No power to the AO to choose his own method to arrive at the value of shares whereas assessee has such choice of option

This Income Tax Appellate Tribunal case concerns the valuation of shares. The Revenue appealed a decision where the CIT(Appeals) accepted the assessee's Discount Cash Flow (DCF) method over the Assessing Officer's (AO) valuation. The core issue is whether the AO has the discretion to choose their valuation method, or if the assessee's chosen method should be preferred when it results in a higher valuation.

IN THE INCOME TAX APPELLATE TRIBUNAL , 
‘A’ BENCH, CHENNAI

BEFORE SHRI V.DURGA RAO, JUDICIAL MEMBER
AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER

I .T.A.No.521/Chny/2019
Assessment Year : 2015-16)

The Deputy Commissioner of Income
Tax,
Corporate Circle-1(1)
Chennai-600 034.
PAN: AAKCA 6239J
Appellant 

Vs

M/s. Avigna Housing Pvt. Ltd.
Plot No.1822, 1st Block,
13th Main Road, Anna Nagar
West.
Chennai-600 040.
Respondent)

Appellant by : Mr. G.Chandrababu, Sr.AR
Respondent by : Mr.M.Karunakaran, Advocate
Date of hear ing : 02.12.2020
Date of Pronouncement : 31.12.2020

 O R D E R

PER G. MANJUNATHA, AM:

This appeal filed by the Revenue is directed against theorder of the learned CIT(Appeals)-4, Chennai dated 28.12.2018 and pertains to assessment year 2015-16.

2. The Revenue has raised the following grounds of appeal:-

“1. The order of the ld. CIT(A) is contrary to law, facts and circumstances of the case.

2. The Ld.CIT(A) erred in giving relief to the assessee accepting Discount Cash Flow Method (DCF) valuationdone by the assesee rather than valuation done by the Assessing Officer(AO) under Rule 11UA of the Income tax Rules, for calculation of Fair Market Value of shares(FMVI& deleting the addition of difference in FMV & actual price at which the shares are issued under section 56{2)(viib) of the Act.

3. The Ld,CIT(A) erred in giving relief to the assessee by holding that the AO was not justified in taking the bookvalue of shares of the immovable property for valuationand should have taken the higher DCF method adoptedvalue 0f the allotted shares as returned by the assesseesince it was the higher valuation of the two methods expressly prescribed by the Act/rules when this finding of the Id.ClT(A) is in contravention of the provisions ofsection 56(2(viib) & Rule 11 UA, as nowhere in these provisions is it mentioned that higher valuation of two methods should be adopted for the purpose of arriving at the FMV

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