Assessee-company issued 1,70,000 shares at a face value of Rs.10 per share at a premium of Rs.20 per share, raising a total capital of Rs.51,00,000 (Rs.17,00,000 as share capital + Rs.34,00,000 as share premium). AO invoked section 56(2)(viib) and treated the entire amount of Rs.51,00,000 as ‘Income from other sources’, holding that assessee did not carry out any active business during the year. The valuation report submitted by assessee was not in accordance with rule 11UA, as it relied on the Adjusted Net Asset Method and Future Earnings Analysis, not prescribed under rule 11UA.DCF Method is a valid method under rule 11UA, and AO cannot reject it merely because it leads to a higher valuation. In the instant case, assessee submitted a CA-certified valuation report, which was neither doubted nor challenged by AO. AO erred in rejecting assessee’s valuation report without pointing out any specific defects. Therefore, addition under section 56(2)(viib) made by AO, based on an incorrect interpretation of valuation rules, was deleted. [AY. 2015-16],