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Black Money Assets Valuation

 
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amibrahim



Joined: 03 Sep 2008
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PostPosted: Fri Jun 09, 2017 5:56 am    Post subject: Black Money Assets Valuation Reply with quote

The Black Money Assets Valuation

 (Key Words: The topic deals I. Black Money as defined by the Act 2015 and Registration procedure with income tax authority (Rules 2015), II.Rule 2015 Form 6 complied Statement of undisclosed assets of Immovable Property, III. Works of Art, IV. Shares and securities, including partnership firms etc. V. Any other assets, VI.Jwellery Valuation and VII. Author’s view).

I. This article is with reference to The Black Money (Undisclosed foreign income and assets) Imposition of tax Act 2015 to be read with Rules 2015. The Act and Rules are to make provisions to deal with the problem of the Black Money that is undisclosed foreign income and assets, the procedure for dealing with such income and assets and to provide for imposition of tax on any undisclosed foreign income and assets held outside India and for matters connected therewith or incidental thereto. 

The Black Money is defined as “Undisclosed Foreign Income and Assets. The Preliminary Section 2(11) of the Act defines ““Undisclosed asset located outside India’ means an asset (Including financial interest in any entity) located outside India, held by the assesse {(a person (or property that is assessed to income tax)} in his name or in respect of which he is a beneficial owner, and he has no explanation about the source of investment in such an asset or the explanation given by him is in the opinion of the ‘Assessing officer’ unsatisfactory. 

‘Value of an undisclosed asset” means the Fair Market Value (FMV) of an asset (Including financial interest in any entity) determined in such manner {(Chapter II. S (3) (2) of the Act) read with Rule 3 of Rules 2015}. 

The Principal Commissioner or Commissioner of Income tax Department shall maintain a register. Any person who is registered as a valuer u/s 34 AB of the Wealth Tax Act 1957 may apply to the jurisdictional Principal Commissioner or Commissioner for being approved as Valuer u/s  77 (1) of the  Act 2015. An application for approval shall be in Form 8, accompanied by a fee of rupee five thousand which shall not be refunded. Valuer fee is yet to be notified (as on June 2017). 

Any assesse who is entitled or required to attend  before any tax authority or the Appellate Tribunal in connection with any matter relating to the valuation of any asset, May attend through a valuer approved by the Income-tax Authority. 

 

II. Rule 3: The Fair Market Value of an Immovable property shall be higher of, - (I) its cost of acquisition and

(II) the price that the property shall ordinarily fetch if sold in the open market on the valuation date for which the assessee may obtain a valuation report from a valuer recognised by the Government of a country or specified territory outside India in which the property is located or any of its agencies for the purpose of valuation of immovable property under any regulation or law.

Immovable property: Rule 3 (1) (d). (attach valuation report): Annexure to Form 6:Statement of undisclosed assets:

 

a). Nature of Property (Land/Building/Flat, etc.): ----------------------------------

(b). Address of the property.                              : ---------------------------------

(c). Country of location

(d). Name(s) under which held                          : -----------------------------------

(e). Date of acquisition                                      : ------------------------------------

(f). Total acquisition cost                                           : -----------------------------------

(g). Value as estimated by the valuer on valuation date: -------------------------

(h)  Fair Market Value as per Rule 3    

 (Provide separate computation if different from (f) or (g).

III. Rule 3 (1) (b) valuation of archaeological collections, drawings, paintings, sculptures or any work of art (hereinafter referred to as artistic work) shall be the higher of,-  

(I) its cost of acquisition and 

(II) the price that artistic works shall ordinarily fetch if sold in the open market on the valuation date for which the assessee may obtain a valuation report from a valuer recognised by the Government of a country or specified territory outside India in which the property is located or any of its agencies for the purpose of valuation of artistic works under any regulation or law.

 (a). Nature of Artistic Works                                        :  ----------------------------------

 (b). Country of location                                                : -----------------------------------

 (c). Name(s) under which held                                     : -----------------------------------

 (d). Date of acquisition                                                 : ------------------------------------

 (e). Cost of acquisition                                                  : -----------------------------------

 (f). Value as estimated by the valuer on valuation date: -------------------------

 (g)  Fair Market Value as per Rule 3  

 

 (Provide separate computation if different from (e) or (f).    &

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amibrahim



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PostPosted: Fri Jun 09, 2017 6:04 am    Post subject: B A V Page 2 Reply with quote

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amibrahim



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PostPosted: Fri Jun 09, 2017 6:24 am    Post subject: B M V Page 3 Reply with quote

 Source: The Black Money and imposition of Tax Act 2015, REGISTERED NO. DL—(N) 04/0007/2003—15 dated 27th May 2015, Rules Notification G.S.R, 529 (E) dated 2nd July 2015 and Department of Revenue Notification G.S.R. 1180(E ) dated 28th December 2016



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amibrahim



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PostPosted: Fri Jun 09, 2017 6:26 am    Post subject: B M V Page 4 Reply with quote

V. Rule 3 (1) (h): valuation of any other asset shall be higher of,-

 

(

I) its cost of acquisition or the amount invested; and

(II) the price that the asset would fetch if sold in the open market on the valuation date in an arm’s-length transaction

When an asset was transferred before valuation date: The FMV shall be higher of its cost of acquisition and the sale price.

