PCIT v. Cinestaan Entertainment Pvt Ltd.

433 ITR 82High Court2021#2345 most cited

What is PCIT v. Cinestaan Entertainment Pvt Ltd. authority for?

The Assessing Officer cannot reject the share valuation method adopted by an assessee under Section 56(2)(viib) if it adheres to prescribed methodologies and commercial prudence. The valuation cannot be challenged based on future performance or by substituting another method.

49

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2022 to 2026.

Also referred to as

PCIT v. Cinestaan Entertainment Pvt Ltd · Section 56(2)(viib) · valuation of shares · fair market value · NAV method · DCF method · AO power to change valuation method · commercial prudence · deletion of addition

Sections most often in play

Section 1961Section 56(2)(viib)Section 143(3)Section 1962Section 56(2)(viib) of the Income Tax ActSection 142(1) of the Income Tax ActSection 143(1) of the Income Tax ActSection 251(1)
Read the full judgment

Issues it is cited on

nav methoddcf methodsection 56(2)(viib)valuation of sharessection 52(2)commercial rightsstrategic investmentsection 56(2)intangible assetssection 60date of transfersection 56(2)(vii)

Judgments citing PCIT v. Cinestaan Entertainment Pvt Ltd.

DCIT, Central Circle-17, New Delhi vs. Caddie Hotels Pvt Ltd., New Delhi

In the result the appeal of the assessee in ITA No

ITA 1724/DEL/2022[2017-18]Status: DisposedITAT Delhi21 Jul 2023AY 2017-18

Bench: Shri N.K. Billaiya & Shri Anubhav Sharma

For Appellant: Shri Ajay Vohra, AdvFor Respondent: Shri T. James Singson, CIT- DR
Section 143(3)Section 263Section 56(2)Section 56(2)(viib)

…find error in the valuation method but none of the errors qualifies the test laid down by the Hon'ble High Court of Delhi. Reference was made to the decision of the Hon'ble Jurisdictional High Court of Delhi in the case of PCIT Vs. Cinestaan Entertainment 433 ITR 82. 16 Before us, the ld. DR strongly supported the findings of the Assessing Officer. Referring to the decision of the Hon'ble High Court of Delhi in the case of Cinestaan Entertainment [supra] the ld. DR pointed out that in that case since no alternative method of valuation was provided, the Hon'ble High Court accepted the discounted cash flow…

DCIT, Central Circle-17, New Delhi vs. Caddie Hotels Pvt. Ltd., Delhi

In the result the appeal of the assessee in ITA No

ITA 1723/DEL/2022[2016-17]Status: DisposedITAT Delhi21 Jul 2023AY 2016-17

Bench: Shri N.K. Billaiya & Shri Anubhav Sharma

For Appellant: Shri Ajay Vohra, AdvFor Respondent: Shri T. James Singson, CIT- DR
Section 143(3)Section 263Section 56(2)Section 56(2)(viib)

…find error in the valuation method but none of the errors qualifies the test laid down by the Hon'ble High Court of Delhi. Reference was made to the decision of the Hon'ble Jurisdictional High Court of Delhi in the case of PCIT Vs. Cinestaan Entertainment 433 ITR 82. 16 Before us, the ld. DR strongly supported the findings of the Assessing Officer. Referring to the decision of the Hon'ble High Court of Delhi in the case of Cinestaan Entertainment [supra] the ld. DR pointed out that in that case since no alternative method of valuation was provided, the Hon'ble High Court accepted the discounted cash flow…

DCIT, Central Circle-17, New Delhi vs. Caddie Hotels P.Ltd, New Delhi

In the result the appeal of the assessee in ITA No

ITA 1722/DEL/2022[2015-16]Status: DisposedITAT Delhi21 Jul 2023AY 2015-16

Bench: Shri N.K. Billaiya & Shri Anubhav Sharma

For Appellant: Shri Ajay Vohra, AdvFor Respondent: Shri T. James Singson, CIT- DR
Section 143(3)Section 263Section 56(2)Section 56(2)(viib)

