Section 57 — Determination of fair market value

For the purpose of following sections referred to in column B of the Table below, the fair market value of the property of the nature referred to column Cshall be determined in the manner provided in column D thereof :—
TABLE
Sl.No. Section Nature of Property Manner of determination of Fair Market Value
A B C D
1 Sections26(2)(j) and92.
Jewellery (a) The price which such jewellery would fetch, if sold in the open market on thevaluation date; or(b) if the jewellery is received by way of purchase from a registered dealer on thevaluation date, the invoice value of such jewellery; or(c) if the jewellery is received by any other mode and its value exceeds Rs. 50,000, theassessee may obtain a report from a registered valuer regarding the price it wouldfetch, if sold in the open market on the valuation date.
2 Sections26(2)(j) and92.
Archaeological collections, drawings,paintings, sculptures or any work of art(herein referred as artistic work)
(a) The price which such artistic work would fetch, if sold in the open market on thevaluation date; or(b) if the artistic work is received by way of purchase from a registered dealer on thevaluation date, the invoice value of such artistic work; or(c) if the artistic work is received through any other means and its value exceeds Rs.50,000, the assessee may obtain a report from a registered valuer regarding the price itwould fetch, if sold in the open market on the valuation date.
3 Sections26(2)(j) and92.
Quoted shares and securities(a) If the quoted shares and securities are received by way of transaction carried outthrough any recognised stock exchange, the fair market value of such shares andsecurities shall be the transaction value as recorded in such stock exchange; or(b) if such quoted shares and securities are received by way of transaction carried outother than through any recognised stock exchange, their fair market shall be:—(A) the lowest price of such shares and securities quoted on any recognised stockexchange on the valuation date; and(B) in cases, where on the valuation date, there is no trading in shares andsecurities on any recognised stock exchange, the lowest price of such sharesand securities on any recognised stock exchange on a date immediatelypreceding the valuation date when such shares and securities were traded onsuch stock exchange.
4 Sections26(2)(j), 72and 92.
Unquoted equity sharesFair market value of unquoted equity shares = (A + B + C + D – L) × (PV)/(PE),Where,–
A = book value of all the assets as appearing in the books of the company (other thanjewellery, artistic work, shares, securities and immovable property) in the balance sheet asreduced by—
(a) any amount of income-tax paid, if any, less the amount of income-tax refund claimed,if any; and(b) any amount shown as asset including the unamortised amount of deferred expenditurewhich does not represent the value of any asset;
B = the price which the jewellery and artistic work would fetch if sold in the open marketon the basis of the valuation report obtained from a registered valuer;
C = fair market value of shares and securities as determined in the manner provided in thisrule;
D = the value adopted or assessed or assessable by any authority of the Government forthe purpose of payment of stamp duty in respect of the immovable property; and
L = book value of liabilities shown in the balance sheet, but not including the followingamounts:—
(i) the paid-up capital in respect of equity shares;(ii) the amount set apart for payment of dividends on preference shares and equity shareswhere such dividends have not been declared before the date of transfer at a generalbody 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 income-tax paid,if any, less the amount of income-tax claimed as refund, if any, to the extent of theexcess over the tax payable with reference to the book profits in accordance with thelaw applicable thereto;(v) any amount representing provisions made for meeting liabilities, other thanascertained liabilities; and(vi) any amount representing contingent liabilities other than arrears of dividends payablein respect of cumulative preference shares;
PV = the paid-up value of such equity shares; and
PE = total amount of paid-up equity share capital as shown in the balance sheet.
5 Sections26(2)(j), 72and 92.
Unquoted shares and securities (otherthan equity shares in a company) whichare not listed in any recognised stockexchange
The price it would fetch, if sold in the open market on the valuation date and the assessee mayobtain a report from a merchant banker or an accountant in respect of such valuation.
6 Section26(2)(j) Immovable property being land orbuilding or both The value adopted or assessed or assessable by any authority of the Central Government or aState Government for the purpose of payment of stamp duty in the respect of such immovableproperty on the valuation date.
7 Section26(2)(j) Any other property other than referredto at Sl. Nos. 1 to 6 above.The price that such property would ordinarily fetch on sale in the open market on thevaluation date.