M/S NABH MULTITRADE PVT. LTD.,JAIPUR vs. INCOME TAX OFFICER, JAIPUR

PER VIJAY PAL RAO, JM : This appeal by the assessee is directed against the order dated 28th

December, 2017 of ld. CIT (A)-1, Jaipur for the assessment year 2014-15. The

assessee has raised the following grounds :-

“ 1. On the facts and in the circumstances of the case and in law, ld. CIT (A) has grossly erred in confirming addition of Rs. 71,25,000/- made by ld. AO u/s 56(2)(viib) of the Income Tax Act, 1961 on the allegation of Share premium received by assessee was in excess of Fair Market Value of shares. Appellant prays addition so made deserves to be deleted.

1.1 That ld. CIT (A) has further erred in confirming the addition made by ld. AO by completely disregarding the submission made and documentary evidences in support of contention that Fair Market Value as determined in accordance with Rule 11U

2 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

and 11UA was even more than issue price of shares. Appellant prays addition so made deserves to be deleted.

1.2 That the ld. CIT (A) has further erred in confirming addition of Rs 71,25,000/- made by ld. AO u/s 56(2)(viib) of the Income Tax Act 1961 without considering the submission filed and further without considering the additional evidences for the sole reason that the same were not filed alongwith prayer u/r 46 of Income Tax Rules, 1962. It is thus prayed that addition so made deserves to be deleted.

The hearing of the appeal is concluded through Video Conference due to prevailing

condition of COVID 19 pandemic.

construction of flats and trading in shares. The assessee filed its return of income on 30th September, 2014 declaring Nil income. During the course of assessment

proceedings the AO noted that the assessee has issued 37,500 shares of Rs. 10/-

each for a price of Rs. 200/- per share which included a premium of Rs. 190/- per

share. In order to substantiate the value of its equity shares and premium thereon,

the assessee submitted Valuation Report dated 17.02.2014 of Registered Valuer as

per Rule 11UA of the IT Rules. The AO noted that the Valuer has estimated the fair market value of vacant piece of land at Rs. 2,93,00,000/- as on 17th February, 2014

whereas as per the Balance Sheet the assessee has shown the value of the said land

no. 142, Ram Gali No. 3, Raja Park, Jaipur at Rs. 1,30,00,000/- being the cost of

acquisition of the land as on 16.03.2013. The AO was of the view that the

3 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

Registered Valuer has not substantiated the value of the property on any

documentary evidence of any kind and consequently the AO declined to accept the

fair market value of the assets of the assessee to substantiate the value of the

equity shares issued at premium. The AO though referred the valuation of the

assets to Valuation Cell of the Department, however, till the date of assessment

order no Valuation Report was received by the AO from the DVO and consequently

the AO made the addition of the entire share premium amount of Rs. 17,25,000/-

under section 56(2)(viib) of the IT Act. The assessee challenged the action of the

AO before the ld. CIT (A) and contended that the value of the shares and issue price

has been substantiated by the assessee with the fair market value of the assets of

the assessee in terms of section 56(2)(viib) of the IT Act. The assessee has also

filed the Valuation Report as per the Discounted Free Cash Flow method provided

under Rule 11UA of the IT Rules. The fair market value was determined by the

Registered Valuer at Rs. 230/- per share based on market value of the assets of the

assessee company which was higher than the issue price whereas the value as per

the Discounted Free Cash Flow method was determined at Rs. 178/- per share. The

ld. CIT (A) though held that the provisions of section 68 and section 115BBE are not

applicable in this case being the addition made under section 56(2)(viib), however,

the ld. CIT (A) has not accepted the valuation of the shares as per the Valuation

Report of the Registered Valuer whereby the value was determined by adopting the

fair market value of the assets of the assessee as per the Discounted Free Cash Flow

method prescribed under rule 11UA of the IT Rules. The ld. CIT (A) has concurred

with the view of the AO as far as the fair market value of the assets of the assessee

4 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

and particularly the plot of land which was valued by the Registered Valuer at Rs.

