Had nice interactive session yesterday at South Delhi CA Study Circle on the topic 'Taxability of Gifts & Share Premium'. The ppt is now available at http://lunawat.com/Uploaded_Files/Presentation/TaxabilityofGifts&ShareCapitalunderITAct-SouthDelhi.pdf Hope it is of use Warm Regards CA Pramod Jain

1. CA. PRAMOD JAIN
FCA, FCS, FCMA, LL.B, MIMA, DISA
CA. PRAMOD JAIN
FCA, FCS, FCMA, LL.B, MIMA, DISA
Taxability of
Gifts & Share Premium
under
Income Tax Act 1961
Taxability of
Gifts & Share Premium
under
Income Tax Act 1961
Shared at
South Delhi CA Study Circle of NIRC of ICAI
28th December 2017
Shared at
South Delhi CA Study Circle of NIRC of ICAI
28th December 2017

2. SECTION 56SECTION 56SECTION 56SECTION 56
S. 56(1)S. 56(1)S. 56(1)S. 56(1) –––– Any income not taxed in any otherAny income not taxed in any otherAny income not taxed in any otherAny income not taxed in any other
headheadheadhead
S. 56(2)S. 56(2)S. 56(2)S. 56(2) –––– Specific incomesSpecific incomesSpecific incomesSpecific incomes
10 items (clauses)10 items (clauses)10 items (clauses)10 items (clauses)
(v)(v)(v)(v) –––– GiftGiftGiftGift ---- individual / HUF from 1.9.2004 till 1individual / HUF from 1.9.2004 till 1individual / HUF from 1.9.2004 till 1individual / HUF from 1.9.2004 till 1stststst
April 2006April 2006April 2006April 2006
(vi)(vi)(vi)(vi) ---- GGGGiftiftiftift ---- individualindividualindividualindividual / HUF from 1st April 2006 but/ HUF from 1st April 2006 but/ HUF from 1st April 2006 but/ HUF from 1st April 2006 but
before 1st October 2009before 1st October 2009before 1st October 2009before 1st October 2009
(vii)(vii)(vii)(vii) ---- GGGGiftiftiftift ---- individualindividualindividualindividual / HUF from 1st October 2009/ HUF from 1st October 2009/ HUF from 1st October 2009/ HUF from 1st October 2009
but before 1st April 2017but before 1st April 2017but before 1st April 2017but before 1st April 2017
((((viiaviiaviiaviia)))) –––– FirmFirmFirmFirm or companyor companyor companyor company –––– shares below FMV fromshares below FMV fromshares below FMV fromshares below FMV from
1st June 2010 but before 1st April 20171st June 2010 but before 1st April 20171st June 2010 but before 1st April 20171st June 2010 but before 1st April 2017
CA. Pramod Jain

3. DEEMED GIFTSDEEMED GIFTSDEEMED GIFTSDEEMED GIFTS
S. 56(2)(x)S. 56(2)(x)S. 56(2)(x)S. 56(2)(x) w.e.fw.e.fw.e.fw.e.f. 1. 1. 1. 1stststst April 2017April 2017April 2017April 2017
EarlierEarlierEarlierEarlier
Individual & HUF covered for all assets; andIndividual & HUF covered for all assets; andIndividual & HUF covered for all assets; andIndividual & HUF covered for all assets; and
Firms and Companies for sharesFirms and Companies for sharesFirms and Companies for sharesFirms and Companies for shares
Now ANY PERSON covered for:Now ANY PERSON covered for:Now ANY PERSON covered for:Now ANY PERSON covered for:
MoneyMoneyMoneyMoney
Immovable PropertyImmovable PropertyImmovable PropertyImmovable Property
Property other than Immovable PropertyProperty other than Immovable PropertyProperty other than Immovable PropertyProperty other than Immovable Property
CA. Pramod Jain

4. MONEYMONEYMONEYMONEY
Receives any sum of moneyReceives any sum of moneyReceives any sum of moneyReceives any sum of money
Without considerationWithout considerationWithout considerationWithout consideration
Aggregate value of which exceeds Rs.Aggregate value of which exceeds Rs.Aggregate value of which exceeds Rs.Aggregate value of which exceeds Rs.
50000/50000/50000/50000/----
IncomeIncomeIncomeIncome ---- whole of the aggregate valuewhole of the aggregate valuewhole of the aggregate valuewhole of the aggregate value
of such sumof such sumof such sumof such sum
ExceptionsExceptionsExceptionsExceptions –––– relatives, etc.. discussedrelatives, etc.. discussedrelatives, etc.. discussedrelatives, etc.. discussed
laterlaterlaterlater
CA. Pramod Jain

