JCIT Vs Om Sons Marketing Pvt. Ltd. (ITAT Amritsar)
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals), Bathinda, for Assessment Year 2015-16. The principal issues before the Tribunal were whether the Commissioner (Appeals) was justified in deleting the addition made under Section 56(2)(viib) by accepting the Discounted Cash Flow (DCF) method for valuation of shares, despite the Assessing Officer’s objections to the projections used in the valuation report, and whether the deletion of the disallowance relating to interest on delayed payment of TDS/TCS was correct.
The assessee had filed its return declaring a nil income, and the case was selected for scrutiny. During assessment, the Assessing Officer made additions under Section 56(2)(viib) on account of the valuation of shares, disallowed interest on delayed payment of TDS, and restricted depreciation on trucks. The Commissioner (Appeals) granted relief on the additions relating to share valuation and interest on TDS but sustained the depreciation disallowance. The Revenue challenged only the relief granted on the share valuation and TDS interest issues.
The Assessing Officer questioned the issue of 7,71,309 shares at ₹147.80 per share, including a premium of ₹137.80. The assessee explained that the valuation had been carried out by a Chartered Accountant using the DCF method prescribed under Rule 11UA. The Assessing Officer rejected the DCF valuation, adopted the Net Asset Value (NAV) method, determined the fair market value at ₹103.90 per share, and treated the difference as taxable under Section 56(2)(viib), resulting in an addition of ₹3,38,60,465.