When that asset was transferred without consideration or inadequate consideration, the FMV shall be higher of its cost of acquisition and the FMV on the date of transfer.

 

(3) Where a new asset has been acquired or made out of consideration received on account of transfer of an old asset or withdrawal from a bank account, then the fair market value of the old asset or the bank account, as the case may be, determined in accordance with rules prescribed by Rules 2015 shall be reduced by the amount of the consideration invested in the new asset. Where a new asset has been acquired or made out of consideration received on account of transfer of an old asset or withdrawal from a bank account, then the fair market value of the old asset or the bank account, as the case may be, determined in accordance with rules (supra) shall be reduced by the amount of the consideration invested in the new asset. 

A house property (H1) located outside India was bought in 1997 for twenty lakh rupees. It was sold in 2001 for twenty five lakh rupees which were deposited in a foreign bank account (BA). In 2002; another house property (H2) was bought for thirty lakh rupees. The investment in H2 was made through withdrawal from BA. H2 has not been transferred before the valuation date and its value on the valuation date is fifty lakh rupees. Assuming that the value of BA as computed under Rule 3(1)(e) is seventy lakh rupees, the fair market value (FMV) of the assets shall be as  shown:

 

 

FMV of H1:

 (Higher of  . 20 lakh and 25 lakh) . 25 lakh (invested in BA) = Nil

 

FMV of BA:. 70 lakh – . 30 lakh

 

(invested in H2) = . 40 lakh

 

FMV of H2: (Higher of. 30 lakh and 50 lakh) = . 50 lakh

 

.

Last edited by amibrahim on Fri Jun 09, 2017 12:00 pm; edited 2 times in total

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amibrahim



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PostPosted: Fri Jun 09, 2017 6:30 am    Post subject: B M V Page 5 Reply with quote

VI. Jewellery (attach valuation report) I Rule: 3 (1) (a). 

 

a) Gold

i). Purity:-------------

Weight: ------------------------

Value: -----------------

ii). Purity:-------------

Weight: ------------------------

Value: -----------------

 

b) Diamond

i). Carat:-------------

. Cut:-------------

colour:-----------

Clarity:-----------

Value: -------------

ii). Carat:-------------

. Cut:-------------

colour:-----------

Clarity:-----------

Value: -------------

           

 

Source: The Black Money and imposition of Tax Act 2015, REGISTERED NO. DL—(N) 04/0007/2003—15 dated 27th May 2015, Rules Notification G.S.R, 529 (E) dated 2nd July 2015 and Department of Revenue Notification G.S.R. 1180(E ) dated 28th December 2016.

VII. Jewellery Valuer: Views of the Author.

In accordance with CBDT/Income tax Department Notification I F. No. 300/355/74. ED dated 1/8/1975 and Annex-I, the Jewellery valuation qualification: 8. “A valuer of jewellery must have been, for a period of not less than five years, a sole proprietor or partner in a partnership firm carrying on jewellery business which has a turnover of not less than Rs. 1 lakh or profits of not less than Rs. 15,000 in two out of the three accounting years immediately preceding the year in which the application for appointment as an approved valuer is made by him”.

Current trend in the global market: Daily gold rate in India is fixed based on bench mark London Bullion Merchant Association (LBMA) PM Gold fix priced in USD per troy Oz and based on LBMA, MCX India is publishing spot price per gram of 995 gold (with premium or discount depending on prevailing Indian market dynamic), which is benchmark for India. IBJA (Indian Bullion Jwellers Association Ltd.) is also publishing AM and PM prices for 999, .995 and 916 gold. The ‘bonds’ issue price is fixed in indian rupee  on the basis of simple average of closing price of gold of 999 purity published by the IBJA for the week (Monday to Friday) preceding the subscription period. 

Gold

(1) A yellow metal, noted for its rarity, resistance to corrosion, malleability and ductility. The chemical symbol is Au, from Aurora or dawn. It can be beaten into leaves only 0.00001mm thick, and once ounce can be drawn into 50 miles of thin gold wire. It is dissolved by cyanide and by aqua regia, a mixture of nitric and hydrochloric acids, which is applicable to the mining of gold. It has been used for ornamental purposes, a storehouse of wealth and as a medium of exchange for over 7,000 years.

