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    NIRAJ JAIN New Member

    The fair market value of unquoted equity shares shall be the value, on the valuation date, of such unquoted equity shares as determined in the following manner, namely:

    The fair market value of unquoted equity shares = [(A-L)/(PE)] * (PV)


    A = Book value of the assets in Balance Sheet as reduced by any amount paid as advance tax under the Income-tax Act and any amount shown in the balance sheet including the debit balance of the profit and loss account or the profit and loss appropriation account which does not represent the value of any asset.

    L = Book value of liabilities shown in the Balance Sheet but not including the following amounts:

    (i) the paid-up capital in respect of equity shares;

    (ii) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company;

    (iii) reserves, by whatever name called, other than those set apart towards depreciation;

    (iv) credit balance of the profit and loss account;

    (v) any amount representing provision for taxation, other than amount paid as advance tax under the Income-tax Act, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;

    (vi) any amount representing provisions made for meeting liabilities, other than ascertained liabilities;

    (vii) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares.

    PE = Total amount of paid up equity share capital as shown in Balance Sheet.

    PV = the paid up value of such equity shares.

    (c) the fair market value of unquoted shares and securities other than equity shares in a company which are not listed in any recognized stock exchange 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 such valuation.]
    Neha Sharma likes this.
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