Vikram Bakshi vs NFAC

PER C.N. PRASAD, J.M.

These three appeals are filed by the assessee against different orders of the Ld. CIT(A) for the A.Y.2020-21 and 2021-22.

The appeal filed for the assessment year 2020-21 arises from the reassessment order passed u/s.143(3) r.w.s 144 of the Act. The appeal for the A.Y.2021-22 arises from the assessment order passed u/s.143(3) of the Act.

First we taken up the appeal for the A.Y. 2020-21. The assessee has challenged the order of the Ld. CIT(A) in sustaining the order of the AO in adopting the valuation of unlisted equity shares at face value while valuing the shares as 01.04.2001 instead of the DCF valuation method adopted by the AO. The Ld. Counsel for the assessee at the outset submitted that the valuation of unlisted equity shares can be done either at cost or it can be valued applying DCF method and the choice to exercise such option is given to the assessee and since the assessee exercised the option to value the shares at DCF method, there is no justification in rejecting the method adopted by the assesse. Reliance was placed on the decision of the Hon’ble Jurisdictional Delhi High Court in the case of Agra Portfolio Pvt. Ltd. Vs. PCIT (464 ITR 348).

On the other hand the Ld. DR placed reliance on the orders of the authorities below.

Heard rival contentions and perused the orders of the authorities below. In this case the assessee while valuing the shares as on 01.04.2001 adopted DCF method for which valuation report was also furnished before the AO. However, the AO adopted the value of shares at cost.

The Hon’ble Jurisdictional High Court in the case of Agra Portfolio Vs. PCIT (supra) had considered elaborately the issue of what can be the value of equity shares as on 01.04.2001 i.e. cost or DCF method, after considering various decisions and Rule 11UA r.w.s. 56 (2)(vii) of the Act, held that the AO has to adopt the discounted cash flow (DCF) method and cannot change the method of valuation which has been opted by the assessee.

Thus, respectfully following the said decision we direct the AO to accept the DCF method adopted by the assessee in valuing unlisted equity shares as on 01.04.2001. Ground No. 2 to 5 are allowed.

Coming to ground No. 6 and 7 which are in respect of addition on account of alleged rent receipt as per Form 26 AS, no arguments have been addressed by the Ld. Counsel in the course of hearing. Therefore, the same are dismissed as not pressed. This appeal is partly allowed.

Coming to appeal for A.Y.2021-22, the ld. Counsel for the assessee submitted that the issue in appeal is with regard to valuation of land as on 01.04.2001. The Ld. Counsel for the assessee submits that since the valuation adopted by the AO was challenged by the assessee, the AO should have referred the matter to the DVO for valuation of FMV as on 01.04.2001.

The Ld. DR has no serious objection in restoring the matter back to the file of the AO with a direction to refer the valuation of the property to the DVO.

Considering the rival submissions we restore the issue in appeal to the file of the AO with a direction to refer the valuation of property as on 01.04.2001 to DVO and complete the assessment afresh and in accordance with law after providing adequate opportunity to the assessee.

In the result, the appeal in ITA No.3031/Del/2021 is partly allowed and appeal in ITA No.2827/Del/2024 is allowed for statistical purpose.