Today, bullion is a term used to describe gold and silver in its pure form that being 22 carat gold or greater. For example the American Eagle gold coin and the British sovereign gold coin are considered bullion coins and are 22 carat gold. Today a gold coin of 22 carat or better is referred to as a Bullion Coin. These could be either government or private issue. The British Sovereign and the American Eagle are two 22-carat modern examples referred to as bullion coins. 

Pure gold is 24 carat, or no less than 995 fine. The proportion in jewellery varies considerably from country to country, and is preserved by either statute or custom. The advantage of a lower

carat content is increased strength, hardness, and hence is wear and scratch resistance. As a result a wider range of subtle colors can be attained, hinting of green, yellow, red and “white gold”, depending on the balance of other metals added. The carat stamped on each piece of jewelry is often guaranteed by an official hallmark. 

Pure Gold: Although technically there exists no such commodity, gold that is of 999.9 parts per 1,000 is regarded as pure gold. 

Kilo bar: A one-kilogram bar of fine gold, widely traded in Europe, the Middle East and South-East Asia, is available as a 995 fine gold bar, which comprises 31.990 troy ounces, a 999 bar, of 32.119 troy ounces, and a 999.9 bar of 32.148 troy ounces. 

Fine Ounce: Refers to a troy ounce of gold that is 995 pure, or to a troy ounce of silver that is 999 pure. 

Fine Weight: The weight of gold or silver contained in a coin or bullion, calculated by: gross weight x fineness. 

Gross Weight: The total weight of gold or silver in bar, coin or shipment of scrap, as opposed to the weight of the fine gold or silver found in the item. For example, a one troy ounce gold coin of 916 fines will have a gross weight of 1.092 troy ounces. 

Fool’s Gold: Pyrites of iron sulfide, which is gold-like in appearance, and often taken as being gold to the untrained eye. (1)

 

 



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amibrahim



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PostPosted: Fri Jun 09, 2017 6:42 am    Post subject: B M V Page 6 Reply with quote

(2) Good Delivery Bar: A silver or gold bar that meets the ‘good delivery’ requirements of the London Bullion Market Association. Good delivery bars are the medium for international trading. 

Silver: A lustrous, white, malleable and ductile precious metal, with remarkable electrical and thermal, light-reflecting, bacteria-killing, wear resistant, photosensitive and other qualities. (2) 

(1) Silver: Gold Ratio

The number of ounces of silver that can be bought with one ounce of gold. Historically, the ratio has found equilibrium of around 15:1. This is somewhat logical as this is the ratio that silver to gold exists in creation, as found in the earth’s crust. There have been historical periods where it has fluctuated, particularly from continent to continent, which again are logical, but as the world shrinks due to advanced transport and communication, it is conceivable that the equilibrium of 15:1 should be found again. Historically in Mexico and South America, where silver was mined, the ratio has been 1:17; in Europe, 15:1, and in India and China it was 13:1(1). On 7th June 2017 @ 1.30 pm IST the ratio is 73.14: 1 (Source: http://www.kitco.com/ )”. 

(2) Hallmark: A stamped symbol on gold/silver objects guaranteeing that the metal conforms to certain legal quality standards, also showing place of origin. 

Assay: Analytical test or trial to ascertain the fineness, or purity, and consistency of precious and other metals. 

Fineness: A measure of the purity equal to the number of parts of pure silver in 1000 parts of the alloy; represents the purity of precious metals, either in monetary or bullion form. 

Fine Ounce: A troy ounce of “pure” precious metal. 

Fine Silver: Pure silver whereby 1000 parts fine or 999.5 parts (or higher) per 1000 parts silver. 

Fine Weight: The actual weight of the pure gold or silver contained in a coin, ingot, bar or other item with a precious metal content, determined by multiplying the gross weight by the fineness, as opposed to the item’s total weight, which includes the weight of the alloying component. (2) 3.75 troy ounce: 10 tolas (Indian), 32.15 Oz troy = 1 kilogram. 1 Oz troy- 31.1034 gram. (1) & (2)




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amibrahim



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PostPosted: Fri Jun 09, 2017 6:55 am    Post subject: BMV page 7 Reply with quote

Indian Hall Mark For Gold:

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amibrahim



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PostPosted: Fri Jun 09, 2017 7:08 am    Post subject: B MV Page 8 Reply with quote

This article can also be viewed in http://www.lawweb.in/2017/06/good-legal-article-on-black-money.html




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