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Facts
The assessee, engaged in manufacturing natural mineral water, filed its return showing a loss. The company issued fresh shares at a premium, with the valuation based on DCF method. The AO made additions under Section 56(2)(viib) and Section 68, but the CIT(A) granted relief for Section 68 additions while upholding those under Section 56(2)(viib).
Held
The Tribunal found that the same set of additional evidence was arbitrarily accepted for one relief and rejected for another. Therefore, the Tribunal admitted the additional evidence and directed the CIT(A) to reconsider the matter afresh.
Key Issues
Whether the CIT(A) erred in rejecting the assessee's additional evidences, particularly when similar evidence was accepted for other reliefs? Whether the valuation of shares issued at a premium was correctly considered in light of the DCF method and accumulated losses?
Sections Cited
246A, 56(2)(viib), 68
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Income Tax Appellate Tribunal, DELHI BENCHES : E : NEW DELHI
Before: SHRI ANUBHAV SHARMA
ORDER
PER ANUBHAV SHARMA, JM:
This appeal has been preferred by the Assessee against order dated 30.11.2023 of the learned Commissioner of Income Tax (Appeals), NFAC, Delhi in Appeal No.CIT(A), Delhi-6/10071/2016-17, arising out of order dated 28.03.2016 passed u/s 246A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the ITO, Ward 17(2), New Delhi (hereinafter referred to as ‘the AO’, for short) pertaining to Assessment Year 2013-14.
At the time of hearing, it was found that the assessee has raised a ground No.2 alleging that the ld.CIT(A) has erred in rejecting the assessee’s additional evidences. On going through the impugned order, it comes up that the appellant is a company engaged in the business of manufacturing, bottling & packaging of natural mineral water at its factory situated at Paonta Sahib, Himachal Pradesh. Assessee filed its return of income at loss of Rs 27,73,570/- on 30.09.2013. The appellant is a closely held company that issued fresh shares during the AY 2013- 14. Assessee issued 150,000 equity shares of face value of Rs 10/- per share issued at @ 200/- per share, amounting to Rs 3 crores, to enhance its working capital. The new shares were issued to the new independent investors as well as to old investors, who after appraisal of the projects and its prospects mutually negotiated the price, after independent Valuation of the Shares using DCF method, certified by a Chartered Accountant. The book value of the shares as per audited accounts as on 31.3.2012 was Rs 0 due to accumulated losses in the Company. Another formal valuation report was acquired by the new investors, before making the decision to invest, to assess the value of the company, which was kept & not shared by the old management and thus assessee was prevented from submitting the same during the course of assessment, and the same valuation report was made available during the Remand proceedings and was submitted before the Ld AO.
The Ld AO issued a demand for Rs 106 lacs for deemed Income of Rs.285 lacs under Sec 56(2)(viib) and Rs 7.5 lacs under Sec 68 and the Ld. AO did not accept the impact of imbedded intrinsic value of the Company on the DCF valuation method. The order was appealed against and the Ld CIT(A) whilst granting relief for additions made u/s Sec 68, upheld the additions under Sec 56(2)(viib), citing that additional information could not be accepted, and aggrieved with the order of the learned CIT (A) the present appeal is preferred. We find that arbitrarily, the same set of additional evidences have been accepted with regard to giving one relief to the assessee and rejected for denying the other relief. Thus, in regard to the relief denied for which the assessee has raised grounds on merits, vide ground No.1, we admit the additional evidences of the assessee and direct the ld.CIT(A) to take into consideration the additional evidences and pass an order afresh. Needless to say, an opportunity of hearing shall be given afresh to the assessee. The appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 31.10.2025. Sd/- Sd/- (AMITABH SHUKLA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 31st October, 2025. dk Copy forwarded to: