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

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....pter contains specific provisions relating to levy of additional income-tax where the charitable institution exempt under the Act ceases to exist as charitable organization or converts into a non-charitable organization. 2. Sub-section (2) of newly inserted section 115TD provides that the accreted income for the purposes of sub-section (1) thereof means the amount by which the aggregate fair market value of the total assets of the trust or the institution, as on the specified date, exceeds the total liability of such trust or institution computed in accordance with the method of valuation as may be prescribed. Therefore, the method of valuation of fair market value in respect of the trust or the institution as on the specified date for det....

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.... the average of the lowest and highest price of such shares and securities on a recognised stock exchange on a date immediately preceding the specified date when such shares and securities were traded on a recognised stock exchange, (b) the fair market value of unquoted equity shares shall be the value, on the specified date of such unquoted equity shares as determined in 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 paymen....

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.... share; (c) The fair market value of shares and securities other than equity shares shall be estimated to be price it would fetch if sold in 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 by trust or institution, shall be its net assets:- (A + B-L) Which shall be determined mutatis mutand....

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....ingent 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 reference to the income in accordance with the law applicable thereto. Explanation- For the purposes of this rule,- (a) "accountant" shall mean a fellow of the Institute of Chartered Accountants of India within the meaning of the Chartered Accountants Act, 1949 (38 of 1949) who is not appointed by the trust or institution as an auditor....