Case Law Details
Fortigo Network Logistics Pvt. Ltd. Vs ACIT (ITAT Bangalore)
In the instant case, both the additions, i.e., addition made u/s 56(2)(viib) of the Act and sec.68 of the Act relate to the share premium amount, i.e., both the additions arise out of common issue only. The assessee has also filed certain additional evidences. We earlier noticed that the assessee had adopted DCF method for valuing the shares, while the AO has adopted NAV method. In view of the decision rendered by co-ordinate bench in the case of Futura Business Solutions (P) Ltd (2020) (117 taxmann.com 567) (Bang.), which in turn has followed the decision rendered by Hon’ble Bombay High Court in the case of Vodafone M-Pesa Ltd Vs Pr.CIT 164 DTR 257, the AO is not entitled to change the method of valuation of shares.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
The assessee has filed this appeal challenging the order dated 07-08-2019 passed by LD CIT(A)-3, Bengaluru and it relates to the assessment year 2016-17. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the addition of Excess Share premium amount made u/s 56(2)(viib) and also u/s 68 of the Income-tax Act,1961 [‘the Act’ for short].
2. We heard the parties and perused the record. The assessee company is engaged in the business of providing a platform to facilitate greater supply chain visibility and efficiency to all the players in road transportation industry. During the year under consideration, the assessee has issued 40,765 preference shares having a face value of Rs.10/- each at a price of Rs.3,158.39 per share. Out of the above, 22,431 shares were issued to a foreign company named M/s Accel India IV (Mauritius) Ltd and the remaining shares were issued to Indian residents. The assessee submitted a valuation report, in which Discounted Free Cash flow (DCF) method was adopted and the value of share was determined at Rss.3118.77 per share. The AO noticed that the assessee has issued shares at a price higher than the price determined in the valuation report.
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