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Accordingly, AO determined the total taxable income at Rs.

1,38,77,00,850/-.

8. Aggrieved with the above order, assessee preferred appeal before Ld. CIT(A) and made the detail submission before Ld. CIT(A) with respect to addition made by the AO u/s 56(2)(viib) of the Act, which is mentioned in para no. 4.1 at page no. 15 to 30 of the order of Ld. CIT(A) and after considering the submission of assessee, Ld. CIT(A) accepted the contentions of the assessee with regard to valuation of the shares based on fair market value on the basis of provisions of section 56(2)(viib) rule 11 UA. As per the above valuation rule, the asseseee has given option to select the valuation method i.e. based on net asset or based on DCF method and assessee can adopt higher of the two value arrived based on the above said two methods and he rejected the contention of the AO to value the shares based only on net asset method. Further Ld. CIT(A) rejected the valuation I.T.A. No. 10731Mum/2018 & 2032/Mum/2019 Vodafone M-Pesa Ltd.

10. Before us, Ld. AR brought to our notice findings in para 3 of the stay order and elaborately explained that facts of the case.

He brought to our notice provisions of section 56(2)(viib) alongwith explanation of rule 11UA sub rule 2, as per above, assessee has option to select one of the method prescribed in rule 11UA i.e. either net asset method or DCM method. As per the above rule, assessee has appointed a merchant banker as a valuer and the valuer has submitted its report based on the DCM method and assessee has adopted the same to value the shares. Before us, Ld. AR submitted the factual sheet and he relied on this factual sheet, which is at para no. 3 to 35 of the paper book.

17. In the rejoinder, Ld. AR relied upon the decision of ITAT Delhi in the case of Stryton Exim India Pvt. Ltd. vers. ITO in the paper book.

18. Considered the rival submission and material placed on record, we notice from the records that assessee has issued rights shares to its shareholders with share premium after duly valuing the shares based on DCF method and the valuation was done by a merchant banker. At the time of assessment proceedings, assessee has submitted valuation report and the AO verified the valuation report and found that all the projections and other information was submitted by the assessee to the valuer in order to justify the issue of shares at a premium and he came to conclusion that the valuer has also not applied the information supplied by assessee independently or verified the figures or projections independently. This is the main reason for rejecting the valuation report submitted by the assessee. Since AO has rejected the valuation report, he himself proceeded to value the fair market value of the shares based on net assets method. Since AO has rejected the valuation report even though it was done by I.T.A. No. 10731Mum/2018 & 2032/Mum/2019 Vodafone M-Pesa Ltd.

valuer, which is independent entity. We observe that the reason for rejecting the valuation report by the AO was well answered by Ld. CIT(A) and also Ld. CIT(A) has appreciated the fact that assessee has option to choose one of the method i.e. net asset method or DCF method, whichever is favourable to them.

19. Since Ld. CIT(A) has already addressed the issue of method of valuation which has to be adopted, therefore we do not intend to go into which method has to be adopted and accordingly, we notice that the department is in appeal against Ld. CIT(A) and in our considered view, Ld. CIT(A) has properly rejected the method adopted by the AO and proceeded to accept the DCF method adopted by the assessee. Therefore, we are inclined to dismiss the ground raised by the department.