IT Dept Cannot Reject FMV of Shares Determined by Statutory Methods: Karnataka HC

PCIT Vs Waterline Hotels Pvt Ltd. (Karnataka High Court) Karnataka High Court dismissed an appeal filed by the Revenue against the Tribunal’s order, which deleted an addition of ₹33.71 crores under Section 56(2)(viib) of the Income Tax Act, 1961. The case involved Waterline Hotels Pvt Ltd., which had issued shares at a premium of ₹165 per share using the Discounted Cash Flow (DCF) method for valuation. The Income Tax Department contested the valuation, arguing that the company was incurring losses and had no justification for such a high share value. The Tribunal, however, upheld the...