Income Tax Department

Ministry of Finance, Government of India

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Rule Number 56

Meaning of expressions used in determination of fair market value

Rule Number

56

Upload Date

08/01/2026

Meaning of expressions used in determination of fair market value.

56. For the purposes of this rule and rule 57,—

(a)

"balance sheet", in relation to any company, means,—

(i)		in relation to an Indian company, the balance sheet of such company (including the notes annexed thereto and forming part of the accounts) as drawn up on the valuation date which has been audited by the auditor of the company appointed under the laws relating to companies in force; and
(ii)		in relation to a company, not being an Indian company, the balance sheet of the company (including the notes annexed thereto and forming part of the accounts) as drawn up on the valuation date which has been audited by the auditor of the company, if any, appointed under the laws in force of the country in which the company is registered or incorporated;

(b)		"merchant banker" means category I merchant banker registered with Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(c)		"quoted shares or securities" in relation to shares or securities means a share or security quoted on any recognised stock exchange with regularity from time to time, where the quotations of such shares or securities are based on current transaction made in the ordinary course of business;
(d)		"recognised stock exchange" shall have the same meaning as assigned to it in section 2(f) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(e)		"registered dealer" means a dealer who is registered under Central Sales Tax Act, 1956 (74 of 1956) or general sales tax law for the time being in force in any State including value added tax laws;
(f)		"registered valuer" shall have the same meaning as assigned to it in section 513;
(g)		"securities" shall have the same meaning as assigned to it in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(h)		"unquoted shares and securities", in relation to shares or securities, means shares and securities which are not quoted shares or securities; and
(i)		"valuation date" means the date provided in the Table below:—

TABLE

	Sl. No.	Section	Valuation date
	A	B	C
	1	Section 92	Date on which property or consideration, as the case may be, referred to in section 92 is received by the assessee.
	2	Section 79	Date on which the capital asset, being share of a company other than a quoted share, referred to in section 79, is transferred.
	3	Section 26(2)(j)	Date on which the inventory is converted, or treated, as a capital asset.