5. IMMOVABLE PROPERTYIMMOVABLE PROPERTYIMMOVABLE PROPERTYIMMOVABLE PROPERTY
Covers land, building or bothCovers land, building or bothCovers land, building or bothCovers land, building or both
Receives without considerationReceives without considerationReceives without considerationReceives without consideration ---- stamp dutystamp dutystamp dutystamp duty
value exceedsvalue exceedsvalue exceedsvalue exceeds Rs. 50000/Rs. 50000/Rs. 50000/Rs. 50000/----
Receives through inadequate considerationReceives through inadequate considerationReceives through inadequate considerationReceives through inadequate consideration ––––
consideration less than stamp duty valueconsideration less than stamp duty valueconsideration less than stamp duty valueconsideration less than stamp duty value ––––
difference exceeds Rs. 50000/difference exceeds Rs. 50000/difference exceeds Rs. 50000/difference exceeds Rs. 50000/----
ExceptionsExceptionsExceptionsExceptions –––– relatives, etc.. Discussed laterrelatives, etc.. Discussed laterrelatives, etc.. Discussed laterrelatives, etc.. Discussed later
WhereWhereWhereWhere date of agreementdate of agreementdate of agreementdate of agreement &&&& date of registrationdate of registrationdate of registrationdate of registration
are not same, value on date of agreementare not same, value on date of agreementare not same, value on date of agreementare not same, value on date of agreement ifififif
some payment made by a/csome payment made by a/csome payment made by a/csome payment made by a/c payee cheque /bankpayee cheque /bankpayee cheque /bankpayee cheque /bank
draftdraftdraftdraft //// ECS on or beforeECS on or beforeECS on or beforeECS on or before datedatedatedate ofofofof agreementagreementagreementagreement
CA. Pramod Jain

6. IMMOVABLE PROPERTYIMMOVABLE PROPERTYIMMOVABLE PROPERTYIMMOVABLE PROPERTY
If value disputed byIf value disputed byIf value disputed byIf value disputed by assesseeassesseeassesseeassessee u/s 50C(2) , AOu/s 50C(2) , AOu/s 50C(2) , AOu/s 50C(2) , AO
may refer to Valuation Officermay refer to Valuation Officermay refer to Valuation Officermay refer to Valuation Officer
IsIsIsIs immimmimmimm. property being stock. property being stock. property being stock. property being stock----inininin----trade covered?trade covered?trade covered?trade covered?
Is leasehold land covered?Is leasehold land covered?Is leasehold land covered?Is leasehold land covered?
TransferTransferTransferTransfer of leaseholdof leaseholdof leaseholdof leasehold rightsrightsrightsrights inininin a buildinga buildinga buildinga building do notdo notdo notdo not
attract provisions of S.attract provisions of S.attract provisions of S.attract provisions of S. 50C50C50C50C ---- DCIT vDCIT vDCIT vDCIT v TejinderTejinderTejinderTejinder Singh (2012)Singh (2012)Singh (2012)Singh (2012)
(50 SOT 391) ((50 SOT 391) ((50 SOT 391) ((50 SOT 391) (KolKolKolKol))))
Leasehold rights in plot of land is not `land orLeasehold rights in plot of land is not `land orLeasehold rights in plot of land is not `land orLeasehold rights in plot of land is not `land or
building or both’building or both’building or both’building or both’ ---- AtulAtulAtulAtul G.G.G.G. PuranikPuranikPuranikPuranik v. ITO (132 ITDv. ITO (132 ITDv. ITO (132 ITDv. ITO (132 ITD
499)(Mum499)(Mum499)(Mum499)(Mum))))....
S. 50C applies to Transfer of Development RightsS. 50C applies to Transfer of Development RightsS. 50C applies to Transfer of Development RightsS. 50C applies to Transfer of Development Rights ----
ChiranjeevChiranjeevChiranjeevChiranjeev Lal Khanna v. ITO (132 ITD 474)(MumLal Khanna v. ITO (132 ITD 474)(MumLal Khanna v. ITO (132 ITD 474)(MumLal Khanna v. ITO (132 ITD 474)(Mum))))
CA. Pramod Jain

7. IMMOVABLE PROPERTYIMMOVABLE PROPERTYIMMOVABLE PROPERTYIMMOVABLE PROPERTY
Mr. A (not a relative of Mr. B) gifts immovableMr. A (not a relative of Mr. B) gifts immovableMr. A (not a relative of Mr. B) gifts immovableMr. A (not a relative of Mr. B) gifts immovable
property whose stamp duty value is Rs. 15property whose stamp duty value is Rs. 15property whose stamp duty value is Rs. 15property whose stamp duty value is Rs. 15
Lakhs to Mr. B.Lakhs to Mr. B.Lakhs to Mr. B.Lakhs to Mr. B.
Actual cost in hands of Mr. A was Rs. 18 Lakhs.Actual cost in hands of Mr. A was Rs. 18 Lakhs.Actual cost in hands of Mr. A was Rs. 18 Lakhs.Actual cost in hands of Mr. A was Rs. 18 Lakhs.
What would be the cost of acquisition in handsWhat would be the cost of acquisition in handsWhat would be the cost of acquisition in handsWhat would be the cost of acquisition in hands
of Mr. B?of Mr. B?of Mr. B?of Mr. B?
S. 49(1)S. 49(1)S. 49(1)S. 49(1) –––– cost to previous owner i.e. Rs. 18 Lcost to previous owner i.e. Rs. 18 Lcost to previous owner i.e. Rs. 18 Lcost to previous owner i.e. Rs. 18 L
S. 49(4)S. 49(4)S. 49(4)S. 49(4) –––– If subject to s. 56(2), stamp duty value i.e.If subject to s. 56(2), stamp duty value i.e.If subject to s. 56(2), stamp duty value i.e.If subject to s. 56(2), stamp duty value i.e.
Rs. 15 LRs. 15 LRs. 15 LRs. 15 L
CA. Pramod Jain

