The fact that the company is loss-making does not mean that shares cannot be allotted at premium. The DCF method is a recognised method though it is not an exact science & can never be done with arithmetic precision. The fact that future projections of various factors made by applying hindsight view cannot be matched with actual performance does not mean that the DCF method is not correct.( ITA Nos. 6453 & 6454/Del/2018, dt.15.03.2019) ( AY. 2013-14 and 2014-15)
India Today Online Pvt. Ltd. v. ITO (2019) 176 ITD 459/ 178 DTR 17/ 199 TTJ 681(Delhi)(Trib),www.itatonline.org
S. 56 : Income from other sources – Fair Market Value-DCF method –Closely held company – The fact that the company is loss-making does not mean that shares cannot be allotted at premium. The DCF method is a recognised method though it is not an exact science & can never be done with arithmetic precision. The fact that future projections of various factors made by applying hindsight view cannot be matched with actual performance does not mean that the DCF method is not correct. [ S. 56(2)(viib), Rule 11UA. ]