Case Law Details
CIT Vs VVA Hotels Private Limited (Madras High Court)
It was submitted that when the assessee has adopted a particular method of valuation as provided under the Act and Rules and in the absence of any material that such method was adopted to defraud the Revenue, merely because the Assessing Officer is of the view that NAV method alone has to be adopted is not a ground to reject the DCF method. The Tribunal upon consideration of the facts pointed out that the assessee has adopted the method of valuation as stipulated under Rule 11UA of the Rules and this accepted method of valuation does provide for estimation. Noting that the Assessing Officer had discarded the DCF method adopted by the assessee on the ground that the actual revenue varied from the projected revenue for four years, the Tribunal rightly noted that the projected value is an estimate and the variation in the estimate is marginal. Therefore, the Tribunal came to the conclusion that there was no material to hold that the assessee’s projected sales revenues are fabricated or manipulated.
Furthermore, it was pointed out that the Assessing Officer did not point out any flaw in the method of calculation of the value of shares by adopting the DCF method but, out rightly rejected the same, which should not have been done. The Revenue by relying upon the decision of the Division Bench of this Court in CIT vs. M/s.Vaani Estates Pvt. Ltd. [T.C.A.No.224 of 2018 dated 04.04.2019], submitted that the matter may be remanded to the Assessing Officer for fresh consideration to determine the fair market value of the shares in question as required in Explanation to Section 56 of the Act.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
This appeal, by the Revenue filed under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), is directed against the order dated 26.03.2019, made in I.T.A.No.2013/Chny/2018 on the file of the Income Tax Appellate Tribunal ‘C’ Bench, Chennai for the assessment year 2013-14.
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