Section 50CA Special provision for full value of consideration for transfer of share other than quoted share

Section 50CA Special provision for full value of consideration for transfer of share other than quoted share

Section 50CA of Income tax Act, 1961 Read Rule 11UAA

Analysis of above mentioned Section with Rule are as under:-

Section 50CA i.e.  Special provision for full value of consideration for transfer of share other than quoted share

Read with Rule 11UAA i.e. Determination of Fair Market Value for share other than quoted share

Explanation:-

• Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being share of a company (other than a quoted share), is less than the fair market value of such share determined in such manner as may be prescribed (Rule 11UAA), the value so determined shall, for the purposes of section 48, be deemed to be the full value of consideration received or accruing as a result of such transfer.

        If Consideration received or accruing < fair market value  then, 

               Full value of consideration (FVOC) = FMV of Share  

• Provided that the provisions of this section shall not apply to any consideration received or accruing as a result of transfer by such class of persons and subject to such conditions as may be prescribed.

Rule 11UAA Determination of Fair Market Value for share other than quoted share

For the purposes of section 50CA,

• the fair market value of the share of a company (other than a quoted share),
• shall be determined in the manner provided in sub-clause (b) or sub-clause (c),as the case may be, of clause (c) of sub-rule (1) of rule 11UA and
• for this purpose the reference to valuation date in the rule 11U and rule 11UA shall mean the date on which the capital asset, being share of a company other than a quoted share, referred to in section 50CA, is transferred.

Note:-

“Quoted share” means the share quoted on any recognized stock exchange with regularity from time to time, where the quotation of such share is based on current transaction made in the ordinary course of business.