8. OTHER THAN IMMOVABLE PROPERTYOTHER THAN IMMOVABLE PROPERTYOTHER THAN IMMOVABLE PROPERTYOTHER THAN IMMOVABLE PROPERTY
Property as per Explanation to 56(2)(vii)Property as per Explanation to 56(2)(vii)Property as per Explanation to 56(2)(vii)Property as per Explanation to 56(2)(vii)
Capital Asset being:Capital Asset being:Capital Asset being:Capital Asset being:
Shares andShares andShares andShares and securitiessecuritiessecuritiessecurities
JewelleryJewelleryJewelleryJewellery
ArchaeologicalArchaeologicalArchaeologicalArchaeological collectionscollectionscollectionscollections
DrawingsDrawingsDrawingsDrawings
PaintingsPaintingsPaintingsPaintings
SculpturesSculpturesSculpturesSculptures
Any work ofAny work ofAny work ofAny work of artartartart
BullionBullionBullionBullion
CA. Pramod Jain

9. EXCEPTIONSEXCEPTIONSEXCEPTIONSEXCEPTIONS
RelativeRelativeRelativeRelative
InInInIn case of ancase of ancase of ancase of an individual:individual:individual:individual:
a)a)a)a) SSSSpouse;pouse;pouse;pouse;
b)b)b)b) BrotherBrotherBrotherBrother orororor sister;sister;sister;sister;
c)c)c)c) BrotherBrotherBrotherBrother or sister of theor sister of theor sister of theor sister of the spouse;spouse;spouse;spouse;
d)d)d)d) BrotherBrotherBrotherBrother or sister of either of theor sister of either of theor sister of either of theor sister of either of the parents;parents;parents;parents;
e)e)e)e) AnyAnyAnyAny lineal ascendant orlineal ascendant orlineal ascendant orlineal ascendant or descendant;descendant;descendant;descendant;
f)f)f)f) AnyAnyAnyAny lineal ascendant or descendant of thelineal ascendant or descendant of thelineal ascendant or descendant of thelineal ascendant or descendant of the
spouse;spouse;spouse;spouse;
g)g)g)g) Spouse ofSpouse ofSpouse ofSpouse of person referred toperson referred toperson referred toperson referred to inininin (b) to ((b) to ((b) to ((b) to (f)f)f)f)
IIIInnnn case of acase of acase of acase of a HUF,HUF,HUF,HUF, any memberany memberany memberany member thereofthereofthereofthereof
CA. Pramod Jain

10. RELATIVESRELATIVESRELATIVESRELATIVES
CA. Pramod JainCA. Pramod JainCA. Pramod JainCA. Pramod Jain
IndividualIndividualIndividualIndividual SpouseSpouseSpouseSpouse
FatherFatherFatherFather MotherMotherMotherMother
BrotherBrotherBrotherBrother
&&&&
SpouseSpouseSpouseSpouse
SisterSisterSisterSister
&&&&
SpouseSpouseSpouseSpouse
BrotherBrotherBrotherBrother
&&&&
SpouseSpouseSpouseSpouse
SisterSisterSisterSister
&&&&
SpouseSpouseSpouseSpouse
BrotherBrotherBrotherBrother
&&&&
SpouseSpouseSpouseSpouse
BrotherBrotherBrotherBrother
&&&&
SpouseSpouseSpouseSpouse
SisterSisterSisterSister
&&&&
SpouseSpouseSpouseSpouse
SisterSisterSisterSister
&&&&
SpouseSpouseSpouseSpouse
FatherFatherFatherFather
MotherMotherMotherMother
DaughterDaughterDaughterDaughter
&&&&
SpouseSpouseSpouseSpouse
SonSonSonSon
&&&&
SpouseSpouseSpouseSpouse
AscendaAscendaAscendaAscenda
ntntntnt
DescenDescenDescenDescen
dantdantdantdant
AscendaAscendaAscendaAscenda
ntntntnt

11. EXCEPTIONSEXCEPTIONSEXCEPTIONSEXCEPTIONS
OnOnOnOn the occasion of the marriage of thethe occasion of the marriage of thethe occasion of the marriage of thethe occasion of the marriage of the
individualindividualindividualindividual
UUUUndernderndernder a will or by way of inheritancea will or by way of inheritancea will or by way of inheritancea will or by way of inheritance
InInInIn contemplation of death of the payer or donor,contemplation of death of the payer or donor,contemplation of death of the payer or donor,contemplation of death of the payer or donor,
as the case may beas the case may beas the case may beas the case may be
FFFFromromromrom anyanyanyany Local AuthorityLocal AuthorityLocal AuthorityLocal Authority as defined in theas defined in theas defined in theas defined in the
Explanation to section 10(20Explanation to section 10(20Explanation to section 10(20Explanation to section 10(20))))
FFFFromromromrom anyanyanyany FundFundFundFund orororor FoundationFoundationFoundationFoundation orororor UniversityUniversityUniversityUniversity orororor
otherotherotherother Educational InstitutionEducational InstitutionEducational InstitutionEducational Institution orororor HospitalHospitalHospitalHospital or otheror otheror otheror other
Medical InstitutionMedical InstitutionMedical InstitutionMedical Institution or anyor anyor anyor any TrustTrustTrustTrust orororor InstitutionInstitutionInstitutionInstitution
referred to in section 10(23C)referred to in section 10(23C)referred to in section 10(23C)referred to in section 10(23C)
CA. Pramod Jain

