TaxTMI 
TaxTMI 
RULES FOR DETERMINING THE VALUE OF ASSETS
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....ot), any gold ornament and other article of gold; (5) "gold ornament" means any article in a finished form, meant for personal adornment or for the adornment of any idol, deity or any other object of religious worship made of, or manufactured from, gold, whether or not set with stones or gems, real or artificial, or with pearls, real, cultured or imitation, or with all or any of them and includes parts, pendants or broken pieces of gold ornaments ; (6) "investment company" means a company whose gross total income consists mainly of income which is chargeable to income-tax under the heads "Income from house property", "Capital gains" and "Income from other sources". Explanation.-In this clause, the expression "gross total income" shall have the meaning assigned to it in section 80B of the Income-tax Act ; (7) "jewellery" includes- (a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stones, and whether or not worked or sewn into any wearing apparel ; (b) precious or semi-precious stones, whether or not set i....
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....s the case may be, the cost of construction, as so increased, shall be taken to be the value of the property under this rule : Provided also that the provisions of the second proviso shall not apply for determining the value of one house belonging to the assessee,where such house is acquired or the construction whereof is completed after the 31st day of March, 1974, and the house is exclusively used by the assessee for his own residential purposes throughout the period of twelve months immediately preceding the valuation date and the cost of acquisition or, as the case may be, the cost of construction, as increased, in either case, by the cost of any improvement to the house, does not exceed,- (a) if the house is situate at Bombay, Calcutta, Delhi or Madras, fifty lakh rupees ; (b) if the house is situate at any other place, twenty-five lakh rupees : Provided also that where more than one house belonging to the assessee is exclusively used by him for residential purposes, the provisions of the third proviso shall apply only in respect of one of such houses which the assessee may, at his option, specify in this behalf Net maintainable rent how to be computed....
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....pect of the property is borne by the tenant, by one-ninth of the actual rent ; (iii) where the owner has accepted any amount as deposit (not being advance payment towards rent for a period of three months or less), by the amount calculated at the rate of 15 per cent per annum on the amount of deposit outstanding from month to month, for the number of months (excluding part of a month) during which such deposit was held by the owner in the previous year, and if the owner is liable to pay interest on such deposit, the increase to be made under this clause shall be limited to the sum by which the amount calculated as aforesaid exceeds the interest actually paid; (iv) where the owner has received any amount by way of premium or otherwise as consideration for leasing of the property or any modification of the terms of the lease, by the amount obtained by dividing the premium or other amount by the number of years of the period of the lease; (v) where the owner derives any benefit or perquisite, whether convertible into money or not, as consideration for leasing of the property or any modification of the terms of the lease by the value of such benefit or perquisit....
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....e, under any law for the time being in force, the minimum area of the plot of land required to be kept as open space for the enjoyment of the property exceeds the specified area, such minimum area shall be deemed to be the specified area; (c) "unbuilt area", in relation to the aggregate area of the plot of land on which the property is constructed, means that part of such aggregate area on which no building has been erected. Adjustment for unearned increase in the value of the land. 7. Where the property is constructed on land obtained on lease from the Government, a local authority or any authority referred to in clause (20A) of section 10 of the Income-tax Act, and the Government or any such authority is, under the terms of the lease, entitled to claim and recover a specified part of the unearned increase in the value of the land at the time of the transfer of the property, the value of such property as determined under rule 3 shall be reduced by the amount so liable to be claimed and recovered or by an amount equal to fifty per cent of the value of the property as so determined, whichever is less, as if the property had been transferred on the val....
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....s Schedule as applicable to that particular asset or if there are no such provisions, determined in accordance with rule 20, exceeds the value arrived at in accordance with clause (a) by more than 20 per cent, then the higher value shall be taken to be the value of that asset; (c) the value of an asset not disclosed in the balance-sheet, shall be taken to be the value determined in accordance with the provisions of this Schedule as applicable to that asset; (d) the value of the following assets which are disclosed in the balance sheet shall not be taken into account, namely :- (i) any amount paid as advance tax under the Income-tax Act; (ii) the debt due to the assessee according to the balance-sheet or part thereof which has been allowed as a deduction under clause (vii) of sub-section (1) of section 36 of the Income-tax Act, for the purposes of assessment for the previous year relevant to the corresponding assessment year under that Act; (iii) the value of any asset in respect of which wealth-tax is not payable under this Act; (iv) any amount shown in the balance-sheet including the debit balance in the profit and loss a....
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.... and the sum total of amounts so allocated to a partner or member under clause (i) and clause (ii) shall be treated as the value of the interest of that partner or member in the firm or associa­tion: Provided that in determining the net wealth of the firm or asso­ciation for the purposes of this rule, no account shall be taken of the exemptions in sub-sections (1) and (1A) of section 5^12. Explanation.-For the purposes of this rule,- (a) where the net wealth of the firm or association com­puted in accordance with this rule includes the value of any assets located outside India, the value of the interest of any partner or member in the assets located in India shall be deter­mined having regard to the proportion which the value of assets located in India diminished by the debts relating to those assets bears to the net wealth of the firm or association; (b) where the net wealth of the firm or association computed in accordance with this rule includes the value of any assets which are exempt from inclusion in the net wealth under sub-sections (1) and (1A) of section 5, the value of the interest of a partner or member shall be deemed to includ....
