#NAV method

The ITAT Pune has ruled that once an assessee selects either the Net Asset Value (NAV) or Discounted Cash Flow (DCF) method under Rule 11UA to determine the fair market value of unlisted shares, the Assessing Officer has no authority to substitute it with another valuation approach or question its realism. This reinforces taxpayer autonomy in valuation and curbs arbitrary tax additions, directly impacting startups, private equity deals, and closely held companies.

ITAT Delhi rules that Section 56(2)(viib) of the Income Tax Act applies only when consideration is received in the assessment year of share allotment. Funds received earlier via Compulsorily Convertible Debentures (CCD) conversion do not attract tax on share premium, even if valuation is based on prior balance sheets. The ruling clarifies the timing of receipt for tax applicability under this provision.