2,93,00,000/- which was considered by the AO as per the book value and cost of

acquisition in the hands of the assessee. The ld. CIT (A) has questioned the

correctness of the value determined by the Registered Valuer. As regards the

valuation determined on the basis of Discounted Free Cash Flow method, the ld. CIT

(A) has declined to accept the same on the ground that it was not produced before

the AO.

value of the shares allotted during the year under consideration, the assessee has

submitted the Valuation Report wherein the Registered Valuer has determined the

value of the equity shares at Rs. 230/- per share on the basis of the fair market

value of the assets of the assessee. He has referred to the Valuation Report and

submitted that the Registered Valuer has applied the prevailing market rates in the

area for the purpose of fair market value of the land being asset of the assessee at

Rs. 2,93,00,000/- which was not accepted by the AO. However, the AO has not

brought on record any contrary fact or material to show that the value determined

by the Registered Valuer is not based on correct facts being the prevailing market

price of the land. He has further contended that as per the Explanation to Section

56(2)(viib), the fair market value of the shares shall be the value as may be

determined in accordance with the method prescribed under rule 11UA of the IT

Rules or as may be substantiated by the assessee company based on the value on

the date of issue of shares of its assets including intangible assets. It is also

provided that whichever valuation is higher is to be taken into consideration.

5 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

Therefore, the higher of the valuation determined as per the various methods

prescribed under section 56(2)(viib) of the Act. The AO cannot adopt the lesser

valuation but it is mandate of the provisions that he has to consider the highest

valuation arrived on the basis of various methods. The assessee apart from the

value based on its assets as on the date of issue of shares also submitted the

valuation based on the Discounted Free Cash Flow method provided under Rule

11UA of the IT Rules. Though the AO has referred the valuation to the Valuation Cell

of the Department, however, no Valuation Report was received from the DVO. Thus

the ld. A/R has submitted that once the valuation of the shares were determined at

Rs. 230/- per share which is more than the price at which the assessee has issued

the shares, then no addition is called for under section 56(2)(viib) of the IT Act. The

AO as well as the ld. CIT (A) has rejected the valuation without pointing out a

specific defect in the valuation. The AO has adopted the book value of the assets

which is not permissible as per the method provided under sub clause (ii) of

Explanation to section 56(2)(viib) as well as Discounted Free Cash Flow method as

provided under Rule 11UA of the IT Rules. Hence the view of the AO as well as ld.

CIT (A) is contrary to the provisions of law. In support of his contention he has

relied upon the following decisions :-

M/s. Rameshwaram Strong Glass (P) Ltd. vs.ITO in ITA No. 884/JP/2016 dated 12.07.2018 (Jaipur).

M/s. Cinestaan Entertainment P. Ltd. vs. ITO in ITA No. 8113/Del/2018 dated 27.05.2019 (Delhi).

DCIT vs. Varsity Education Management Pvt. Ltd. in ITA No. 6991/Mum/2016 dated 24.10.2018 (Mumbai).

6 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

before the ld. CIT (A), the assessee has changed its stand and submitted the

valuation based on Discounted Free Cash Flow method as against the valuation

based on fair market value of the assets of the assessee on the date of issue of

shares. Since the valuation based on Discounted Free Cash Flow method was not

submitted before the AO, therefore, the ld. CIT (A) was justified in refusing to

accept such a valuation. Further, the valuation as determined by the Registered

Valuer is based on unaudited Balance Sheet and, therefore, the book value as per the Balance Sheet as on 31st March, 2013 was taken for determining the fair market

value of the equity shares. The ld. CIT (A) has considered the Net Assets Value

method and therefore, rejected the value claimed by the assessee. The ld. CIT (A)

has accordingly confirmed the addition made by the AO.

