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7. Having heard learned advocates for the respective parties and considering the material on record it appears that the reasons recorded for reopening are based upon the applicability of the DCF method vis-a-vis Net Asset Value Method prescribed under Rule 11UA of the Rules. According to the Assessing Officer, there NEUTRAL CITATION C/SCA/5378/2022 JUDGMENT DATED: 28/10/2024 undefined is difference in valuation of Rs. 80/- between the computation of the fair market value by applying these two methods and accordingly, there is escapement of income of Rs. 80/- as the valuation as per the Net Asset Value is less as compared to the value as per DCF method. The Assessing Officer has further recorded that the assessee has not achieved the goal as per the projected growth for the past three years and therefore a difference of Rs. 80/- between the two methods per share is required to be added as income of the assessee for the year under consideration.

(b) the fair market value of the unquoted equity shares determined by a merchant banker as per the Discounted Free Cash Flow method;..................."

10. Clause (a) and (b) of the Rule 11UA(2) of the Rule prescribes the method of Net Asset Value method and the discounted cash NEUTRAL CITATION C/SCA/5378/2022 JUDGMENT DATED: 28/10/2024 undefined flow method for which, the assessee is entitled to exercise the option for computation of the fair market value for the applicability of section 56(2)(viib) of the Act.

NEUTRAL CITATION C/SCA/5378/2022 JUDGMENT DATED: 28/10/2024 undefined "15. Thus, the fair market value of the share shall be higher of the value as determined in accordance with the provisions of rule 11 UA or any other method, which can be substantiated by the assessee before the Assessing Officer. For the purpose of determining "fair (2022) 94 ITR (Trib) 596 market value" of unquoted shares provisions of rule 11 UA (2) applies which gives an option to the assessee to either value the shares as per prescribed formula given in clause (a) or clause (b) which provides for the determination of the fair market value based on discounted cash flow method as valued by a merchant banker or a chartered accountant (till 24th of May 2018). In the present case the assessee has valued the shares according to one of the "options" available to assessee by adopting discounted NEUTRAL CITATION C/SCA/5378/2022 JUDGMENT DATED: 28/10/2024 undefined cash flow method. Therefore, such an option given to the assessee cannot be withdrawn or taken away by the learned Assessing Officer by adopting different method of valuation i.e., net asset value method. The method of valuation is always the option of the assessee.

The learned Assessing Officer is authorised to examine whether assessee has adopted one of the available options properly or not. In the present case, the learned Assessing Officer has thrust upon the assessee, net asset value method rejecting discounted cash flow method for only reason that there is a deviation in the actual figures from the projected figures. It is an established fact that discounted cash flow method is always based on future projections adopting certain parameters such as expected generation of cash flow, the discounted rate of return and cost of capital. In hindsight, on NEUTRAL CITATION C/SCA/5378/2022 JUDGMENT DATED: 28/10/2024 undefined availability of the actual figures, if the future projections are not met, it cannot be said that the projections were wrong. To prove that the projections were unreliable, the learned Assessing Officer must examine how the valuation has been done. In a case future cash flow projections do not meet the actual figures, rejection of discounted cash flow method is not proper. If projected future cash flow and actual result matches, such situation would always be rare. For projecting the future cash flow certain assumptions are required to be made, there needs to be tested and then such exemptions becomes the base of estimation of such projected future cash flows. If there are no assumptions, there cannot be an estimate of future projected cash flows and then discounted cash flow method becomes redundant. For exercise of NEUTRAL CITATION C/SCA/5378/2022 JUDGMENT DATED: 28/10/2024 undefined valuation, assumption made by the valuer and information available at the time of the valuation date are relevant. As the exercise of valuation must be viewed as on the date of the valuation looking forward and cannot be reviewed in retrospect. Further, the valuation is always made based on review of historical data and projected financial information provided by the management. Further report of expert will always include limitation and responsibilities but that does not make his report incorrect. Of course, if there are errors in the working of projected cash flow, estimating the projected revenue and projected expenditure as well as in adoption of cost of equity and discount factor, the learned Assessing Officer is within his right to correct it after questioning the same to the assessee. The learned Assessing Officer can also question the basic NEUTRAL CITATION C/SCA/5378/2022 JUDGMENT DATED: 28/10/2024 undefined assumptions made by the valuer. If they are unreasonable or not based on historical data coupled with the management expectation, the learned Assessing Officer has every right to question it and adjust the valuation so derived at. However, if he does not find any error in those workings, he could not have rejected the same. Further the reason given by the learned Assessing Officer that the net asset value method and the discounted cash flow method for valuation of the shares of the company gives a wide variation between them, we do not find any reason to find fault with the assessee in such cases. Both these methods have different approaches and methodologies therefore there are bound to be differences, but it does not give any authority to the learned Assessing Officer to pick and choose one of the method and make the addition. It is the NEUTRAL CITATION C/SCA/5378/2022 JUDGMENT DATED: 28/10/2024 undefined assessee who has to exercise one of the options available under the provisions of the law for valuing the shares. The learned Assessing Officer needs to examine that method. Naturally, if the discounted cash flow method and net asset value method gives the same result, where would have been the need to prescribe the two methods in the law. In view of above facts, we do not find any infirmity in the order of the learned Commissioner of Income-tax (Appeals) in deleting the addition of Rs. 69,000,000 made by the learned assessing officer u/ s 56 (2) (viib) of the act.