Pisces EServices Pvt Ltd Vs DCIT (ITAT Bangalore)
ITAT Bangalore held that AO not allowed to interfere in method selected for valuation of share by the assessee u/s. 56(2)(viib) of the Income Tax Act read with rule 11UA(2) of the Income Tax Rules. Thus, AO cannot change the method from DCF to NAV method.
Facts- Assessee, a private limited company, is engaged in the business of food delivery. The assessee at the start of the financial year and during the financial year was the subsidiary company of a foreign company viz., Delivery Hero based in Germany. The holding company got the share value done of the assessee company for transfer of its shareholding in the assessee company to the company viz. ANI Technologies Pvt. Ltd., the holding company of OLA Group. The valuer viz. Ernst and Young Merchant Banking Services Ltd., valued the shares of the assessee company dated 30/11/2017 at Rs.13.94 per share based on discounted cash flow method. In the valuation exercise, while using the discounted cash flow method, the valuer has projected the sales, expenses, and the profit of the assessee company from December 2017 and the calendar years beginning from 2018 to 2023 with the compounded annual growth rate of 34% of the revenue. As such, the holding company of the assessee transferred its entire shareholding to ANI Technologies Pvt. Ltd., at Rs. 13.94 per share having a face value of Rs.10 per share.
