Talentube Entertainment Pvt. Ltd. Vs ITO (ITAT Mumbai)
DCF Valuation Not Questioned, Section 68 Can’t Be Mechanical: ITAT Mumbai Upholds Deletion of ₹4.25 Cr Share Premium Addition
Mumbai ITAT partly allowed the assessee’s appeal and dismissed the Revenue’s appeal in a case involving share capital & share premium additions u/s 68.
The assessee had issued shares at a high premium based on DCF valuation and received investments from 15 shareholders. The AO made an addition of ₹5 crore u/s 68, doubting the creditworthiness of investors, though no adverse finding was recorded against the DCF valuation. The CIT(A), after calling for a remand report, found that notices u/s 133(6) were complied with by all investors and that identity, genuineness & creditworthiness were established in respect of 14 investors, deleting addition of ₹4.25 crore, while sustaining ₹74.98 lakh relating to one NRI investor for want of documentary evidence.
The ITAT upheld the deletion of ₹4.25 crore, observing that once all three ingredients of section 68 are proved and transactions are routed through banking channels, the addition cannot survive merely on suspicion. As regards the NRI investment, the Tribunal admitted additional evidence (bank statement) filed by the assessee and remanded the matter to CIT(A) for fresh verification, granting opportunity to both sides.
Accordingly, the Revenue’s appeal was dismissed, and the assessee’s appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