12. EXCEPTIONSEXCEPTIONSEXCEPTIONSEXCEPTIONS
FromFromFromFrom or by anyor by anyor by anyor by any TrustTrustTrustTrust orororor InstitutionInstitutionInstitutionInstitution registeredregisteredregisteredregistered
u/s 12A /12AAu/s 12A /12AAu/s 12A /12AAu/s 12A /12AA
BBBByyyy anyanyanyany FundFundFundFund orororor TrustTrustTrustTrust orororor InstitutionInstitutionInstitutionInstitution or anyor anyor anyor any
university or other educational institution or anyuniversity or other educational institution or anyuniversity or other educational institution or anyuniversity or other educational institution or any
hospital or other medical institution referredhospital or other medical institution referredhospital or other medical institution referredhospital or other medical institution referred inininin
S. 10(23C) (iv)S. 10(23C) (iv)S. 10(23C) (iv)S. 10(23C) (iv) –––– Importance in India / statesImportance in India / statesImportance in India / statesImportance in India / states
S. 10(23C) (v)S. 10(23C) (v)S. 10(23C) (v)S. 10(23C) (v) –––– ApprovedApprovedApprovedApproved religious or charitablereligious or charitablereligious or charitablereligious or charitable
trusttrusttrusttrust
S. 10(23C) (vi)S. 10(23C) (vi)S. 10(23C) (vi)S. 10(23C) (vi) –––– ApprovedApprovedApprovedApproved university or educationaluniversity or educationaluniversity or educationaluniversity or educational
instituteinstituteinstituteinstitute
S. 10(23C) (via)S. 10(23C) (via)S. 10(23C) (via)S. 10(23C) (via) –––– ApprovedApprovedApprovedApproved hospitalshospitalshospitalshospitals
CA. Pramod Jain

13. EXCEPTIONSEXCEPTIONSEXCEPTIONSEXCEPTIONS
ByByByBy way of transaction not regarded asway of transaction not regarded asway of transaction not regarded asway of transaction not regarded as transfer:transfer:transfer:transfer:
S. 47 (S. 47 (S. 47 (S. 47 (iiii)))) –––– Total / partial partition of HUFTotal / partial partition of HUFTotal / partial partition of HUFTotal / partial partition of HUF
S. 47 (vi)S. 47 (vi)S. 47 (vi)S. 47 (vi) –––– Amalgamation if amalgamated co. IndianAmalgamation if amalgamated co. IndianAmalgamation if amalgamated co. IndianAmalgamation if amalgamated co. Indian
S. 47S. 47S. 47S. 47 ((((via)via)via)via) –––– Amalgamation of two foreignAmalgamation of two foreignAmalgamation of two foreignAmalgamation of two foreign
companies asset being shares subject to certaincompanies asset being shares subject to certaincompanies asset being shares subject to certaincompanies asset being shares subject to certain
conditionsconditionsconditionsconditions
SSSS. 47. 47. 47. 47 ((((viaaviaaviaaviaa)))) –––– Amalgamation of banks sanctioned byAmalgamation of banks sanctioned byAmalgamation of banks sanctioned byAmalgamation of banks sanctioned by
CGCGCGCG
S. 47S. 47S. 47S. 47 ((((vibvibvibvib)))) –––– Demerger if resulting co. in Indian CoDemerger if resulting co. in Indian CoDemerger if resulting co. in Indian CoDemerger if resulting co. in Indian Co
S. 47S. 47S. 47S. 47 ((((vicvicvicvic)))) –––– Demerger of foreign company assetDemerger of foreign company assetDemerger of foreign company assetDemerger of foreign company asset
being shares subject to certain conditionsbeing shares subject to certain conditionsbeing shares subject to certain conditionsbeing shares subject to certain conditions
CA. Pramod Jain

14. EXCEPTIONSEXCEPTIONSEXCEPTIONSEXCEPTIONS
ByByByBy way of transaction not regarded asway of transaction not regarded asway of transaction not regarded asway of transaction not regarded as transfer:transfer:transfer:transfer:
SSSS. 47. 47. 47. 47 ((((vicavicavicavica)))) ---- business reorganisation, of a capitalbusiness reorganisation, of a capitalbusiness reorganisation, of a capitalbusiness reorganisation, of a capital
asset by the predecessor coasset by the predecessor coasset by the predecessor coasset by the predecessor co----operative bank to theoperative bank to theoperative bank to theoperative bank to the
successor cosuccessor cosuccessor cosuccessor co----operative bankoperative bankoperative bankoperative bank
S. 47S. 47S. 47S. 47 ((((vicbvicbvicbvicb)))) ---- business reorganisation, of a capitalbusiness reorganisation, of a capitalbusiness reorganisation, of a capitalbusiness reorganisation, of a capital
asset being sharesasset being sharesasset being sharesasset being shares bybybyby predecessor copredecessor copredecessor copredecessor co----operative bankoperative bankoperative bankoperative bank
totototo successor cosuccessor cosuccessor cosuccessor co----operative bankoperative bankoperative bankoperative bank
S. 47 (vid)S. 47 (vid)S. 47 (vid)S. 47 (vid) ---- transfertransfertransfertransfer or issue of shares by theor issue of shares by theor issue of shares by theor issue of shares by the
resulting company, in a scheme of demerger to theresulting company, in a scheme of demerger to theresulting company, in a scheme of demerger to theresulting company, in a scheme of demerger to the
shareholders of the demerged companyshareholders of the demerged companyshareholders of the demerged companyshareholders of the demerged company
SSSS. 47 (vii). 47 (vii). 47 (vii). 47 (vii) ---- trftrftrftrf by a shareholder, inby a shareholder, inby a shareholder, inby a shareholder, in schemeschemeschemescheme ofofofof
amalgamation,amalgamation,amalgamation,amalgamation, ofofofof capital assetcapital assetcapital assetcapital asset beingbeingbeingbeing share orshare orshare orshare or inininin
amalgamatingamalgamatingamalgamatingamalgamating co.co.co.co. subject to certain conditionssubject to certain conditionssubject to certain conditionssubject to certain conditions
CA. Pramod Jain

