Use of a valuation officer for capital assets When it comes to the question of the valuation of a capital asset then there could be disputes between the tax payer and the Income tax department on this issue. This can lead to a conflict but there is a mechanism by which this can be resolved and it is the position of referring the case to a valuation office by the Income tax department. There are specific conditions under which this can be done and once it is completed then the result as given by the valuation officer would have to be taken into consideration. It is vital to look at the conditions when this would work and here is a look at the details. Lower value of assets The whole question of having a valuation officer in the picture arises when there is a capital asset that is sold and the price for which this is sold is not acceptable to the tax department. There could be a transfer of the capital asset in many different ways and there can be a position where the tax department feels that the value that is claimed by the individual is less than the fair market value. In many cases there is no question of a dispute in the sense that if there are shares that are sold on the stock exchange then there is a traded price that is available. Similarly in case of a sale of a property there is the stamp duty value that can be used under the law. However in many cases there has to be an estimate made by a registered valuer and an example could be of some gold jewellery that is valued in this manner and here the valuer works in his private capacity. There is a license that is issued by the Central Board of Direct Taxes (CBDT) for the valuers and the presence of this is also essential. The other condition that has to be fulfilled is that the valuation advice that is given should not be binding on the income tax department. Only when this is present would the situation be able to go ahead. The basis for the start of the referral process is that the value so claimed is less than the fair market value. When this happens then the case can be referred to a valuation officer who would undertake the necessary work and give the details as required. Monetary difference There is another condition that could come into play wherein the assessing officer feels that the fair market value of the asset is more than a certain figure as compared to the claimed figure. This has been quantified monetarily to be either more than Rs 25,000 or 15 per cent of the value claimed by the tax payer whichever is less. Once this is present then the matter can be referred to the valuation officer. It has to be noted that in this case the coverage is wider as it could include any valuation undertaken by the taxpayer which is thought to be less than the fair value and hence needs some careful attention. Opinion matters Another conditions which will give rise to a similar situation requiring referral is actually quite wide in the sense that here there just has to be an opinion of the valuation officer that the having regard to the nature of the asset and the relevant circumstances it is necessary to actually make such a referral. Here there has to be clear opinion that it is necessary to ensure that the valuation officer has a look at the matter and gives his opinion and this becomes a crucial thing that would have to be considered. This gives quite a broad frame for the tax department to make the necessary moves towards ensuring that there is a relook by the valuation officer. for more similar blog visit: vkaprofessionals/
Posted on: Thu, 22 May 2014 07:01:51 +0000
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