Fair Market value for section 56(2)(x) and 50CA
Valuation of Jewellery:
- Open market value on valuation date
- Invoice value as on valuation date, provide purchased from registered dealer.
- Valuation report from registered valuer if value of jewellery is more than 50,000.
Valuation of archaeological collections, drawings, painting, sculptures any other work of art:
- Open market value on valuation date.
- Invoice value as on valuation date, provided purchased form registered dealer
- Valuation Report from registered valuer if value artistic work is more than 50,000.
Quoted shares and security:
- Transaction value recorded in recognized stock exchange. If purchased through recognized stock exchange
- If transaction not carried out through recognized stock exchange then Fair Market Value will be
>>>> Lowest price from recognized stock exchange on valuation date, and
>>>> Lowest price from recognized stock exchange on preceding date of valuation date if no trisection on valuation date if no transaction on valuation date.
Unquoted shares and securities other than equity shares:
Open market price on valuation date and the assessee may obtain report from a merchant banker or an accountant in respect of which such valuation.
Unquoted equity shares:
Fair Market Value of unquoted equity shares = (A+B+C+D-L) X PV/PE
A= Book value of all the assets ( other than jewellery, artistic work, shares, securities and immovable property) in the balance sheet as reduced by-
Any amount of income- tax paid (TDS/TCS/Advance Tax), if any, less the amount of income-tax refund claimed, if any: and
Unamortised amount of deferred expenditure;
B= The Fair Market Value of the jewellery and artistic work on the basis of the valuation report obtained from a registered valuer;
C= Fair Market Value of Shares and securities as determined in the manner provided in this rule;
D= Stamp Duty Value in respect of the immovable property;
L= Book value of the liabilities shown in the balance sheet, but not including the following amounts, namely-
- Paid up capital in respect of equity shares
- Dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at AGM of the company;
- Reserves and surplus, by whatever name called, even if the resulting figure is negative other than those set apart towards depreciation;
- Provision for taxation, other than amount of income tax paid, if any, less the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;
- Provisions made for Unascertained liabilities;
- Contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares.
PV= The paid up value of such equity shares
PE= Total amount of paid up equity share capital as shown in the balance-sheet.
Notes:
- For the purpose of section 56(2)(viib)- Angel tax above B,C and shall be taken at their book value and mot at the market value
- For the purpose of section 56(2)(viib)- Assessee can consider the Fair Market Value of the unquoted equity shares determined by a merchant banker as per the Discounted free cash flow method.
