GUJARAT FARM SEEDS PVT. LTD.,ANAND V. THE ITO, WARD-2, ANAND

MA 24/AHD/2025

AI Insights

The case involves Gujarat Farm Seeds Pvt. Ltd., the appellant, contesting an addition of Rs.66,60,000 made under Section 56(2)(viib) of the Income Tax Act, 1961 by the Assessing Officer, which was partly confirmed by the CIT(A). The primary issue was the method used to determine the fair market value (FMV) of shares, where the assessee preferred the Discounted Cash Flow (DCF) method, which was not accepted by the Assessing Officer who instead used the Net Asset Value (NAV) method. The Tribunal's earlier decision directed the Assessing Officer to refer the matter to a Registered Valuer for a DCF valuation, and allowed the assessee the option to adopt the NAV method if they chose. The assessee's application sought to rectify what they claimed was an error in the Tribunal's order regarding the NAV method's consideration.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717421 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-08-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 06-03-2025
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT
• Assessee Lawyers: S.N. DIVATIA
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Fair market value

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH, AHMEDABAD BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER M.A. No.24/Ahd/2025 (In ITA No.431/Ahd/2024) Assessment Year: 2014-15 Gujarat Farm Seeds Pvt. Ltd., 101, Jemsons House, Nr. Laxmi Cinema, Anand – 388 001. (Gujarat) [PAN – AAACG 7271 J] Vs. Income Tax Officer, Ward – 2, Anand. (Gujarat). (Appellant) (Respondent) Assessee by Shri S.N. Divatia, AR Revenue by Shri Abhijit, Sr. DR Date of Hearing 08.08.2025 Date of Pronouncement 14.08.2025 O R D E R PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER: This Miscellaneous Application (M.A.) is filed by the Assessee with request to rectify the mistake apparent from record in the order dated 06.11.2024 passed by the Tribunal in ITA No.431/Ahd/2024 for Assessment Year 2014-15. 2. Shri S. N. Divatia, Ld. AR of the assessee explained that the issue involved in this case was an addition of Rs.66,60,000/- made under Section 56(2)(viib) of the Income Tax Act, 1961 by the Assessing Officer which was partly confirmed by the Ld. CIT(A). He explained that the Printed from counselvise.com M.A. No.24/Ahd/2025 (In ITA No.431/Ahd/2024) Assessment Year: 2014-15 Gujarat Farm Seeds Pvt. Ltd. vs. ITO Page 2 of 4 assessee has determined the fair market value of the shares as per the provisions of Section 56(2)(viib) of the Act read with Rule 11U and 11UA of the Income Tax Rules, 1962 by following the DCF method which was not accepted by the Assessing Officer in the course of assessment. The Assessing Officer had rejected the DCF method and suo moto adopted the NAV method for determining the fair market value of the shares. In this regard, the Ld. AR has drawn our attention to the finding given in paragraph no.-9 of the Tribunal’s order dated 06.11.2024 which is reproduced below:- “9. In view of the above facts, we deem it proper to set aside the matter to the file of the AO for afresh consideration of the issue involved. The assessee had followed DCF method of valuation for determining FMV of shares and the AO had rejected the valuation as done by the assessee for the reasons as discussed in the assessment order. The AO is, therefore, directed to refer the matter to a Registered Valuer (a merchant banker or an accountant) for determining the FMV of shares as per DCF method. The value as determined by the Registered Valuer should be confronted to the assessee before taking a final decision in the matter. In case the assessee opts to adopt NAV method of valuation, the AO should consider the contention of the assessee to take the value of land and building as per jantri rate while determining the FMV of shares as per NAV method, and give his finding on adoption of jantri rate or otherwise. The matter regarding determination of FMV of the shares should be decided after allowing a proper opportunity of being heard to the assessee.” 3. The Ld. AR submitted that the Tribunal had committed an error in directing the Assessing Officer to consider the NAV method when the assessee had opted for DCF method and particularly when the Tribunal had held that the choice of method rested with the assessee. According to the Ld. AR, this was a mistake apparent from record and accordingly the Ld. DR requested to expunge the observation and direction to consider the NAV method of valuation for the shares. Printed from counselvise.com M.A. No.24/Ahd/2025 (In ITA No.431/Ahd/2024) Assessment Year: 2014-15 Gujarat Farm Seeds Pvt. Ltd. vs. ITO Page 3 of 4 4. Per contra, Shri Abhijit, the Ld. Sr. DR submitted that the Ld. Tribunal had not given any blanket direction to the Assessing Officer to consider the NAV method. He explained that the assessee had followed the DCF method of valuation which was rejected by the Assessing Officer. In this regard, a direction was given to the Assessing Officer to refer the matter to the registered valuer for determining the fair market value of the shares as per the DCF method only. The direction to consider the alternate NAV method was to be acted upon only if the assessee opted to adopt NAV method of valuation. The Ld. Sr. DR submitted that this was only an option given to the assessee by the Ld. Tribunal and thus there was no mistake in the order of the Tribunal. 5. We have considered the rival submissions. It is found from paragraph no.9 of the order that the explicit direction to the Assessing Officer was to refer the matter to the Registered Valuer (a merchant banker or an accountant) for determining the fair market value of the shares as per DCF method. In the course of hearing, the assessee has taken a plea that the working of NAV method of valuation done by the Assessing Officer was not correct and that the additional evidences furnished in this respect before the Ld. CIT(A) were not admitted and considered. As discussed in paragraph No.5 of the Tribunal’s order, the assessee had pointed out that there was a mistake in the working of NAV as made by the Assessing Officer and, therefore, the Ld. CIT(A) should have admitted and considered the additional evidence in respect of working of NAV. It was in consideration of this submission of the assessee, that an option was given in paragraph No. 9 of the order, that “If the assessee opts to adopt a NAV method of valuation”, then the AO should consider the assessee’s contention to take the value of land and building as per jantri value while determining the fair market value of Printed from counselvise.com M.A. No.24/Ahd/2025 (In ITA No.431/Ahd/2024) Assessment Year: 2014-15 Gujarat Farm Seeds Pvt. Ltd. vs. ITO Page 4 of 4 shares as per NAV method. As per the direction given in paragraph no.9, the Assessing Officer has not been directed to adopt NAV method of valuation on his own. It is only when the assessee opts to adopt NAV method of valuation, then this direction is required to be acted upon. We, therefore, do not find any mistake in the order, as the primary direction in the order is to determine the fair market value of shares as per DCF method only. Since there is no mistake apparent from record in the order of the Tribunal, the Miscellaneous Application filed by the assessee is dismissed. 6. In the result, Miscellaneous Application is dismissed. Order pronounced in the open Court on this 14th August, 2025. Sd/- Sd/- (T.R. SENTHIL KUMAR) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Ahmedabad, the 14th August, 2025 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPYE C Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad Printed from counselvise.com "