IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘E’: NEW DELHI)

BEFORE SHRI MADHUMITA ROY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER ITA No:-4887/Del/2024 (Assessment Year- 2015-16)

Income Tax Officer Nine Plus Infrastructure Delhi Vs. Private Limited, No.524, Galleria, DLF City, Phase-IV, Gurgoan, Haryana-

122009.

PAN No:AAACN4873F APPELLANT RESPONDENT Appellant by :Shri S.N.Devatia, Adv.

Department by: Shri Manoj Tiwari, Sr.DR Date of Hearing : 28.07.2025 Date of Pronouncement :19.09.2025

ORDER

PER AMITABH SHUKLA, A.M :

This appeal filed by the Revenue is directed against the order dated 04.09.2024 passed by CIT(A), 6, Delhi, arising out of the order passed by Assessing Officer dated 26.12.2017 for A.Y.2015-16. The reference to the word “Act” in this order hereinafter shall mean the Income Tax Act, 1961 as amended from time to time.

2.0 The only issue raised by the appellant Revenue in this case, through its grounds of appeal is regarding deletion, of an addition of Rs.2,27,50,000/- made by the Ld.AO u/s 56(2)(viib), by the Ld.CIT(A). Explaining the brief factual matrix of the case the Ld.DR submitted that the assesse company, M/s Nine Plus Infrastructure Private Limited. Is engaged in the business of development of real estate. The assessee had filed return of income for the relevant assessment year 2015-16 declaring an income of 10,42,410/- on 29.09.2015. In the assessment order passed under section 143(3) of the Act dt. 26.12.2017, the Ld. Assessing Officer has made addition. of 2,27,50,000 claimed u/s 56 (2)(viib) r.w.r. 11 UA of the Act. The assesse Company allotted shares of Rs. 10 - each to M/s Gallop Infrastructure Limited on 31.03.2015 at a premium of Rs. 190 each. The issue price of the shares at a premium of Rs. 190/- was based on valuation as per rule 11 UA by an accountant as per DCF method. The Ld.AO noted the deficiencies in the valuation adopted by the assessee and proceeded to reject the DCF method adopted by the appellant and consequently made the impugned addition of Rs.2,27,50,000. 3.0. The Ld. DR vehemently argued that the relief accorded by the Ld.CIT(A) is highly excessive and unwarranted. It was stated that reliance has been placed upon unconnected judicial precedents. It was accordingly pleaded that the impugned appellate order be set aside and that of Ld.AO be restored.

4. The Ld.Counsel for the assessee argued in favour of the order of Ld.CIT(A). It was contended that the relief accorded is based upon correct interpretation and appreciation of facts of the case in the light of contemporaneous statutory prescription of section 56 (2)(viib) r.w.r. 11 UA of the Act as well as judicial precedents governing the subject. The Ld.Counsel also submitted that its case is squarely covered by the decision of the Hon’ble Delhi High Court in the case of Agra Portfolio Pvt Ltd dated

04.04.2024 as at 464 ITR 348.

5.0 We have heard rival submissions in the light of material available on records. The principal controversy seminal to the matter is regarding the action of the Ld.AO in invoking provisions of section 56 (2)(viib) and making the impugned addition by rejecting the valuation report produced by the assessee. It is pertinent to note that the appellant assessee had adopted the DCF method prescribed in Rule 11UA, whereas the Ld.AO proceeded to make the valuation by substituting the valuation of shares by adopting fair market value(FMV). The question that thus arises is whether the Ld.AO is entitled to do the same or not. The Ld.CIT(A) has accorded relief to the assessee while observing as under:

“…..;3.9 From the above, it is evident that Rule 11UA(2) prescribes twomethods– BookValue method and DCF method. However, the said rule also provides that themethod to be adopted is le ft to the choice of the assessee. The appellant haschosen to the 2nd option i.e the fair market value of the unquoted equity sharesdetermined by a merchant banker or an accountant as per the Discounted FreeCash Flow method. It is