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Section 11 U Of The Income Tax Act, 1961
As per Companies Act, Section 247.

  1. Rule 11UA(1) is applicable in case of Section 56 of the IT Act for determine the fair market value of the property other than immovable property.
  2. Rule 11UA(2) is applicable in case of Section 56(viib) (i.e. shares issued by the company at premium).
OTHER RELATED TOPICS

Rule 11 UA(1) prescribes the manner to find out the fair market value of the following property

  1. Valuation of Jewellery
  2. Valuation of archaeological collections, drawings, paintings, sculptures or any work of art.
  3. Valuation of shares and securities
    • Fair market value of quoted shares and securities
    • Fair market value of unquoted Equity shares.
    • Fair market value of unquoted shares and securities other than Equity shares.

[Fair market value of unquoted shares and securities other than equity share in a company which are not listed in any RSE shall be estimated to be price it would fetch if sold in the open market on the valuation date and the assessee may obtain a report from a merchant banker or an accountant in respect of which such valuation.]

Rule 11 UA(2) prescribes the manner to find out the fair market value of the unquoted equity shares in case of shares issued by the company at premium under Section 56 (viib) of IT Act with two options at the choice of the assessee.

  • Option (a): calculate the fair market value of unquoted equity shares as per formula given in this option.
  • Option (b): the fair market value of unquoted equity shares determined by a merchant banker as per the Discounted Free Cash Flow Method.

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