15. EXCEPTIONSEXCEPTIONSEXCEPTIONSEXCEPTIONS
FromFromFromFrom an individual by a trust created oran individual by a trust created oran individual by a trust created oran individual by a trust created or
established solely for the benefit of relative ofestablished solely for the benefit of relative ofestablished solely for the benefit of relative ofestablished solely for the benefit of relative of
the individualthe individualthe individualthe individual
CA. Pramod Jain

16. SHARE PREMIUMSHARE PREMIUMSHARE PREMIUMSHARE PREMIUM
S. 56(2) (S. 56(2) (S. 56(2) (S. 56(2) (viibviibviibviib)))) –––– w.e.fw.e.fw.e.fw.e.f. AY 2013. AY 2013. AY 2013. AY 2013----14141414
CCCCompany receives consideration from aompany receives consideration from aompany receives consideration from aompany receives consideration from a
resident for issue of shares exceeding FMVresident for issue of shares exceeding FMVresident for issue of shares exceeding FMVresident for issue of shares exceeding FMV
–––– aggregate consideration < 50Kaggregate consideration < 50Kaggregate consideration < 50Kaggregate consideration < 50K
Exemption for receipt byExemption for receipt byExemption for receipt byExemption for receipt by
CompanyCompanyCompanyCompany in which public are substantiallyin which public are substantiallyin which public are substantiallyin which public are substantially
interestedinterestedinterestedinterested
Venture capital undertaking from VC companyVenture capital undertaking from VC companyVenture capital undertaking from VC companyVenture capital undertaking from VC company
or VC fund as defined in 10(23FB)or VC fund as defined in 10(23FB)or VC fund as defined in 10(23FB)or VC fund as defined in 10(23FB)
Notified companiesNotified companiesNotified companiesNotified companies –––– startupstartupstartupstartup companiescompaniescompaniescompanies –––– Not.Not.Not.Not.
No. 45/2016 dated 14.6.2016No. 45/2016 dated 14.6.2016No. 45/2016 dated 14.6.2016No. 45/2016 dated 14.6.2016
CA. Pramod Jain

17. SHARE PREMIUMSHARE PREMIUMSHARE PREMIUMSHARE PREMIUM
FMV to be on the date of issue of sharesFMV to be on the date of issue of sharesFMV to be on the date of issue of sharesFMV to be on the date of issue of shares
higher of :higher of :higher of :higher of :
Rule 11UA / 11U; orRule 11UA / 11U; orRule 11UA / 11U; orRule 11UA / 11U; or
Satisfaction of AO based on value of its assetsSatisfaction of AO based on value of its assetsSatisfaction of AO based on value of its assetsSatisfaction of AO based on value of its assets
including intangible assets being goodwill, knowincluding intangible assets being goodwill, knowincluding intangible assets being goodwill, knowincluding intangible assets being goodwill, know----
how, patents, copyrights, trademarks, licences,how, patents, copyrights, trademarks, licences,how, patents, copyrights, trademarks, licences,how, patents, copyrights, trademarks, licences,
franchises or any other business or commercialfranchises or any other business or commercialfranchises or any other business or commercialfranchises or any other business or commercial
rights of similar naturerights of similar naturerights of similar naturerights of similar nature
CA. Pramod Jain

18. CA. Pramod Jain
RuleRuleRuleRule
11UA11UA11UA11UA
JewelleryJewelleryJewelleryJewellery
FMVFMVFMVFMV
PurchasePurchasePurchasePurchase
fromfromfromfrom regdregdregdregd
dealerdealerdealerdealer
InvoiceInvoiceInvoiceInvoice
valuevaluevaluevalue
OtherOtherOtherOther
modemodemodemode
ValuerValuerValuerValuer
ArchaeologicalArchaeologicalArchaeologicalArchaeological
collections, drawings,collections, drawings,collections, drawings,collections, drawings,
paintings, sculptures, orpaintings, sculptures, orpaintings, sculptures, orpaintings, sculptures, or
any work of artany work of artany work of artany work of art
FMVFMVFMVFMV
PurchasePurchasePurchasePurchase
fromfromfromfrom regdregdregdregd
dealerdealerdealerdealer
InvoiceInvoiceInvoiceInvoice
valuevaluevaluevalue
OtherOtherOtherOther
modemodemodemode
ValuerValuerValuerValuer
Shares &Shares &Shares &Shares &
SecuritiesSecuritiesSecuritiesSecurities
QuotedQuotedQuotedQuoted
UnquoteUnquoteUnquoteUnquote
dddd

