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Fair market value (fmv) of private limited company

Tax queries 1921 views 3 replies

Hi,

 

My client had purchased 100 shares in a private limited company in 1975 @ Rs. 10 per share. He wants to sell these shares to a third party @ Rs. 1,000 per share.

Can I take the FMV of the shares as 1 April 2001 and calculate the capital gain. 

How do i calculate the FMV of the shares as on 1 Apil 2001

I have prepared a small table. Request you to let me know which of the scenarios is correct. Please feel free to indicate any mistakes / error in the same.

Thanks and regards,

CA Chandresh Sanat Jatania

 

  a b c d=(c*b)/a e  f=e-d 
Scenario CIF of base year CIF year of sale  (assumed) Purchase price Indexed Cost of acquisition Sale price  Long term capital gain 
Base year is 1981 100                              1,165                    1,000                       11,650          100,000                      88,350
Base year is 2001 100                                 280                    1,000                         2,800          100,000                      97,200

 

 

Replies (3)
for calculation of CG on sale of Equity share it is better to Calculate the Index COA of share as on 1.04.2001 which will be 4060 and consider this as the base cost of Equity Share as on 01.04.2001 and then reindex it to current year indexation I.e. 4060*280/100 this will be the ICOA. also ensure the sale price of equity share I.e. Rs. 1000/- per share is in complice with section 50CA and section 56(2)(x) read will rule 11U and 11UA(1)(c)(b).
for calculation of CG on sale of Equity share it is better to Calculate the Index COA of share as on 1.04.2001 which will be 4060 and consider this as the base cost of Equity Share as on 01.04.2001 and then reindex it to current year indexation I.e. 4060*280/100 this will be the ICOA. also ensure the sale price of equity share I.e. Rs. 1000/- per share is in complice with section 50CA and section 56(2)(x) read will rule 11U and 11UA(1)(c)(b).
for calculation of CG on sale of Equity share it is better to Calculate the Index COA of share as on 1.04.2001 which will be 4060 and consider this as the base cost of Equity Share as on 01.04.2001 and then reindex it to current year indexation I.e. 4060*280/100 this will be the ICOA. also ensure the sale price of equity share I.e. Rs. 1000/- per share is in complice with section 50CA and section 56(2)(x) read will rule 11U and 11UA(1)(c)(b).


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