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Determination
of Fair Market Value.
11UA.
For the purposes of section 56 of the Act, the fair market value of a property,
other than immovable property, shall be determined in the following manner,
namely:—
(a)
Valuation of jewellery—
(i)
the fair market value of jewellery shall be estimated to be the price which such
jewellery would fetch if sold in the open market on the valuation date;
(ii) in case the jewellery is received by the way of purchase on the
valuation date, from a registered dealer, the invoice value of the jewellery
shall be the fair market value;
(iii) In case the jewellery is received by any other mode and the value of
the jewellery exceeds rupees fifty thousand, then assessee may obtain the report
of registered valuer in respect of the price it would fetch if sold in the open
market on the valuation date;
(b)
Valuation of archaeological collections, drawings, paintings, sculptures or any
work of art.—
(i) the fair market value of archaeological collections, drawings,
paintings, sculptures or any work of art (hereinafter referred as artistic work)
shall be estimated to be price which it would fetch if sold in the open market
on the valuation date;
(ii) in case the artistic work is received by the way of purchase on the
valuation date, from a registered dealer, the invoice value of the artistic work
shall be the fair market value;
(iii) in case the artistic work is received by any other mode and the
value of the artistic work exceeds rupees fifty thousand, then assessee may
obtain the report of registered valuer in respect of the price it would fetch if
sold in the open market on the valuation date;
(c)
Valuation of shares and securities.—
(a)
the fair market value of quoted shares and securities shall be determined in the
following manner, namely:—
(i) if the quoted shares and securities are received by way of transaction
carried out through any recognized stock exchange, the fair market value of such
shares and securities shall be the transaction value as recorded in such stock
exchange;
(ii) if such quoted shares and securities are received by way of
transaction carried out other than through any recognized stock exchange, the
fair market value of such shares and securities shall be,—
(a) the lowest price of such shares and securities quoted on any
recognized stock exchange on the valuation date, and
(b) the lowest price of such shares and securities on any recognized stock
exchange on a date immediately preceding the valuation date when such shares and
securities were traded on such stock exchange, in cases where on the valuation
date there is no trading in such shares and securities on any recognized stock
exchange;
(b) the fair market value of unquoted equity shares shall be the value, on
the valuation date, of such unquoted equity shares as determined in the
following manner, namely:—
(A – L)
The
fair market value of unquoted equity shares =
× (PV)
(PE)
Where,
A
= Book value of the assets in Balance Sheet as reduced by any amount paid
as advance tax under the Income-tax Act and any amount shown in the balance
sheet including the debit balance of the profit and loss account or the profit
and loss appropriation account which does not represent the value of any asset.
L
= Book value of liabilities shown in the Balance Sheet but not including
the following amounts:—
(i) the paid-up capital in respect of equity shares;
(ii) the amount set apart for payment of dividends on preference shares
and equity shares where such dividends have not been declared before the date of
transfer at a general body meeting of the company;
(iii) reserves, by whatever name called, other than those set apart
towards depreciation;
(iv) credit balance of the profit and loss account;
(v) any amount representing provision for taxation, other than amount paid
as advance tax under the Income-tax Act, to the extent of the excess over the
tax payable with reference to the book profits in accordance with the law
applicable thereto;
(vi) any amount representing provisions made for meeting liabilities,
other than ascertained liabilities;
(vii) any amount representing contingent liabilities other than arrears of
dividends payable in respect of cumulative preference shares.
PE
= Total amount of paid up equity share capital as shown
in Balance Sheet.
PV
= the paid up value of such equity shares.
(c) the fair market value of unquoted shares and securities other than equity
shares in a company which are not listed in any recognized stock exchange shall
be estimated to be price it would fetch if sold in the open market on the
valuation date and the assessee may obtain a report from a merchant banker or an
accountant in respect of such valuation.
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