19. CA. Pramod Jain
Quoted Shares &Quoted Shares &Quoted Shares &Quoted Shares &
SecuritiesSecuritiesSecuritiesSecurities
Received through SEReceived through SEReceived through SEReceived through SE
Transaction value onTransaction value onTransaction value onTransaction value on
SESESESE
Other modeOther modeOther modeOther mode
Quoted on SE onQuoted on SE onQuoted on SE onQuoted on SE on
transaction datetransaction datetransaction datetransaction date
Lowest price on thatLowest price on thatLowest price on thatLowest price on that
datedatedatedate
Not Quoted on SE onNot Quoted on SE onNot Quoted on SE onNot Quoted on SE on
transaction datetransaction datetransaction datetransaction date
Lowest price of lastLowest price of lastLowest price of lastLowest price of last
tradetradetradetrade

20. UNQUOTED SHARESUNQUOTED SHARESUNQUOTED SHARESUNQUOTED SHARES ---- TRANSFERTRANSFERTRANSFERTRANSFER
FMV =FMV =FMV =FMV = (A+B+C+D(A+B+C+D(A+B+C+D(A+B+C+D ---- L)L)L)L)×××× (PV)/(PE)(PV)/(PE)(PV)/(PE)(PV)/(PE)
A=A=A=A= BookBookBookBook value ofvalue ofvalue ofvalue of allallallall assets (other thanassets (other thanassets (other thanassets (other than
jewellery, artistic work, shares, securities andjewellery, artistic work, shares, securities andjewellery, artistic work, shares, securities andjewellery, artistic work, shares, securities and
immovable property) inimmovable property) inimmovable property) inimmovable property) in B/S asB/S asB/S asB/S as reduced byreduced byreduced byreduced by
any amount ofany amount ofany amount ofany amount of IT paid less IT refundIT paid less IT refundIT paid less IT refundIT paid less IT refund claimed, ifclaimed, ifclaimed, ifclaimed, if anyanyanyany
any amount shown as asset includingany amount shown as asset includingany amount shown as asset includingany amount shown as asset including unamortisedunamortisedunamortisedunamortised
amount of deferred expenditure which does notamount of deferred expenditure which does notamount of deferred expenditure which does notamount of deferred expenditure which does not
represent the value of anyrepresent the value of anyrepresent the value of anyrepresent the value of any assetassetassetasset
B = PB = PB = PB = Price whichrice whichrice whichrice which jewelleryjewelleryjewelleryjewellery & artistic& artistic& artistic& artistic work wouldwork wouldwork wouldwork would
fetch if sold infetch if sold infetch if sold infetch if sold in openopenopenopen market onmarket onmarket onmarket on basisbasisbasisbasis ofofofof
registeredregisteredregisteredregistered valuervaluervaluervaluer reportreportreportreport
CA. Pramod Jain

21. UNQUOTED SHARESUNQUOTED SHARESUNQUOTED SHARESUNQUOTED SHARES ---- TRANSFERTRANSFERTRANSFERTRANSFER
C =C =C =C = FMV ofFMV ofFMV ofFMV of shares and securities as determinedshares and securities as determinedshares and securities as determinedshares and securities as determined
inininin this rulethis rulethis rulethis rule
D =D =D =D = Stamp duty valueStamp duty valueStamp duty valueStamp duty value adopted or assessed oradopted or assessed oradopted or assessed oradopted or assessed or
assessable by any authority of the Governmentassessable by any authority of the Governmentassessable by any authority of the Governmentassessable by any authority of the Government
inininin respect of the immovable propertyrespect of the immovable propertyrespect of the immovable propertyrespect of the immovable property
L=L=L=L= BookBookBookBook value of liabilitiesvalue of liabilitiesvalue of liabilitiesvalue of liabilities in B/Sin B/Sin B/Sin B/S notnotnotnot including:including:including:including:
Equity paidEquity paidEquity paidEquity paid----up capitalup capitalup capitalup capital
AmountAmountAmountAmount set apart for payment of dividends onset apart for payment of dividends onset apart for payment of dividends onset apart for payment of dividends on
preferencepreferencepreferencepreference andandandand equity shares where such dividendsequity shares where such dividendsequity shares where such dividendsequity shares where such dividends
have not been declared before the date of transferhave not been declared before the date of transferhave not been declared before the date of transferhave not been declared before the date of transfer
atatatat AGMAGMAGMAGM
CA. Pramod Jain

