submitted that the Chartered Accountant, in his valuation
report prepared under Rule 11UA mentioned that for valuation of preference
shares, he adopted a model similar ... analogy as discounted cash flow method. Assessee further, stated
that the Rule 11UA of the Income Tax Rules prescribes NAV or DCF method
specifically
Renewable Energy Pvt. Ltd.
Method as per sub rule (2) of Rule 11UA in order to determine the
Fair Market Value of the equity shares ... particularly invited to Section 56(2) (viib)
read together with Rule 11UA of the Income Tax Rules and is
reproduced hereunder:
[(viib) where a company
valuation in accordance with any of
the method prescribed under Rule 11UA and made valuation of the shares
based upon audited balance sheet ... VSPL at the Fair Market Value (FMV) arrived at as
per Rule 11UA of the Income-tax Rules, 1962 ('IT Rules') which
valued the Fair Market
Value (FMV) of each share as per Rule 11UA of the I.T Rules, 1962 and
FMV of each share ... method as per Rule 11UA of I.T. Rules.
However, Assessing Officer rejected the above submissions and observed
that the projection of cash flow made
therefore, such uncertified valuations were not
acceptable in terms of Rule 11UA of the Income Tax Rules, 1962
(hereinafter called 'the Rules ... further observes that since
the valuation in terms of Rule 11UA was Rs. 101.62 per share
and whereas the assessee had issued the shares
pursuance to provision of section
56(2)(viib) read with Rule 11UA whose fair market value of the share i.e. Rs. 50/- was
done ... issue
price of the shares to the Ld. AR and Rule 11UA(2) the Ld. AO is not supposed to
ignore the option exercised
justify why the provisions of section 56(2)(viib) r.w. Rule
11UA of the Act be not attracted. In response, assessee filed its
submission ... received in the assessment years prior to the insertion of Rule 11UA.
b) Section 56(2)(viib) applies to issue of shares, which includes
calculated based on the formula stipulated under Rule
11U and 11UA of the Income Tax Rule 1962 which has
not been carried ... Assessment order erroneous. Upon
applying the formula under Rule 11U and 11UA of the
Rules, the valuation of the shares come to only
following method of
Fair Market Value of shares as prescribed under Rule 11UA of the Income Tax
Rules, 1962, the assessee has worked ... have been furnished by
the assessee company. The AO observed that Rule 11UA of 1962 Rules prescribed
a definitive method to arrive at Fair Market
prescribed company to the satisfaction of the
in Rule 11UA(2) Assessing Officer, based on the
value, on the date of issue of
shares ... Discounted Cash Flow method is very well prescribed method under Rule
11UA(2)(b) and, therefore, its adoption by the assessee Company is well within
