The assessee submitted valuation per equity share computed on the discounted cash flow method as per the certificate of Chartered Accountants wherein the value per shares was arrived at Rs. 54.98 per share. The AO did not accept said valuation and applied Net Asset Value method as per which value of share came to Rs. 26.69 per share. Applying the said value, the Assessing Officer made addition under S. 56(2)(vii)(b) of the Act. Tribunal held that the provisions of S. 56(2)(vii)(b) gives an options to assessee to adopt any of methods which can be compared with Net Asset Value Method and Assessing Officer shall adopt value whichever is higher. Accordingly the since discounted cash flow method is one of prescribed method and, moreover, Assessing Officer had not found any serious defect in facts and details used in determining fair market value under said method, impugned addition made by him was deleted. ( AY. 2014-15)
ACIT v. Safe Decore (P.) Ltd. (2018) 169 ITD 328/165 DTR 339/193 TTJ 898 (Jaipur) (Trib.)
S.56:Income from other sources – Unquoted equity shares -Discounted cash flow method – Net asset value method – Option to adopt the method of valuation is with assessee- When no defect is found in valuation of shares arrived on basis of discounted cash flow method addition made by the AO on basis of net asset value method was to be set aside. [ S.56(2)(vii)(b), R. 11UA ]