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For
section 56, value of unquoted shares can optionally be taken as value
determined by either DFCF or as per revised method
Income-tax
(Fifteenth Amendment) Rules, 2012 – Amendment in Rules 11U and 11UA
Notification
No. 52/2012 [F.No.
142/19/2012-SO (TPL)]/SO 2805(E), dated 29-11-2012
In
exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43
of 1961), the Central Board of Direct Taxes hereby makes the following rules
further to amend the Income-tax Rules, 1962, namely:-
1. (1) These rules may be called the
Income-tax (15th Amendment) Rules, 2012.
(2) They
shall come into force on the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962,
(hereinafter referred to as the said rules), in rule 11U,—
(A) for
clauses (a) and (b), the following clauses shall respectively be
substituted, namely:-
‘(a)
“accountant” ,-
(i)
for the purposes of sub-rule (2) of rule 11UA, means 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 company as an
auditor under Section 44AB of the Act or under Section 224 of the Companies
Act, 1956 (1 of 1956); and
(ii)
in any other case, shall have the same meaning as assigned to it in the Explanation
below sub-section (2) of section 288 of the Act;
(b)“balance-sheet”,
in relation to any company, means,-
(i)
for the purposes of sub-rule (2) of rule 11 UA, the balance-sheet of such
company (including the notes annexed thereto and forming part of the accounts)
as drawn up on the valuation date which has been audited by the auditor of the
company appointed under section 224 of the Companies Act, 1956 (1 of 1956) and
where the balance-sheet on the valuation date is not drawn up, the
balance-sheet (including the notes annexed thereto and forming part of the
accounts) drawn up as on a date immediately preceding the valuation date which
has been approved and adopted in the annual general meeting of the shareholders
of the company; and
(ii)
in any other case, the balance-sheet of such company (including the notes
annexed thereto and forming part of the accounts) as drawn up on the valuation
date which has been audited by the auditor appointed under section 224 of the
Companies Act, 1956 (1 of 1956);’;
(B) for
clause (j), the following clause shall be substituted, namely:-
‘(j)
“valuation date” means the date on which the property or consideration, as the
case may be, is received by the assessee.’.
3. The rule 11UA of the said rules
shall be renumbered as sub-rule (1) thereof, -
(i)
in sub-rule (1) as so renumbered, in clause (c), for sub-clause (b),
the following shall be substituted, namely:-
“(b) the fair market value
of unquoted equity shares shall be the value, on the valuation date, of such
unquoted equity shares as determined in the following manner, namely:—
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the
fair market value of unquoted equity shares =
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(A-L)
|
×
|
(PV),
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||
|
(PE)
|
where,
A = book value of the assets in
the balance-sheet as reduced by 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 Income-tax Act and any amount shown in the balance-sheet
as asset including the unamortised amount of deferred expenditure which does
not represent the value of any asset;
L = book value of liabilities
shown in the balance-sheet, but not including the following amounts, namely:—
(i)
the paid-up capital in respect of equity shares;
(ii)
the amount set apart for payment of dividends on preference shares and equity
shares where such dividends have not been declared before the date of transfer
at a general body meeting of the company;
(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 Income-tax Act, to the extent of
the excess over the tax payable with reference to the book profits in
accordance with the law applicable thereto;
(v)
any amount representing provisions made for meeting liabilities, other than
ascertained liabilities;
(vi)
any amount representing contingent liabilities other than arrears of dividends
payable in respect of cumulative preference shares;
PE = total amount of paid up equity
share capital as shown in the balance-sheet;
PV = the paid up value of such
equity shares;”;
(ii)
after the sub-rule (1) as so renumbered, the following sub-rule shall be
inserted, namely:-
“(2) Notwithstanding anything
contained in sub-clause (b) of clause (c) of sub-rule (1), the
fair market value of unquoted equity shares for the purposes of sub-clause (/)
of clause (a) of Explanation to clause (viib) of
sub-section (2) of section 56 shall be the value, on the valuation date, of
such unquoted equity shares as determined in the following manner under clause
(a) or clause (b), at the option of the assessee, namely:—
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(a)
the fair market value of unquoted equity shares =
|
(A-L)
|
×
|
(PV),
|
||
|
(PE)
|
where,
A = book value of the assets in
the balance-sheet as reduced by 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 Income-tax Act and any amount shown in the balance-sheet
as asset including the unamortised amount of deferred expenditure which does
not represent the value of any asset;
L = book value of liabilities
shown in the balance-sheet, but not including the following amounts, namely:—
(i)
the paid-up capital in respect of equity shares;
(ii)
the amount set apart for payment of dividends on preference shares and equity
shares where such dividends have not been declared before the date of transfer
at a general body meeting of the company;
(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 as refund under the Income-tax Act, to the
extent of the excess over the tax payable with reference to the book profits in
accordance with the law applicable thereto;
(v)
any amount representing provisions made for meeting liabilities, other than
ascertained liabilities;
(vi)
any amount representing contingent liabilities other than arrears of dividends
payable in respect of cumulative preference shares;
PE = total amount of paid up equity
share capital as shown in the balance-sheet;
PV = the paid up value of such
equity shares; or
(b) the fair market value
of the unquoted equity shares determined by a merchant banker or an accountant
as per the Discounted Free Cash Flow method.”.
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