Valuation of unquoted shares: profit-earning capacity governs valuation, with break-up value only for liquidation or uncertain profits. Valuation of unquoted equity shares uses the profit-earning capacity (yield) method as primary; break-up value is limited to exceptional cases such as imminent liquidation or where profits are too uncertain. Maintainable profits are the adjusted average of five years' book profits after removing non-recurring items, adding back certain allowances, deducting tax and excluding amounts for preference dividends. Specific capitalisation rates are prescribed by asset nature. A premium applies for substantially but now wholly holding companies, and parent and wholly-owned subsidiaries are treated as one entity for valuation.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Valuation of unquoted shares: profit-earning capacity governs valuation, with break-up value only for liquidation or uncertain profits.
Valuation of unquoted equity shares uses the profit-earning capacity (yield) method as primary; break-up value is limited to exceptional cases such as imminent liquidation or where profits are too uncertain. Maintainable profits are the adjusted average of five years' book profits after removing non-recurring items, adding back certain allowances, deducting tax and excluding amounts for preference dividends. Specific capitalisation rates are prescribed by asset nature. A premium applies for substantially but now wholly holding companies, and parent and wholly-owned subsidiaries are treated as one entity for valuation.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
of 
TaxTMI 
