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TMI Blog2024 (12) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... ntant, he should have referred the matter to another Registered Valuer/Merchant Banker to work out the valuation on the basis of DCF method. The AO on his own was not correct in rejecting the valuation of the assessee as per DCF method, nor he was correct in adopting NAV method to determine the FMV of shares. AO can certainly scrutinize the valuation report submitted by the assessee but for determination of a fresh valuation he has to obtain a report from an independent Registered Valuer / Merchant Banker. Further, the basis had to be DCF method and he cannot change the method of valuation which was opted by the assessee. CIT(A) had, therefore, rightly held that the AO cannot adopt his own valuation unless there was an enabling provision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act is upheld. Appeal of the Revenue is dismissed. - Shri T.R. Senthil Kumar, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member For the Appellant : Shri Ravi Bharadwaj, A.R. For the Respondent : Shri P S Choudhary, CIT. DR ORDER PER SHRINARENDRA PRASAD SINHA, AM: This appeal is filed by the Revenue against the order of the National Faceless Appeal Centre (NFAC), Delhi, (in short the CIT(A) ), dated 22.11.2023for the Assessment Year 2015-16. 2. The brief facts of the case are that the return of income for A.Y. 2015-16 was filed by the assessee on 16.11.2015 declaring loss of Rs. 79,68,765/-. The case was selected for limited scrutiny under CASS to verify the substantial increase in share capital, large share premium receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2014. He, therefore, held that the valuation certificate produced by the assessee was not reliable genuine and also not based on actual facts and figures and, therefore, rejected the valuation report. Accordingly, an addition of Rs. 50 Crore was made in respect of share premium receipt u/s. 56(2)(viib) of the Act. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was decided by the Ld. CIT(A)vide the impugned order and the appeal of the assessee was allowed. 4. Now, the Revenue is in appeal before us. The following grounds have been taken in this appeal: 1. Whether on the facts in the circumstances of the case, the Ld. CIT(A) was right in deleting the addition made u/s 56(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F method or NAV method for valuation of its shares. Therefore, it was not open for the AO to reject the DCF method of valuation as adopted by the assessee. He further submitted that most of the parameters required for conducting valuation in DCF method was based on the industry parameters prevailing at that time, which was independently vetted and confirmed by L T- Sargent Lundy Limited, appointed by the lender Bank of Maharashtra. Therefore, the rejection of the valuation report based on comparison with one-year actual figure was not correct. He further submitted that the entire share premium was received from the holding company and that the Co-ordinate Bench of this Tribunal in the case of DCIT vs. Ozone India Ltd., [2021] 126 taxmann.co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done by the assessee as per DCF method, which was backed by a report of the Chartered Accountant. If the AO was not satisfied with the correctness of the valuation report of the Chartered Accountant, he should have referred the matter to another Registered Valuer/Merchant Banker to work out the valuation on the basis of DCF method. The AO on his own was not correct in rejecting the valuation of the assessee as per DCF method, nor he was correct in adopting NAV method to determine the FMV of shares. The AO can certainly scrutinize the valuation report submitted by the assessee but for determination of a fresh valuation he has to obtain a report from an independent Registered Valuer / Merchant Banker. Further, the basis had to be DCF method ..... X X X X Extracts X X X X X X X X Extracts X X X X
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