record. There is no dispute that during previous year relevant to assessment year

under consideration the assessee issued 37,500 equity shares of Rs. 10/- each for a

price of Rs. 200/- each which includes the share premium of Rs. 190/- per share. To

substantiate the value of equity shares, the assessee filed the Valuation Report

whereby the Registered Valuer has determined the value of the shares at Rs. 230/-

per share. The sole controversy is around the value of the land being the asset of

the assessee company which was acquired by the assessee at Rs. 1,30,00,000/- and

shown in the Balance sheet at cost price whereas the Registered Valuer has adopted

the fair market value of the said land as on the date of issue of the shares at Rs.

2,93,00,000/-. It is pertinent to note that for the purpose of fair market value of

7 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

the shares, the value has to be determined in accordance with the methods

prescribed under rule 11UA of the IT Rules or the value may be substantiated by the

assessee company to the satisfaction of the AO based on the value of its assets

including intangible assets as on the date of issue of shares whichever is higher.

Thus the fair market value determined by adopting different methods is relevant

only for the purpose of choosing the highest value and option is definitely given in

favour of the assessee for taking the highest value. For ready reference we

reproduce the provisions of section 56(2)(viib) as under :-

Provided that this clause shall not apply where the consideration for issue of shares is received— (i) by a venture capital undertaking from a venture capital company or a venture capital fund; or (ii) by a company from a class or classes of persons as may be notified67 by the Central Government in this behalf. Explanation.—For the purposes of this clause,— (a) the fair market value of the shares shall be the value— (i) Xxxxxx xxxxxx

(ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature,

8 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

whichever is higher;

If the issue price received by the assessee is more than the fair market value of the

shares as determined on the basis of methods provided under section 56(2)(viib),

then the difference between the consideration received and the fair market value of

the shares will be added as Income from other sources under the provisions of

section 56(2)(viib) of the Act. The Explanation to section 56(2)(viib) contemplates

various methods to substantiate the market value of the shares issued by the

company and, therefore, as per clause (a) of the Explanation, the fair market value

of the shares shall be the value as may be determined in accordance with the

method prescribed under rule 11UA of the IT Rules or it may be substantiated by the

company to the satisfaction of the AO based on the value of the assets as on the

date of issue of shares including the intangible assets of the assessee company.

Therefore, option is with the assessee to adopt a method which is more suitable and

giving higher fair market value of the shares. Sub-clause (ii) of clause (a) of the

Explanation to Section 56(2)(viib) gives the power to the AO to accept the valuation

subject to his satisfaction. Therefore, if the value determined as per the fair market

value of the assets of the assessee is higher than the value determined as per the

method prescribed under rule 11UA of the IT Rules, then the value so determined

based on the fair market value of the assets as on the date of issue of shares has to

be taken into consideration for determination of fair market value of the shares and

differential consideration, if any, to be taken into account for the purpose of making

addition under section 56(2)(viib) of the Act. There is no dispute in the case in hand

9 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

that the value determined as per the fair market value of the assets of the assessee

company as on the date of issue of shares is Rs. 230/- per share which is higher

than the value determined as per the Discounted Free Cash Flow method at Rs.

178/- per share. The AO as well as the ld. CIT (A) has questioned the value

determined as per the fair market value of the assets and particularly on the point of

fair market value of the land bearing no. 142, Ram Gali No. 3, Raja Park, Jaipur.

