M/S. AMBATTUR DEVELOPERS PVT. LTD.,CHENNAI vs. ITO, CORPORATE WARD-1(1), CHENNAI

आयकर अपील य अ
धकरण, ‘सी’ यायपीठ, चेनई
IN THE INCOME TAX APPELLATE TRIBUNAL
‘C’ BENCH, CHENNAI

ी मनु कुमार
गर, यायक सद य एवं ी एस. आर. रघुनाथा, लेखा सद य के सम#
BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER

आयकर अपील सं./ITA No.: 2601/Chny/2024
नधा$रण वष$ / Assessment Year: 2015-16

M/s. Ambattur Developers Private
Limited,
(Amalgamated with Ambattur
Hotels Private Limited)
No. 86/E2, Industrial Estate,
Ambattur, Chennai - 600 058. Tamil Nadu.

vs.
Income Tax Officer,
Corporate Ward- 1(1),
Chennai.
[PAN: AAECA-7490-D]
(अपीलाथ&/Appellant)

('(यथ&/Respondent)

अपीलाथ& क) ओर से/Appellant by : Shri. R. Vijayaraghavan, Advocate
'(यथ& क) ओर से/Respondent by : Shri. Bipin, C.N., CIT

सुनवाई क) तार ख/Date of Hearing
:
09.09.2025
घोषणा क) तार ख/Date of Pronouncement
: 11.11.2025

आदेश /O R D E R

PER S.R.RAGHUNATHA, AM :

This appeal by the assessee is filed against the order of the learned
Commissioner of Income Tax (Appeal), NFAC, Delhi, (in short Ld.CIT(A)) for the assessment year 2015-16, vide order dated 12.08.2024. 2. The grounds raised by the assessee are as follows:

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ITA. No: 2601/Chny/2024

1)
The Order of the Commissioner of Income tax, National
Faceless Appeal Centre (NFAC), Delhi is contrary to law, facts and in the circumstances of the case.
2)
The CIT(A) NFAC erred in confirming the addition made under section 56(2)(vii)(b) to the extent of Rs. 72,69,89,420/- in respect of shares allotted at a premium of 1,767/- per share.
3)
The CIT(A) / NFAC erred in estimating the Fair market value of shares at 837.24 per shares instead of Rs.1,777/- as submitted by the Appellant.
4)
The CIT(A) /NFAC should have appreciated that, even under 11UA, what is being valued is the conglomeration of assets which together form a thriving running hotel business and the valuation should be based on/ estimated on the value of the business on commercial principles on what the business concern would fetch in the market and not on the basis of guideline value of a property which is not comparable.
5)
The benefits accruing to association with an internationally recognized brand "HYATT" would certainly enhance the value of the business. Such benefits are real if intangible in nature and hence to be valued as has been done by the Appellant. The CIT(A) NFAC erred in completely ignoring the addition to the valuation due to the association with such an internationally recognized brand in the Hotel industry as "HYATT".
6)
The CIT(A) / NFAC, in effect has concluded that the value of shares of the Hotel will not alter whether they have and association with а internationally recognized brand or operate without any association with a recognized brand name. It is against all commercial principles of valuation of business.
7)
The CIT(A) / NFAC erred in adopting the value of the land of the company@ ₹12,000/- per sq.ft based on the value of some vacant land in the nearby area without considering whether such lands can be considered as comparable in value ignoring the fact that on the Appellant's land a Luxury Five Star Hotel is running and the land cannot be valued as a vacant land at the guideline value.
8)
The CIT(A) / NFAC while assuming value of the land value should be only 12,000 per square feet On the basis of sale of some other properties based on information by SRO, about which he has not specified nor discussed the characteristics of the such properties which he has taken as comparison in relation to the Appellant's land which has been fully developed into a Five Star Luxury Hotel.

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ITA. No: 2601/Chny/2024

(9)
The CIT(A) / NFAC ought to have appreciated that in the case of a High end luxury hotel with Five star facilities, the Land and the hotel building with facilities should be valued jointly at the market value.
AO cannot take the land value independently and compare with some ordinary regular empty land and adopt it as a comparative figure for land on which a running Five Star Hotel is in existence and running.

10)
The CIT(A) / NFAC ought to have appreciated that a Architecturally Planned operational building cannot be valued as the aggregate of the cost of individual components.
11)
The CIT(A) / NFAC ought to have appreciated that what was being valued was the business and land and the hotel building constitute a composite business asset which cannot be segregated and land and building valued separately.
12)
The valuation reports made by recognized valuers taking into account the intangible benefits computed on the basis of accepted valuation principles, cannot be ignored lightly without any commercial reasons, and also value the land merely at the guideline value.
CIT(A)/NFAC ought to have appreciated that it is a case of business valuation and not capital gains computation under Section 50C.
13)
The combined value of the land and the Hotel building with the facilities is well worth the Rs. 365.12 Crores and the total tangible assets Rs. 470.11 Crores as taken by the Appellant and the value of intangible assets at Rs. 26 Crores as given by Registered valuers.
Neither the AO or the CIT(A) have not given any reason as to why it did not reflect the correct market value of the running Hotel facility.
14)
The AO/CIT(A) action of segregating the land portion alone and valuing the same on the basis of some sale of nearby land is not comparable and is not based on any rudimentary commercial principles.
15)
The CIT(A) / NFAC should have appreciated that the valuation should be done from the angle of Investors and what would the business was worth and whether it would be a good risk to invest.
16)
The CIT(A) / NFAC ought to have appreciated that in valuing assets of the business for the purpose of valuing the business, value of contribution of each asset as a constituent of the overall business value has to be considered and not what individual asset would fetch if sold in the market, because the valuation is not made as if the assets are all individually sold in the open market. Value of synergy cannot be ignored.

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ITA. No: 2601/Chny/2024

17)
For all and other reasons, documents and evidence that may be submitted the order of the CIT(A) bet aside and delete the addition made u/s sec 56(2)(viib).

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ITA. No: 2601/Chny/2024