22. UNQUOTED SHARESUNQUOTED SHARESUNQUOTED SHARESUNQUOTED SHARES ---- TRANSFERTRANSFERTRANSFERTRANSFER
LLLL==== BookBookBookBook value of liabilitiesvalue of liabilitiesvalue of liabilitiesvalue of liabilities in B/Sin B/Sin B/Sin B/S notnotnotnot including:including:including:including:
R&S,R&S,R&S,R&S, including negative balance, other than setincluding negative balance, other than setincluding negative balance, other than setincluding negative balance, other than set
apart towards depreciationapart towards depreciationapart towards depreciationapart towards depreciation
Provision forProvision forProvision forProvision for tax,tax,tax,tax, other thanother thanother thanother than IT paidIT paidIT paidIT paid lesslesslessless IT RefundIT RefundIT RefundIT Refund
totototo the extent ofthe extent ofthe extent ofthe extent of excessexcessexcessexcess over the tax payableover the tax payableover the tax payableover the tax payable u/su/su/su/s
115JB115JB115JB115JB
UnascertainedUnascertainedUnascertainedUnascertained liabilitiesliabilitiesliabilitiesliabilities
ContingentContingentContingentContingent liabilities other than arrears of dividendsliabilities other than arrears of dividendsliabilities other than arrears of dividendsliabilities other than arrears of dividends
payable in respect of cumulative preference sharespayable in respect of cumulative preference sharespayable in respect of cumulative preference sharespayable in respect of cumulative preference shares
PV= Paid up value of such equity sharesPV= Paid up value of such equity sharesPV= Paid up value of such equity sharesPV= Paid up value of such equity shares
PE = Paid up equity share capitalPE = Paid up equity share capitalPE = Paid up equity share capitalPE = Paid up equity share capital
CA. Pramod Jain

23. UNQUOTED SECURITIESUNQUOTED SECURITIESUNQUOTED SECURITIESUNQUOTED SECURITIES ---- TRANSFERTRANSFERTRANSFERTRANSFER
PricePricePricePrice it would fetch if sold in the open marketit would fetch if sold in the open marketit would fetch if sold in the open marketit would fetch if sold in the open market
on the valuation dateon the valuation dateon the valuation dateon the valuation date
AssesseeAssesseeAssesseeAssessee may obtain a report from a merchantmay obtain a report from a merchantmay obtain a report from a merchantmay obtain a report from a merchant
banker or an accountant in respect of whichbanker or an accountant in respect of whichbanker or an accountant in respect of whichbanker or an accountant in respect of which
suchsuchsuchsuch valuationvaluationvaluationvaluation
CA. Pramod Jain

24. UNQUOTED SHARESUNQUOTED SHARESUNQUOTED SHARESUNQUOTED SHARES ---- ISSUEISSUEISSUEISSUE
Two optionsTwo optionsTwo optionsTwo options
1.1.1.1. FMV =FMV =FMV =FMV = ((((AAAA ---- L)L)L)L)×××× (PV)/(PE)(PV)/(PE)(PV)/(PE)(PV)/(PE)
A=A=A=A= BookBookBookBook value ofvalue ofvalue ofvalue of allallallall assetsassetsassetsassets in B/S asin B/S asin B/S asin B/S as reduced byreduced byreduced byreduced by
any amount ofany amount ofany amount ofany amount of IT paid less IT refundIT paid less IT refundIT paid less IT refundIT paid less IT refund claimed, ifclaimed, ifclaimed, ifclaimed, if anyanyanyany
any amount shown as asset includingany amount shown as asset includingany amount shown as asset includingany amount shown as asset including unamortisedunamortisedunamortisedunamortised
amount of deferred expenditure which does notamount of deferred expenditure which does notamount of deferred expenditure which does notamount of deferred expenditure which does not
represent the value of anyrepresent the value of anyrepresent the value of anyrepresent the value of any assetassetassetasset
L= Book value of liabilities in B/S notL= Book value of liabilities in B/S notL= Book value of liabilities in B/S notL= Book value of liabilities in B/S not including …including …including …including …
same as for Transfersame as for Transfersame as for Transfersame as for Transfer
2.2.2.2. Merchant Banker or Accountant as per DCFMerchant Banker or Accountant as per DCFMerchant Banker or Accountant as per DCFMerchant Banker or Accountant as per DCF
CA. Pramod Jain

25. ACCOUNTANTACCOUNTANTACCOUNTANTACCOUNTANT
Who can issue valuation report ?Who can issue valuation report ?Who can issue valuation report ?Who can issue valuation report ?
For issue of sharesFor issue of sharesFor issue of sharesFor issue of shares [[[[Rule 11UA(2)]:Rule 11UA(2)]:Rule 11UA(2)]:Rule 11UA(2)]:
AAAA fellow of the ICAI who is not Taxfellow of the ICAI who is not Taxfellow of the ICAI who is not Taxfellow of the ICAI who is not Tax
Auditor or Statutory AuditorAuditor or Statutory AuditorAuditor or Statutory AuditorAuditor or Statutory Auditor
ForForForFor transfer:transfer:transfer:transfer:
SameSameSameSame as in the Explanation belowas in the Explanation belowas in the Explanation belowas in the Explanation below
section 288 (2)section 288 (2)section 288 (2)section 288 (2)
CA. Pramod Jain

