Share Premium Valuation Under Section 56(2)(viib): DCF Method Cannot Be Rejected Without Examining Details

The HC upheld the ITAT's deletion of addition under section 56(2)(viib) regarding share premium collected by a closely held company. The court found that lower authorities improperly rejected the DCF valuation method without examining its details or calling for additional information. The rejection was based on objective satisfaction rather than subjective assessment of case facts. Following Town Essential Pvt. Ltd. (ITAT Bangalore, 2021), the HC ruled that valuation reports cannot be rejected without recording contrary findings. The authorities' reasoning that the company's loss-making status precluded share premium valuation was deemed insufficient, and the addition was accordingly deleted in the assessee's favor. .....

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