Brajbhumi Nirmaan Private Limited Vs ITO (ITAT Kolkata)
In Brajbhumi Nirmaan Pvt. Ltd. (AY 2015-16), the AO taxed ₹10.21 Cr as excess share premium u/s 56(2)(viib) by rejecting the assessee’s DCF valuation and substituting it with NAV based on book values. The assessee had issued shares at ₹189.40 per share supported by a DCF valuation report for a real estate project funded by existing promoters.
The ITAT held that under Rule 11UA the assessee has the option to adopt the DCF method, and while the AO may scrutinize the assumptions, he cannot change the valuation method itself. DCF projections are inherently forward-looking and cannot be rejected merely because actual results later differed. The Tribunal also noted that the investment was by an existing promoter group for genuine business purposes, and even under proper NAV (using market value of land), FMV exceeded the issue price. Accordingly, the addition u/s 56(2)(viib) was deleted and the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 15.10.2025 for the AY 2015-16.
2. The only issue raised in the various grounds of appeal is against the confirmation of addition of Rs.10,21,00,000/- by the ld. CIT (A) as made by the ld. AO u/s 56(2)(viib) of the Act in respect of excess share premium received over the fair market value of shares issued during the year.