26. BALANCE SHEETBALANCE SHEETBALANCE SHEETBALANCE SHEET
Which B/s date to be taken for valuation?Which B/s date to be taken for valuation?Which B/s date to be taken for valuation?Which B/s date to be taken for valuation?
For issue of sharesFor issue of sharesFor issue of sharesFor issue of shares [[[[Rule 11UA(2)]:Rule 11UA(2)]:Rule 11UA(2)]:Rule 11UA(2)]:
AuditedAuditedAuditedAudited B/SB/SB/SB/S ((((including the notes) as drawn up onincluding the notes) as drawn up onincluding the notes) as drawn up onincluding the notes) as drawn up on
valuationvaluationvaluationvaluation datedatedatedate
WhereWhereWhereWhere the B/S on the valuation date is not drawnthe B/S on the valuation date is not drawnthe B/S on the valuation date is not drawnthe B/S on the valuation date is not drawn
upupupup,,,, B/S (including the notes) drawn up as on a dateB/S (including the notes) drawn up as on a dateB/S (including the notes) drawn up as on a dateB/S (including the notes) drawn up as on a date
immediately preceding the valuation date whichimmediately preceding the valuation date whichimmediately preceding the valuation date whichimmediately preceding the valuation date which
has been approvedhas been approvedhas been approvedhas been approved &&&& adopted inadopted inadopted inadopted in AGMAGMAGMAGM
ForForForFor transfer:transfer:transfer:transfer:
Audited B/SAudited B/SAudited B/SAudited B/S of such company (including theof such company (including theof such company (including theof such company (including the notes)notes)notes)notes)
as drawn up onas drawn up onas drawn up onas drawn up on valuationvaluationvaluationvaluation datedatedatedate auditedauditedauditedaudited bybybyby statutorystatutorystatutorystatutory
auditorauditorauditorauditor
CA. Pramod Jain

27. ????????????????
SchoolsSchoolsSchoolsSchools having less than Rs. 1 Cr receipt fromhaving less than Rs. 1 Cr receipt fromhaving less than Rs. 1 Cr receipt fromhaving less than Rs. 1 Cr receipt from
education activities claimingeducation activities claimingeducation activities claimingeducation activities claiming exemption u/sexemption u/sexemption u/sexemption u/s
10(23C)(10(23C)(10(23C)(10(23C)(iiiadiiiadiiiadiiiad) receive donations) receive donations) receive donations) receive donations forforforfor buildingsbuildingsbuildingsbuildings
being capital receipts?being capital receipts?being capital receipts?being capital receipts?
Few people come together to build aFew people come together to build aFew people come together to build aFew people come together to build a
community centre and contribute Rs. 5 Lakhs?community centre and contribute Rs. 5 Lakhs?community centre and contribute Rs. 5 Lakhs?community centre and contribute Rs. 5 Lakhs?
Partner at time of dissolution withdrawsPartner at time of dissolution withdrawsPartner at time of dissolution withdrawsPartner at time of dissolution withdraws
immovable property whose book value is 25immovable property whose book value is 25immovable property whose book value is 25immovable property whose book value is 25
Lakhs but stamp duty value is 50 Lakhs.Lakhs but stamp duty value is 50 Lakhs.Lakhs but stamp duty value is 50 Lakhs.Lakhs but stamp duty value is 50 Lakhs.
Taxation in hands of firm as well as partner?Taxation in hands of firm as well as partner?Taxation in hands of firm as well as partner?Taxation in hands of firm as well as partner?
CA. Pramod Jain

28. ????????????????
HospitalsHospitalsHospitalsHospitals claiming exemption u/s 10(23Cclaiming exemption u/s 10(23Cclaiming exemption u/s 10(23Cclaiming exemption u/s 10(23C)))) ((((iiiaeiiiaeiiiaeiiiae))))
receive Corpus donations forreceive Corpus donations forreceive Corpus donations forreceive Corpus donations for building hospital?building hospital?building hospital?building hospital?
Mr. A receives Car Mercedes Benz value Rs. 50Mr. A receives Car Mercedes Benz value Rs. 50Mr. A receives Car Mercedes Benz value Rs. 50Mr. A receives Car Mercedes Benz value Rs. 50
Lakhs as gift from Mr B?Lakhs as gift from Mr B?Lakhs as gift from Mr B?Lakhs as gift from Mr B?
An unregisteredAn unregisteredAn unregisteredAn unregistered religious Trustreligious Trustreligious Trustreligious Trust receives Rs. 4receives Rs. 4receives Rs. 4receives Rs. 4
Lakhs as corpus donation for building ofLakhs as corpus donation for building ofLakhs as corpus donation for building ofLakhs as corpus donation for building of
temple?temple?temple?temple?
A company dealing in immovable propertyA company dealing in immovable propertyA company dealing in immovable propertyA company dealing in immovable property
purchasespurchasespurchasespurchases immimmimmimm property below stamp duty rate?property below stamp duty rate?property below stamp duty rate?property below stamp duty rate?
Are Preference Shares covered u/s 56(2)(Are Preference Shares covered u/s 56(2)(Are Preference Shares covered u/s 56(2)(Are Preference Shares covered u/s 56(2)(viibviibviibviib))))
CA. Pramod Jain

29. CA. Pramod JainCA. Pramod JainCA. Pramod JainCA. Pramod Jain
pramodjain@lunawat.compramodjain@lunawat.compramodjain@lunawat.compramodjain@lunawat.com
+91 9811073867+91 9811073867+91 9811073867+91 9811073867
© 2017 CA. Pramod Jain,© 2017 CA. Pramod Jain,© 2017 CA. Pramod Jain,© 2017 CA. Pramod Jain,