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Draft Rules for prescribing the method of valuation of fair market value in respect of the trust or the institution-Chapter XII-EB of the Income-tax Act 1961

Income Tax - F. No. 370142/21/2016-TPL - Dated:- 24-10-2016 - F. No. 370142/21/2016-TPL Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, dated 24th October, 2016 Subject: - reg. The Finance Act, 2016, inter alia, inserted a new Chapter XII-EB consisting of sections 115TD, 115TE and 115TF in the Income-tax Act, 1961 (the Act). This chapter contains specific provisions relating to levy of additional income-tax where the charitable institution e .....

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cribed. Therefore, the method of valuation of fair market value in respect of the trust or the institution as on the specified date for determination of accreted income needs to be prescribed in the rules. 3. Accordingly, it is proposed to insert rule 17CB in the Income-tax Rules, 1962. The draft rule 17CB, on which comments and suggestion of stakeholders and general public may be sent electronically by 31st October, 2016 at the email address, dirtpl1@nic.in in this regard, are as under: 17CB. M .....

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hown as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset. (2) For the purpose of sub-rule (1), the fair market value of an asset shall be determined in the following manner, namely:- (i) Valuation of shares and securities,- (a) the fair market value of quoted share and securities shall be the following,- I. the average of the lowest and highest price of such shares and securities quoted on a recognised stock exchange as on the specifi .....

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n accordance with the following formula, namely:- Fair market value = (A+B - L) × (PV), /(PE) where, A = book value of all the assets in the balance sheet (other than bullion, jewellery, precious stone, artistic work, shares, securities, and immovable property) as reduced by- (i) any amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Act; and (ii) any amount shown in the balance sheet as asset includ .....

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and equity shares; III. reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation; IV. any amount representing provision for taxation, other than amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Act, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable theret .....

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the open market on the specified date on the basis of valuation report from a merchant banker or an accountant in respect of such valuation; (ii) The fair market value of an immovable property shall be higher of the following: (a) price that the property shall ordinarily fetch if sold in the open market on the specified date on the basis of the valuation report from a registered valuer, and (b) stamp duty value as on the specified date, (iii) The fair market value of a business undertaking, held .....

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registered for valuation of such assets, the valuation report shall be obtained from a valuer who is a member of any one of the professional valuer bodies viz. Institution of Valuers, institution of Surveyors (Valuation Branch), institution of Govt. Approved Valuers, Practicing Valuers Association of India, The Indian Institution of Valuers, Centre for Valuation Studies, Research and Training, Royal institute of Chartered Surveyors, India Chapter, American Society of Appraisers, USA, Appraisal i .....

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r excess of income over expenditure, by whatever name called, (iii) any amount representing contingent liability (iv) any amount representing provisions made for meeting liabilities, other than ascertained liabilities; (v) any amount representing provision for taxation, other than amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Income- tax Act, to the extent of the excess over the tax payable with refer .....

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