#Fair Market Value

The ITAT Pune has ruled that once an assessee selects either the Net Asset Value (NAV) or Discounted Cash Flow (DCF) method under Rule 11UA to determine the fair market value of unlisted shares, the Assessing Officer has no authority to substitute it with another valuation approach or question its realism. This reinforces taxpayer autonomy in valuation and curbs arbitrary tax additions, directly impacting startups, private equity deals, and closely held companies.

ITAT Jabalpur rules that for capital gains computation under Section 50C, the consideration is deemed received on the date the account payee cheque is deposited into the seller’s account, not on the date of sale deed execution. This clarifies the timing of income recognition for sellers who receive part payment via crossed cheques, impacting how indexed cost and capital gains are calculated in delayed property transactions.

The ITAT Mumbai has affirmed that taxpayers acquiring capital assets before April 1, 2001, have a statutory right to use the fair market value as of that date for indexation, regardless of whether the valuation report is submitted after the assessment is completed. This clarifies procedural flexibility for legacy asset holders and reinforces the intent of Section 55(2)(b) to prevent unfair taxation on pre-reform holdings.

ITAT Delhi rules that Section 56(2)(viib) of the Income Tax Act applies only when consideration is received in the assessment year of share allotment. Funds received earlier via Compulsorily Convertible Debentures (CCD) conversion do not attract tax on share premium, even if valuation is based on prior balance sheets. The ruling clarifies the timing of receipt for tax applicability under this provision.

ITAT Mumbai rules that share premium received before Section 56(2)(viib) came into force (01/04/2013) cannot be taxed, even if shares are allotted later. The tribunal invalidates additions under Section 68 for lack of notice and procedural compliance, reinforcing that tax provisions cannot apply retrospectively to past transactions.

The Punjab & Haryana High Court ruled that a final award in a prior land acquisition case under the same notification and purpose serves as a valid benchmark for determining market value, especially when superior sale instances are either non-comparable or undocumented. This holding ensures consistency in compensation determination and prevents arbitrary valuation discrepancies.