Rivet Health Club Pvt. Ltd. Vs ITO (ITAT Delhi)
ITAT Delhi Deletes Share Capital & 56(2)(viib) Additions—DCF Valuation Cannot Be Rejected; Section 68 Onus Discharged
The Delhi Bench of the ITAT allowed the appeal of Rivet Health Club Pvt. Ltd. for AY 2015-16, granting complete relief on additions relating to share capital/share premium, valuation under section 56(2)(viib), enhancement by CIT(A), business expenditure disallowance, and Form 26AS mismatch.
On section 68, the Tribunal held that the assessee had fully discharged its onus by furnishing PAN, ROC details, audited financials, bank statements, confirmations, share application forms, and share certificates of the investor companies. Once identity, creditworthiness, and genuineness were established, the burden shifted to the Revenue, which failed to bring any contrary material. Accordingly, the sustained addition of ₹49 lakh under section 68 was deleted, following PCIT v. Rohtak Chain Co. (P) Ltd. and Lovely Exports.
On section 56(2)(viib), the ITAT held that where the assessee adopts a prescribed method under Rule 11UA(2)—here, DCF valuation by a qualified professional—the Assessing Officer cannot substitute or reject the valuation based on hindsight or actual results. The Tribunal relied on Cinestaan Entertainment (P) Ltd. and clarified that valuation is not an exact science; commercial expediency and business projections cannot be second-guessed. The protective addition of ₹26.39 lakh was therefore deleted.
