Taxation Of Gifts U/s 56(2): CBDT Modifies Rule For Valuation Of Unquoted Shares

 

U/s 56(2)(vii)(c), (viia) & (viib), the receipt of shares of a company for a consideration which is less than the aggregate fair market value of the shares is deemed to be “income” to the extent that the fair market value of the shares exceeds the consideration. The formula for determining the “fair market of the shares” is set out in Rule 11UA. Vide Notification No. 52/2012 [f.no. 142/19/2012-so (tpl)]/so 2805(e), dated 29-11-2012, Rule 11UA has been amended to provide, in respect of unquoted shares, a revised method of determining the FMV and to give the assessee the choice of valuing the shares as per the Discounted Free Cash Flow method.