Intermesh Shopping Network Pvt Ltd Vs ITO (ITAT Delhi)
DCF Valuation Cannot Be Rejected Just Because Projections Differ- Disclaimer in Valuation Report Not a Ground to Junk DCF Method: AO Should Have Referred to Valuation Officer —56(2)(viib) Addition Deleted
Mumbai Tribunal examined validity of addition of ₹8,39,55,840 u/s 56(2)(viib) arising from share premium collected on allotment of equity shares.
Assessee had obtained DCF-based valuation from a qualified CA; projections, discounting rate & methodology were confirmed by the valuer in statement u/s 131. AO rejected the valuation solely because projections were not achieved in later years & because the report carried standard disclaimers, thereafter substituting NAV method to compute FMV at ₹200 per share.
Tribunal held that DCF is a recognized method under Rule 11UA & cannot be discarded merely due to variation between projected & actual performance, or because standard disclaimers are included in valuation reports. Tribunal noted that if AO doubted DCF working, he ought to have referred matter to Valuation Officer, which was not done. Tribunal also relied on Delhi HC in Cinestaan Entertainment Pvt Ltd & noted that the AO’s reliance on Agra Portfolio Pvt Ltd was misplaced since that decision stands reversed by jurisdictional High Court. Holding DCF valuation valid, Tribunal directed deletion of the entire 56(2)(viib) addition. Appeal allowed.
