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Fair market value of assets in certain cases

Rule 11UB - Rule - Part I - Determination of value of assets and apportionment of income in certain cases - Income Tax - Rule 11UB - 1[11UB..-(1) The fair market value of asset, tangible or intangible, as on the specified date, held directly or indirectly by a company or an entity registered or incorporated outside India ( hereafter referred to as foreign company or entity ), for the purposes of clause (i) of sub-section (1) of section 9, shall be computed in accordance with the provisions of th .....

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amely :- Fair market value = (A+B) /C Where; A= the market capitalisation of the company on the basis of observable price of its shares quoted on the recognised stock exchange; B= the book value of liabilities of the company as on the specified date; C= the total number of outstanding shares: Provided further that where, on the specified date, the share is listed on more than one recognised stock exchange, the observable price of the share shall be computed with reference to the recognised stock .....

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by the liability, if any, considered in such determination. (4) Where the asset is an interest in a partnership firm or an association of persons, its fair market value shall be determined in the following manner,namely:- (i) the value on the specified date of such firm or association of persons,shall be determined by a merchant banker or an accountant in accordance with any internationally accepted valuation methodology as increased by the liability, if any, considered in such determination ; ( .....

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rtion in which the partners or members are entitled to share profits and the sum total of the amount so allocated to a partner or member shall be treated as the fair market value of the interest of that partner or member in the firm or the association of persons, as the case may be. (5) The fair market value of the asset other than those referred to in sub-rules (2), (3) and (4) shall be the price it would fetch if sold in the open market on the specified date as determined by a merchant banker .....

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shall be determined in accordance with the following formula, namely:- Fair market value of all assets = A+B Where; A = Market capitalisation of the foreign company or entity computed on the basis of the full value of consideration for transfer of the share or interest; B = book value of the liabilities of the company or the entity as on the specified date as certified by a merchant banker or an accountant; (ii) in any other case, if, - (a) the share of the foreign company or entity is listed o .....

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the entity as on the specified date: Provided that where, as on the specified date, the share is listed on more than one stock exchange, the observable price in the aforesaid formula shall be in respect of the stock exchange which records the highest volume of trading in the share during the period considered for determining the price; (b) the share in the foreign company or entity is not listed on a stock exchange on the specified date, the value of all the assets owned by the foreign company o .....

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n the basis of any interim balance sheet referred to in the first proviso to clause (ix) of the Explanation,then the fair market value shall be appropriately modified after finalisation of the relevant financial statement in accordance with the applicable laws and all the provisions of this rule and rules 11UC and 114DB shall apply accordingly. (8) For determining the fair market value of any asset located in India, being a share of an Indian company or interest in a partnership firm or associat .....

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and rule 11UC, - (i) accountant means an accountant referred to in the Explanation to sub-section (2) of section 288 and for the purposes of sub-rule (6) includes any valuer recognised for undertaking similar valuation by the Government of the country where the foreign company or the entity is registered or incorporated or any of its agencies, who fulfils the following conditions, namely :- (a) if he is a member or partner in any entity engaged in rendering accountancy or valuation services the .....

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n ten years. (ii) connected person shall have the meaning as assigned to it in clause (4) of section 102; (iii) "right of management or control" shall include the right to appoint majority of the directors or to control the management or policy decision exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of shareholding or management rights or shareholders agreements or voting agreements or in any other manner; (iv) telegrap .....

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the two weeks preceding the specified date; (vi) book value of the liabilities means the value of liabilities as shown in the balance sheet of the company or the entity as the case may be, excluding the paid-up capital in respect of equity shares or members interest and the general reserves and surplus and security premium related to the paid up capital . (vii) specified date shall have the meaning as assigned to it in clause (d) of Explanation 6 to clause (i) of subsection (1) of section 9; (vi .....

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