O R D E R

% 02.09.2024 CM APPL. 50262/2024 in ITA 470/2024, CM APPL. 50271/2024 in ITA 471/2024, CM APPL. 50275/2024 in ITA 472/2024, CM APPL. 50278/2024 in ITA 473/2024 Bearing in mind the disclosures made, the delay in refiling the appeal is condoned.

The applications shall stand disposed of.

ITA 470/2024, ITA 471/2024, ITA 472/2024 & ITA 473/2024

1. The Principal Commissioner impugns the order of the Income Tax Appellate Tribunal1 dated 21 July 2023 and posits the following questions of law: -

“A. Whether in facts & circumstances of the case and applicable law, the Ld. ITAT and Ld. CIT(A) has erred by ignoring that the valuation done by the assessee/valuer had adopted a demonstrably wrong approach, the method of valuation was made on a wholly erroneous basis and the valuer committed a mistake which goes to the root of the valuation process?

B. Whether in facts & circumstances of the case and applicable law, the Ld. ITAT and Ld. CIT(A) have erred in law by holding that the Assessing Officer cannot scrutinise the valuation report and determine the valuation afresh even by himself?

C. Whether in facts & circumstances of the case and applicable law, the Ld. ITAT and Ld. CIT(A) have erred in law in accepting the valuation report submitted by the assessee even though the assessee has failed to comply with the requirements/provisions of Section 56(2)(viib) of the Income-tax Act and Rule 11U and Rule

11 UA of the Income-tax Rules?

D. Whether in facts & circumstances of the case and applicable law, the Ld. ITAT and Ld. CIT(A) have erred in law by solely

1 Tribunal ITA 470/2024 & other connected matters Page 2 of 8 relying upon the decision of this Hon'ble Court in Pr. Commissioner of Income Tax -2 Vs M/s Cinestaan Entertainment Pvt. Ltd. (2021) 433 ITR 82, without appreciating the facts and circumstances in which the said decision was rendered?

E. Whether in facts & circumstances of the case, findings of Ld.

ITAT and Ld. CIT( A) are perverse and are liable to be set aside?”

2. The solitary issue which has been pressed on the appeal is with respect to the view expressed by the Tribunal and which had held that it would not be open for the Assessing Officer to substitute the method of valuation as chosen by the assessee while computing Fair Market Value in terms of Section 56(2)(viib) of the Income Tax Act, 19612.

3. In our considered opinion, the aforesaid issue stands settled in light of the judgment rendered by us in Agra Portfolio Pvt. Ltd. vs. Principal Commissioner of Income Tax & Anr.3 and where we had dealt with this aspect in some detail and observed as follows:-

“16. In our considered opinion, the language of rule 11UA(2) indubitably places a choice upon the assessee to either follow the route as prescribed in clause (a) or in the alternative to place for the consideration of the Assessing Officer a valuation report drawn by a merchant banker as per the discounted cash flow method. However, and as is manifest from a conjoint reading of section 56(2) (viib) read along with rule 11UA(2), the option and the choice stands vested solely in the hands of the assessee.

17. While it would be open for the Assessing Officer, for reasons so recorded, to doubt or reject a valuation that may be submitted for its consideration, the statute clearly does not appear to empower it to independently evaluate the face value of the unquoted equity shares by adopting a valuation method other than the one chosen by the assessee. It is this aspect which was duly acknowledged by the Bombay High Court in Vodafone M-Pesa.

18. We note that the view as taken by the Bombay High Court in the aforenoted judgment appears to have been consistently followed by Tribunals of different regions as would be evident

2 Act

3 2024 SCC OnLine Del 2391 ITA 470/2024 & other connected matters Page 3 of 8 from the discussion which ensues. We, in this regard, firstly take into consideration the judgment rendered by the Mumbai Bench of the Income-tax Appellate Tribunal in Dy. CIT v. Sodexo Facil