IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”, NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.8259/DEL/2019 (Assessment Year : 2016-17)

DCIT, Circle 13 (2), vs. M/s. JUS Scriptum Magnus Pvt. Ltd., New Delhi. B-13, Metro View Apartments, Sector 13, Dwarka, New Delhi – 110 075.

(PAN : AABCV8198A)

(APPELLANT) (RESPONDENT)

ASSESSEE BY: Shri Pramod Jain, CA REVENUE BY : Shri Harpreet Kaur Hansra, Sr. DR Date of Hearing : 07.07.2025 Date of Order : 26.09.2025

O R D E R

PER S. RIFAUR RAHMAN, AM :

1. The assessee has filed appeal against the order of the Learned Commissioner of Income-Tax (Appeals)-5, New Delhi [“Ld. CIT(A)”, for short] dated 30.07.2019 for the Assessment Year 2016-17.

2. Brief facts of the case are, assessee company was incorporated on

06.10.2003 and is engaged in the business of publishing. The return of income was filed for AY 2016-17 on 17.10.2016 declaring loss of Rs.1,36,05,019/-. The case was selected for limited scrutiny under CASS for the reason “Large share premium received during the year in order to verify applicability of section 56(2)(viib) of the Income-tax Act, 1961 (for short ‘the Act’). Accordingly, notices u/s 143(2) and 142(1) were issued and served on the assessee through ITBA Portal. In response, assessee submitted that relevant information from time to time. During assessment proceedings, Assessing Officer observed that during the year assessee has allotted 8438 new shares having face value of Rs.10 and at a premium of Rs.10,655.85 per share. Therefore, assessee has raised paid up share capital and addition of Rs.8,99,14,062/- in the share premium account. The assessee was asked to furnish relevant documents on the issue of large share premium receipt. In response, assessee submitted valuation report determining the value of shares using the Discounted Cash Flow (DFCF) Method, copy of engagement letter of advisory, copy of Board Resolution and copy of share application forms etc.. The Assessing Officer after perusing the valuation report furnished by the assessee found certain discrepancies in the projection used for determining the fair market value using DFCF method. The assessee was asked to furnish further details on the abovesaid valuation report. In response, assessee has submitted the details of projections before the Assessing Officer which is produced at pages 2 to 5 of the assessment order. After comparing the table submitted by the assessee, the Assessing Officer observed that the projected growth of revenue utilised for the purpose of valuation is largely inflated as compared to actual growth seen in the preceding years. Accordingly, the Assessing Officer compared the projected figures with actual figures. He came to the conclusion that due to variables seen in the figures, revenue from sales of service was determined as a base for comparison as it is found to be reflective of the business growth pattern of the assessee and not satisfied with the explanation submitted by the assessee. In order to verify the genuineness of the transaction, notice u/s 133(6) were issued to the investors of the assessee company. However, none of the investors responded to the abovesaid notices. The Assessing Officer rejected the valuation report submitted by the assessee and proceeded to adopt the NAV method and determined the fair market value at Rs.64.3 per share. Accordingly, he proceeded to make the difference between share premium received and value determined under NAV method was added to the income of the assessee u/s 56(2)(viib) of the Act of Rs.8,94,55,878/-.

3. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A)-5, New Delhi and also filed detailed submissions which are reproduced in the appellate order. After considering the submissions of the assessee, ld. CIT (A) allowed the grounds raised by the assessee by observing as under :-

“7.3 The appellant has preferred to adopt fair market value as per option