) the fair market value of the unquoted equity shares determined by a merchant banker or an accountant as per the Discounted Free Cash Flow method.] 5. It is pertinent to mention here that as per the relevant rules as applicable for assessment year under consideration i.e. 2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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