…find error in the valuation method but none of the errors qualifies the test laid down by the Hon'ble High Court of Delhi. Reference was made to the decision of the Hon'ble Jurisdictional High Court of Delhi in the case of PCIT Vs. Cinestaan Entertainment 433 ITR 82. 16 Before us, the ld. DR strongly supported the findings of the Assessing Officer. Referring to the decision of the Hon'ble High Court of Delhi in the case of Cinestaan Entertainment [supra] the ld. DR pointed out that in that case since no alternative method of valuation was provided, the Hon'ble High Court accepted the discounted cash flow…

DCIT, Central Circle-17, New Delhi vs. Caddie Hotels P.Ltd, New Delhi

In the result the appeal of the assessee in ITA No

ITA 1721/DEL/2022[2014-15]Status: DisposedITAT Delhi21 Jul 2023AY 2014-15

Bench: Shri N.K. Billaiya & Shri Anubhav Sharma

For Appellant: Shri Ajay Vohra, AdvFor Respondent: Shri T. James Singson, CIT- DR
Section 143(3)Section 263Section 56(2)Section 56(2)(viib)

…find error in the valuation method but none of the errors qualifies the test laid down by the Hon'ble High Court of Delhi. Reference was made to the decision of the Hon'ble Jurisdictional High Court of Delhi in the case of PCIT Vs. Cinestaan Entertainment 433 ITR 82. 16 Before us, the ld. DR strongly supported the findings of the Assessing Officer. Referring to the decision of the Hon'ble High Court of Delhi in the case of Cinestaan Entertainment [supra] the ld. DR pointed out that in that case since no alternative method of valuation was provided, the Hon'ble High Court accepted the discounted cash flow…

Caddie Hotels Pvt. Ltd., Delhi vs. Pr. CIT Central Circle 17, Delhi

In the result the appeal of the assessee in ITA No

ITA 2014/DEL/2021[2014-15]Status: DisposedITAT Delhi21 Jul 2023AY 2014-15

Bench: Shri N.K. Billaiya & Shri Anubhav Sharma

For Appellant: Shri Ajay Vohra, AdvFor Respondent: Shri T. James Singson, CIT- DR
Section 143(3)Section 263Section 56(2)Section 56(2)(viib)

…find error in the valuation method but none of the errors qualifies the test laid down by the Hon'ble High Court of Delhi. Reference was made to the decision of the Hon'ble Jurisdictional High Court of Delhi in the case of PCIT Vs. Cinestaan Entertainment 433 ITR 82. 16 Before us, the ld. DR strongly supported the findings of the Assessing Officer. Referring to the decision of the Hon'ble High Court of Delhi in the case of Cinestaan Entertainment [supra] the ld. DR pointed out that in that case since no alternative method of valuation was provided, the Hon'ble High Court accepted the discounted cash flow…

Thinkstations Learning Private Limited, New Delhi vs. ACIT Circle-8(1), New Delhi

In the result, both the appeals of the assessee are allowed

ITA 9824/DEL/2019[2015-16]Status: DisposedITAT Delhi04 Jul 2023AY 2015-16

Bench: Shri Narendra Kumar Billaiya & Shri Challa Nagendra Prasad

For Appellant: Advocate
Section 139(1)Section 142(1)Section 143(2)Section 143(3)Section 56(2)(viib)

…ounsel also contended that the shares subscribed by the parties are not related to the assessee and the genuineness of the investment is not doubted. 9. We observe that the Hon’ble Delhi High Court in the case of Pr. CIT Vs. Cinestaan Entertainment Pvt. Ltd. [433 ITR 82 (Del)] an identical issue came up before the Hon’ble court and the Hon’ble court held that the shares had not been subscribed to by any sister ITA. Nos. 9824 & 7345/Del/2019 concern or closely related person but by outsider investors. It was further held that the methodology adopted was a recognized method of valuation and the Revenue was unable…

Thinkstations Learning Private Limited, New Delhi vs. ACIT Circle-25(1), New Delhi

In the result, both the appeals of the assessee are allowed

ITA 7345/DEL/2019[2016-17]Status: DisposedITAT Delhi04 Jul 2023AY 2016-17

Bench: Shri Narendra Kumar Billaiya & Shri Challa Nagendra Prasad

For Appellant: Advocate
Section 139(1)Section 142(1)Section 143(2)Section 143(3)Section 56(2)(viib)