The AO referred the valuation to the DVO but not brought on record any valuation

determined by the DVO to controvert the valuation determined by the Registered

Valuer. Thus in the absence of any contrary material or facts brought on record, the

valuation determined by the Registered Valuer based on the fair market value of the

assets of the assessee company cannot be rejected. The AO as well as the ld. CIT

(A) was of the view that the value of the land has to be taken as per the book value

and cost of acquisition in the hands of the assessee. But as per the Explanation, the

fair market value of the shares is required to be substantiated by the company on

the basis of the value of the assets including the intangible assets on the date of

issue of shares which means that the fair market value of the assets as on the date

of issue of shares. The views of the AO as well as the ld. CIT (A) are relevant only

for the purposes of valuation based on the Net Assets Method provided under Rule

11UA of the IT Rules. Thus when the said method was not giving the higher

valuation, then the valuation which gives the higher fair market value of the shares

has to be adopted. There is a difference of net assets which is based on the net

book value of the assets of the company and the fair market value of the assets as

on the date of issue of shares. Land being a non depreciable asset, will carry a fair

10 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

market value based on the prevailing market price in the area. The Registered

Valuer as per the Valuation Report has specifically stated that the fair market value

of the land is taken as per the local survey done by him and, therefore, in case, if

the AO was not satisfied with the fair market value of the shares based on the value

of the assets, then he has to bring on record the specific defect as well as the

contrary valuation to be determined by the DVO. Without bringing such contrary

material or counter valuation report, the valuation as determined by the Registered

Valuer cannot be rejected. We further note that the ld. CIT (A) has rejected the

valuation based on Discounted Free Cash Flow method at threshold without verifying

the fact that the said Valuation Report was also produced before the AO during the

assessment proceedings. The only mistake is the reference of the letter given by

the assessee i.e. the date whereas the AO has accepted this fact that the A/R of the

assessee company submitted his report as per Rule 11UA along with the Valuation

Report dated 07.02.2014 of the Registered Valuer. We have also verified from the

record that the assessee produced all these Valuation Reports based on different

methods before the AO and, therefore, rejection of the same by the ld. CIT (A) is

not based on correct facts on record. Further, the ld. CIT (A) has also misconstrued

the provisions of section 56(2)(viib) as well as Rule 11UA(2)(a) of the IT Rules. The

observations of the ld. CIT (A) in para (vii) at page 20 of the impugned order is as

under :-

“ (vii) Thus, fair market value of the shares is to be determined on the basis of book value of its assets and liabilities on the valuation date or on the basis of discounted free cash flow method; and it is the

11 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

appellant who has to exercise such option. It may be mentioned that the appellant has not chosen any of the above methods for valuation of its unquoted equity shares. In fact, it has valued the equity shares at Rs. 230/- on the basis of the market value of its assets, on the basis of valuation report of the Chartered Accountant dated 28.02.2014 as stated in Explanation to Section 56(2)(viib) of the Act but it was failed to substantiate that valuation.”

Once the assessee has produced all the valuation reports based on Discounted Free

Cash Flow method as well as the fair market value of the assets as on the date of

issue of the shares, then this observation of the ld. CIT (A) that the assessee has

failed to exercise an option of adopting the method is contrary to the record.

Further, despite the fact that all the valuations are available on record, the ld. CIT

(A) has again failed to give the credit to the extent of the valuation being the fair

market value of the shares based on Net Assets Value method at least. Failure on

the part of the ld. CIT (A) to allow the credit to the extent of the fair market value

even based on the Net Assets Value method, it appears that the ld. CIT (A) was not

functioning as an independent appellate authority but reflecting as an authority to

collect the maximum revenue. Accordingly, in the facts and circumstances of the

case when the assessee has substantiated the value of the shares issued at a price

of Rs. 200/- by a fair market value of Rs. 230/- which is more than the issue price,

then no addition is called for under section 56(2)(viib) of the Act. This Tribunal in

the case of M/s. Ramehwaram Strong Glass (P) Ltd. vs. ITO (supra) has considered

this issue of adopting the prescribed method at the choice of the assessee in para

