Case Law Details
Alishan Palace Resorts Pvt Ltd. Vs ITO (ITAT Cuttack)
in the instant case, the value adopted and computed by the assessee as per Rule 11UA(2)(c)(b) by following DCF method at Rs.51/85 and the assessee company has received shares and issued/allotted @ Rs.50 per share including premium and this rate has not been contested or challenged by the AO and during hearing before him by ld D.R. From a careful reading of the assessment order, I clearly observe that the AO merely compelled the assessee to change the valuation method from DCF method to another book value method, which is not permissible as per Rule 11UA(2)(c)(b) and other provisions of the Act. As per the Explanation (a) (ii) to Section 56(2)(viib), speaks about the satisfaction of the AO but there is no condition in the explanation (a)(i) that the AO is not permitted to interfere with the valuation once done in accordance with the method prescribed in the Rule 11UA (2)(c)(b) of the Rules. Therefore, the AO as well as ld CIT(A) was not correct in rejecting the adoption of DCFM by the assessee and invoking the provisions of section 56(2)(viib) of the Act for making addition on differential value of shares and valuation done as per book value method.
Therefore, in view of above discussion and respectfully following the ratio laid down in the case of Rameshwaram Strong Glass Pvt Ltd., (supra) and keeping in view the facts of the case and provisions of section 56(2)(viib) r.w. Rule 11U(1)(c)(b), I am compelled to hold that the addition made by the AO is not sustainable and, therefore, I dismiss the same.
FULL TEXT OF THE ITAT JUDGEMENT
This is an appeal filed by the assessee against the order of the CIT(A),1, Bhubaneswar dated 26.2.2019 for the assessment year 2015-16.
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