…ounsel also contended that the shares subscribed by the parties are not related to the assessee and the genuineness of the investment is not doubted. 9. We observe that the Hon’ble Delhi High Court in the case of Pr. CIT Vs. Cinestaan Entertainment Pvt. Ltd. [433 ITR 82 (Del)] an identical issue came up before the Hon’ble court and the Hon’ble court held that the shares had not been subscribed to by any sister ITA. Nos. 9824 & 7345/Del/2019 concern or closely related person but by outsider investors. It was further held that the methodology adopted was a recognized method of valuation and the Revenue was unable…

Sis Prosegur Holdings Pvt Ltd, Patna vs. Pr.CIT-1, Patna

In the result, the appeal of the assessee stands dismissed

ITA 47/PAT/2021[2015-16]Status: DisposedITAT Patna18 May 2023AY 2015-16

Bench: Shri Sanjay Garg & Shri Girish Agrawali.T.A. No.47/Pat/2021 Assessment Year: 2015-16 Sis Prosegur Holdings Pvt. Ltd...…………....….........…..........….…… Appellant Annapoorna Bhawan, Patliputra Telephone Exchange, Kurji, Patna, Bihar-800010 [Pan: Aaucs7524A] Vs. Pcit-1, Patna..................................…………........….....…...…..…..... Respondent Appearances By: Shri Nageswar Rao, Adv., Appeared On Behalf Of The Appellant. Smt. Rinku Singh, Cit-Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : May 18, 2023 Date Of Pronouncing The Order : May 18, 2023 आदेश / Order संजय गग", "या"यक सद"य "वारा / Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Revision Order Dated 25.03.2021 Of The Principal Commissioner Of Income Tax-1, Patna [Hereinafter Referred To As ‘Pcit’] Passed U/S 263 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. The Brief Facts Of The Case Are That The Ld. Pcit While Examining Assessment Records Found That The Assessee During The Year Had Issued 900000 Equity Shares Of Rs.10/- At A Premium Of Rs.90/- Per Share Totalling Rs.100/- Per Share. The Ld. Pcit Further Observed As Under: It Is To Be Noted That, During The Year Under Consideration, The Provisions Of Section 56(2)(Viib) Were Applicable As Per Which If Aggregate Consideration For Issuance Of Shares Is More Than Fair Market

Section 143(3)Section 263Section 56(2)(viib)

…this respect has relied upon the following case laws: i) CIT vs. Sun Engineering Works Pvt. Ltd. [1992] 198 ITR 297 (SC) dated 17.09.1992 ii) CIT vs. L F D Silva [1991] 192 ITR 547 (Kar) dated 27.09.1991 iii) PCIT vs. Cinestaan Entertainment Pvt. Ltd. [2021] 433 ITR 82 (Delhi) dated 01.03.2021 7. Apart from that, the ld. counsel has submitted that the accountant has given valuation following the ICAI guidelines and following one of the recognised method i.e. discounted cash flow method. He has also submitted that the valuer has given only future projections which due to certain factors may not actually give the…

DCIT, Circle-11(1), New Delhi vs. Holisol Logistics P.Ltd, New Delhi

In the result, the appeal of the Revenue stands

ITA 4361/DEL/2018[2014-15]Status: DisposedITAT Delhi30 Aug 2022AY 2014-15

Bench: Dr. B.R.R. Kumar & Shri N.K. Choudhryassessment Year: 2014-15

For Appellant: Sh. Ravi Kant Choudhary, Ld. Sr. DRFor Respondent: Sh. R.K. Mehra, Ld. CA
Section 250Section 36Section 46ASection 56(2)(vii)Section 56(2)(viib)

…ty and liable to be reversed with the decision of the Assessing Officer. 7 DCIT Vs Holisol Logistrics P. Ltd 4.4 On the contrary, the ld. AR while relying upon the judgments passed in the following cases: (i) PCIT v. Cinestaan Entertainment Pvt. Ltd. (2021) 433 ITR 82 (Delhi) (ii) TSY Yatra (P) Ltd. vs. ACIT (2021) 209 TTJ 596 (Delhi) (iii) DCIT vs. Avingna Housing (P) Ltd. (2021) 209 TTJ 8 (Chennai)(UO), submitted that the Hon’ble Courts in the said casesapproved the adopting of the DCF method for valuation of shares u/s. 56(2)(viib) of the Act , therefore, the ld. Commissioner has rightly taken the decision o…