Case Law Details
Narang Access Pvt. Ltd. Vs DCIT (ITAT Mumbai)
In the present case the valuation done by the assessee for valuing its shares is on the basis of DCF method and the AO could not have substituted it by NAV method rather he should have arrived at another value, if any, by applying DCF method only. We also noted that the explanation and additional evidences produced before us shows that why projection has been made in that manner and have been substantiated by filing additional evidences/ papers on assessee’s paper book volume 2 at pages 1 to 78. We noted that this issue has been considering by the Hon’ble Bombay High Court and remanded back to the file of the AO the issue regarding considering the value of shares in term of section 56(2)(viib) of the Act on the basis of DCF method. Here, in this present case also, we direct the AO to consider these additional evidences and then can arrive at a correct value of share for charging of share premium in term of section 56(2)(VIIB) of the Act. But on the basis of DCF method only which is adopted by the assessee. Hence, the assessment order and the order of the CIT(A) is set aside and the matter restore back to the file of the AO. In term of the above, we restore this issue to the file of the AO.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal of assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-21, Mumbai in appeal No. CIT(A)-21/DCIT-13(1)(1)/IT-166/2016-17 dated 28.02.2018. The Assessment was framed by the Dy. Commissioner of Income Tax, Circle-13 (1)(1), Mumbai (in short DCIT/ITO/ AO) for AY 2013-14 vide dated 28.03.2016, under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in valuing the share premium on the basis of book value of shares as reasonable value instead of valuing on the basis of Discounted Cash Flow (DCF) method and accordingly adding the share premium at ₹ 5,32,68,570/-. For this assessee has raised the following two grounds: –
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