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DCF Valuation Cannot Be Rejected Using Hindsight – ITAT Deletes ₹36.54 Crore Section 56(2)(viib) Addition
Case Law Details
- Case Name
- Catwalk Worldwide Limited Vs ACIT (ITAT Mumbai)
- Appeal Number
- Only available for paid members
- Date of Judgement/Order
- Only available for paid members
- Related Assessment Year
- 2017-18
- Courts
- All ITAT, ITAT Mumbai
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Catwalk Worldwide Limited Vs ACIT (ITAT Mumbai)
The Mumbai ITAT deleted a massive addition of ₹36.54 crore made under section 56(2)(viib), holding that once an assessee adopts a prescribed valuation method under Rule 11UA — such as the Discounted Cash Flow (DCF) method — the Assessing Officer cannot discard it merely because actual future performance differs from projections.
The assessee had issued shares at a premium of ₹518 per share based on a DCF valuation report prepared by a Chartered Accountant valuing shares at ₹536.17 each. The AO rejected the valuation aft...
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