Selection of option of Discounted Free Cash Flow method for valuation of shares

Last updated: 10 November 2021

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This case concerns the valuation of shares issued by Vinayaka Microns (India) Private Ltd. The company used the Discounted Free Cash Flow (DCF) method, as permitted by tax rules, to determine the fair market value of its shares. Although the shares were issued at a premium, the Assessing Officer (AO) initially accepted the returned income without thorough verification of the share premium. However, the tribunal later found this assessment to be erroneous and prejudicial to the revenue's interests, ordering a fresh assessment with proper inquiry into the share premium and the applicability of relevant tax provisions.

Court :
ITAT Jaipur

Brief :
This is an appeal filed by the assessee against the order of ld. PCIT, Udaipur dated 01.02.2021 wherein the assessee has raised the following grounds of appeal.

Citation :
ITA No. 11/JP/2021

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

BEST VALUE

3 Years PLAN

4999

(Excl. of GST ₹899)

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Attached File : 1442821_4597_1635834613_ita2_no_11_jp_2021_vinayak_microns_india_pvt.pdf

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Judgement posted by

Poojitha Raam Vinay

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I simplify complex income tax, TDS, banking, and investment updates into practical insights for taxpayers, salaried professionals, pensioners, and senior citizens. I regularly write on ITR filing, tax compliance, savings schemes, and the latest financial rule changes in India.

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