4.5 as under :-

12 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

“4.5 We have heard the rival contentions and perused the materials available on record including the written submissions and case laws relied upon during the course of hearing. From the order of the ld. CIT(A) it emerges that the ld.AR and Smt. Dhanwanti Gupta, CA appeared and the matter was discussed with them and they were asked to furnish the actual figures in respect of F.Y. 2013-14, 2014-15 & 2015-16. In compliance of such direction, the ld. AR and the ld. CA attended before the CIT(A) on 29.08.2016 and filed another valuation report wherein the value of the share was worked out @ 65.31 per share. A copy of the said report is placed on Pages 47-50 of the assessee’s paper book. It is clear from the order of the ld. CIT(A) that he made a comparison of the last report submitted to him on 29.08.2016 based on the actual figures with the earlier reports submitted and prepared by the CA as per Rule 11UA(2)(b) on DCF method, and the ld. CIT(A) finding difference between the figure of the two, rejected the report submitted by the assessee as absolutely unreliable and without any basis. Thus, the basic dispute between the parties is whether the authorities below could have applied the Net Asset Value as prescribed u/r 11UA(2)(a) or whether the assessee has got a right to opt for the method of valuation given u/r 11UA(2)(b) and secondly, if the assessee is entitled to the adopt the DCF method to estimate the fair market value, the valuation submitted by the assessee was fair and reasonable in accordance with Rule 11UA(2). Before proceeding further, we would like to reproduce the relevant Provisions contained u/s 56(2)(vii)(b) of the Act and the relevant Rules, which reads as under: - “S. 56(2) (viia) where a firm or a company not being a company in which the public are substantially interested, receives, in any previous year, from any person or persons, on or after the 1st day of June, 2010 , any property, being shares of a company not being a company in which the public are substantially interested,— (i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration :

Provided that this clause shall not apply to any such property received by way of a transaction not regarded as transfer under clause (via) or clause (vic) or clause (vicb) or clause (vid) or clause (vii) of section 47. Explanation.—For the purposes of this clause, "fair market value" of a property, being shares of a company not being a company in which the public are substantially interested, shall have the meaning assigned to it in the Explanation to clause (vii);

13 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

(viib) where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares: Provided that this clause shall not apply where the consideration for issue of shares is received— (i) by a venture capital undertaking from a venture capital company or a venture capital fund; or (ii) by a company from a class or classes of persons as may be notified by the Central Government in this behalf.

Explanation.—For the purposes of this clause,— (a) the fair market value of the shares shall be the value— (i) as may be determined in accordance with such method as may be prescribed9; or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, whichever is higher; (b) "venture capital company", "venture capital fund" and "venture capital undertaking" shall have the meanings respectively assigned to them in clause (a), clause (b) and clause (c) of Explanation to clause (23FB) of section 10;

“[Rule 11UA(2) Notwithstanding anything contained in sub-clause (b) of clause (c) of sub-rule (1), the fair market value of unquoted equity shares for the purposes of sub-clause (i) of clause (a) of Explanation to clause (viib) of sub-section (2) of section 56 shall be the value, on the valuation date, of such unquoted equity shares as determined in the following manner under clause (a) or clause (b), at the option of the assessee, namely:—

(a) the fair market value of unquoted equity shares (A-L) x (PV) (PE)

where,

14 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

A = book value of the assets in the balance-sheet as reduced by any amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Income-tax Act and any amount shown in the balance-sheet as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset; L = book value of liabilities shown in the balance-sheet, but not including the following amounts, namely:— (i) the paid-up capital in respect of equity shares;

(ii) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company;

(iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation;

(iv) any amount representing provision for taxation, other than amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Income-tax Act, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;

(v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities;

(vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares;

PE = total amount of paid up equity share capital as shown in the balance-sheet; PV = the paid up value of such equity shares; or (b) the fair market value of the unquoted equity shares determined by a merchant banker or an accountant as per the Discounted Free Cash Flow method.]”

