Professional Documents
Culture Documents
Exceptions being:
[(a) Receipts from certain relatives; as defined in the section]. (Refer Chart)
Sec. 56(2)(v) has been amended by the Taxation Laws (Amendment) Act, 2006
so as to exempt also the receipts from:
Sec. 56(2) has been further amended and w.e.f. 1-10-2009, the scope of gift
is increased by adding immovable property or any property besides sum of
money [S. 56(2)(vii)] but excluding stock-in-trade, raw material, consumable
stores or any other trading assets as under :
List of Property –
iii) jewellery ;
v) drawings ;
vi) paintings ;
vii) sculptures ;
(a) without consideration – if stamp duty value exceeds Rs. 50,000/-, stamp duty
value
(b) for a consideration which is less than stamp duty value – Provision not
applicable
(a) without consideration – fair market value exceeds Rs. 50,000/-, fair market
value of the property
(b) for a consideration – fair market value less consideration exceeds Rs.
50,000/-, the fair value less consideration.
1. Bullion
Notes:
Background:
The Finance (No. 2) Act, 2009 has inserted clause (vii) in section 56(2) of the
Income-tax Act (‘the Act’) to tax an Individual or a Hindu Undivided Family (HUF)
who is receiving any asset which is in the nature of shares and securities,
jewellery, archaeological collections, drawings, paintings, sculptures or any work
of art (specified assets) without consideration or for inadequate consideration i.e.
consideration which is less than fair market value (FMV) by an amount exceeding
Rs. 50,000. Further, the Finance Bill, 2010 proposes to insert a similar provision
to tax receipt of shares of a closely-held company by a firm or another closely
held company. If Bill is enacted and become part of the law, then, the rules
notified will also apply to the valuation of shares covered by the proposed
provisions.
The rules 11U and 11UA prescribes the different methods for the purpose of
valuation of specified assets.
The FMV of the specified asset needs to be determined on a date on which such
specified assets are received by the assessee.
The determination of FMV, under this rule, will be only for the purpose of section
56 of the Act.
Notification No. 23/ 2010, which shall come into force from 1st October, 2009.
Further, specified assets received from relative are not covered by the provisions
of Section 56(2)(vii) of the Act.
Methods of Valuation
(A – L) x PV
—————
PE
Where,
A = Book value of assets in balance
sheet
less
advance income-tax paid, any amount
which does
not represent the value of any asset,
including debit
balance in profit & loss account