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....exceed the value as on the valuation date as determined under this Schedule, of the corpus of the trust from which the life interest is derived. Part G Jewellery ^13[Valuation of jewellery.^14 18. The value of the jewellery shall be estimated to be the price which it would fetch if sold in the open market on the valuation date (hereafter in this rule referred to as fair market value). (2) The return of net wealth furnished by the assessee shall be supported by,- (i) a statement in the prescribed form, where the value of the jewellery on the valuation date does not exceed rupees five lakhs; (ii) a report of a registered valuer in the prescribed form, where the value of the jewellery on the valuation date exceeds rupees five lakhs. (3) Notwithstanding anything mentioned in sub-rule (2), the Assessing Officer may, if he is of opinion, that the value of the jewellery declared in the return,- (a) is less than its fair market value by such percentage or such amount as is prescribed under sub-clause (i) of clause (b) of sub-section (1) of section 16A; (b) is less than its fair market value as referred to in clause (a) ....
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....ified by the Board from time to time by general or special order. Restrictive covenants to be ignored in determining market value. 21. For the removal of doubts, it is hereby declared that the price or other consideration for which any property may be ac­quired by or transferred to any person under the terms of a deed of trust or through or under any restrictive covenant in any instru­ment of transfer shall be ignored for the purposes of determining under any provision of this Schedule, the price such property would fetch if sold in the open market on the valuation date. Appendix [See rule 17] Table of (1/p+d -1) Age nearer birthday Premium for unit sum assured (1/p+d)-1 Value of life interest of rupee 1 per annum at 6½% rate of interest 1 2 3 0. 0.02906 10.100 1. 0.01590 11.999 2. 0.01295 12.517 3. 0.01162 12.765 4. 0.01095 12.893 5. 0.01065 12.951 6. 0.01058 12.965 7. 0.01063 12.955 8. 0.01076 12.930 9. 0.01095 12.893 10. 0.01117 12.850 11. 0.01142 12.803 12. 0.01169 12.751 ....
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....III dealing with shares/debentures omitted with effect from 1-4-1993. 7. See rule 13(a) and Form O-11. 8. Part C of Schedule III dealing with shares/debentures omitted with effect from 1-4-1993. 9. Clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956, defines "recognised stock exchange" as follows : '(f) "recognised stock exchange" means a stock exchange which is for the time being recognised by the Central Government under section 4 ;' 10. Part C of Schedule III dealing with shares/debentures omitted with effect from 1-4-1993. 11. Before omission, Part C, as amended by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1989/1-4-1990 and the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992, read as under : 'PART C SHARES IN OR DEBENTURES OF COMPANIES 9. Quoted shares and debentures of companies.-The value of an equity share or a pre-ference share in any company or a debenture of any company which is a quoted share or a quoted debenture shall be taken as the value quoted in respect of such share or debenture on the valuation date or where there is no such quotation on the valuation date, the quotation on the date closest to ....
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....low :- TABLE Number of accounting years ending on the valuation date or, in a case where the accounting year does not end on the valuation date, the number of accounting years ending on a date immediately preceding the valuation date, for which no dividend has been paid Rate of reduction (1) (2) Three years 10 per cent of the paid-up value or the adjusted paid-up value, as the case may be ; Four years 20 -do- Five years 30 -do- Six years and above 40 -do- (b) in the case of a cumulative preference share, by one-half of the rates specified in the aforesaid Table. Explanation.-For the purposes of this rule, "adjusted paid-up value", in relation to a preference share, means an amount which bears to the paid-up value of the preference share the same proportion as the stipulated rate of dividend [being the rate of dividend on the preference share specified in the terms of issue of such share, and in a case where such dividend is required to be increased under the provisions of section 3 of the Preference Shares (Regulation of Dividends) Act, 1960 (63 of 1960), the rate of dividend as so increased] on such sha....
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....part of the accounts) as drawn up on the valuation date and, where there is no such balance-sheet, the balance-sheet drawn up on a date immediately preceding the valuation date, and in the absence of both, the balance-sheet drawn up on a date immediately after the valuation date. 12. Unquoted equity shares in investment companies.-(1) Subject to rule 13, the value of an unquoted equity share in an investment company shall be determined in the manner specified in sub-rule (2). (2) The value of all the liabilities as shown in the balance-sheet of such company shall be deducted from the value of all its assets shown in that balance-sheet; the net amount so arrived at shall be divided by the total paid-up equity share capital of the company as shown in the balance-sheet, and the result multiplied by the paid-up value of each equity share shall be the value of the unquoted equity share in that investment company for the purposes of this Act. (3) For the purposes of sub-rule (2), the value of an asset disclosed in the balance-sheet of the company shall be taken to be its value determined in accordance with the rules as applicable to that particular asset and, in the absence of a....
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....are in the nature of revenue receipts but are not accounted for in the profit and loss account; (d) any development rebate or investment allowance debited in the books of account shall be added back to the book profits; (e) the tax liability of the company on the book profits, arrived at after the adjustments at items (a), (b), (c) and (d), shall be deducted from such book profits; (f) amounts required for paying dividends on preference share or shares with prior rights shall be deducted from such book profits; (g) the aggregate of the book profits for the five accounting years so arrived at, divided by 5, shall be the maintainable profits of the company. Explanation.-For the purposes of this rule, "interlocked companies" means any two investment companies each of which holds shares in the other company.' *For instructions regarding balance-sheet drawn up as on the relevant valuation date but not available to the shareholders on the due date of filing wealth-tax returns, see Circular No. 548, dated 27-10-1989. For details, see Referencer. † See rule 13(b) and Form O-12. 12. Clauses of section 5 are not in force w.e.f. 1-4-1993. ....