However, there is no dispute between the parties that Rule 11UA(1) is not applicable on the facts and circumstances of the present case which is a provision of general nature whereas Rule 11UA(2) is a specific provision providing for the valuation of the unquoted equity shares. After going through the relevant Section and the Rules, in our opinion, the matter of valuation of unquoted equity shares, has been completely left to the discretion of the assessee. It is his option whether to choose NAV Method (Book Value) under clause (a) or to choose DCF Method under clause (b) and the AO cannot adopt a method of his own choice.

15 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

The authorities below cannot compel the assessee to choose NAV Method only as against DCF Method. When the legislation has conferred an option upon the assessee to choose a particular method, the valuation of the shares has to be in accordance with such method only i.e. DCF method in the present case u/r 11UA(2)(b) r/w S. 56(2)(viib). In the case of Medplus Health Services (P) Ltd vs ITO (supra), the ITAT, Hyderabad Coordinate Bench, after taking into consideration various decisions, has observed as under: “11. On a careful reading of the judgments discussed above, it is seen that the Courts have held that where a method has been prescribed by the legislature, that method alone shall be followed for computation of the fair market value. The A.O. and the Ld. CIT(A) have not followed the relevant provisions for adopting or computing the fair market value of the shares, but have adopted the market value at which some of the shares have been purchased by the assessee as FMV. This, in our opinion, is not correct. As held by the Courts in the above judgments, the A.O. has to compute the fair market value in accordance with the prescribed method but cannot adopt the market value as fair market value under Section 56(2)(viia) of the Act. The legislature in its wisdom has also given a formulae for computation of the fair market value which cannot be ignored by the authorities below.”

It is observed that in the instant case, the assessee company had exercised an option to value the share by DCF Method however, we find that the AO has worked out the value based on NAV Method though in the body of assessment order he has referred to Rule 11UA(2)(b) but in substance, he has valued the share based on the book value figures only by considering the value of the assets shown in the Balance Sheet as on 31.03.2013 being the land valuing Rs. 3,27,690/- and the liabilities. The ld. CIT(A) also, though considered the case in context of Rule 11UA(2)(b) yet however, his act of asking the assessee & his CA to prepare and submit a valuation report only on actual figures, is nothing but a valuation done on the basis of NAV Method u/r 11UA(2)(a) only. From the facts thus, it is clear that the authorities below wanted to impose upon the method of valuation of their own choice, completely disregarding the legislative intent which has given an option to the assessee to choose any one of the two methods of valuation of his choice. When the law has specifically provided a method of valuation and the assessee exercised an option by choosing a particular method (DCF here), changing the method or adopting a different method would be beyond the powers of the revenue authorities. Permitting the revenue to do so will render the clause (b) of Rule. 11UA(2) as nugatory and purposeless. Thus, to this extent the action of the authorities below is not justified and it is held that the assessee has got all the right to choose a method which, cannot be changed by the AO. Further, though the AO can scrutinize the valuation report only if some arithmetical mistakes are found, he may make necessary adjustments. But if he finds the working of the C.A. or the assumptions made as erroneous or contradictory, he may suggest the necessary modification and alterations therein provided the same are based on sound reasoning and rational basis and for this purpose the AO may call for independent expert valuer’s report or may also invite comment on the report furnished by the assessee’s valuer as the AO is not an expert. It is not open

16 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.

for the AO to challenge or change the method of valuation, once opted by the assessee and to modify the figures as per his own whims and fancies. In any case, the revenue could not ask to prepare the valuation report based on actuals which is not contemplated in Rule 11UA(2)(b).”

Accordingly in view of the foregoing discussions as well as the decision of the

Coordinate Bench, we set aside the orders of the authorities below and consequently

the addition made by the AO under section 56(2)(viib) is deleted.

Order is pronounced in the open court on 09/10/2020.

Sd/- Sd/- (foØe flag ;kno) (fot; iky jkWo ½ (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member

Jaipur Dated:- 09/10/2020. Das/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

17 ITA No. 269/JP/2018 M/s. Nabh Multitrade Pvt. Ltd., Jaipur.