ICAI has submitted its representation to CBDT by Direct Taxes Committee of ICAI with respect to the Notification No 23/2018, dated 24th May, 2018 amending Rule 11UA omitting reference to term “accountant”, thereby making Chartered Accountants ineligible to determine the FMV of unquoted equity shares as per the Discounted Free Cash Flow Method.
It has also been pointed out that limited availability of the merchant bankers would increase the cost to the assessee for determining the FMV of unquoted equity shares.
The representation of ICAI is in detail and centers around the initiatives/concerns of ICAI as under:
- Preparation and Issuance of Valuation Standards by ICAI – as a benchmark for Valuation Practices applicable for Chartered Accountants , predominantly recognised role of ICAI in connection with Valuation Standards and systematic training imparted to CA students as a part of course curriculum as also in post qualification course to CAs;
- Section 247 of the Companies Act, 2013 recognizes chartered accountant to be eligible for registering as a valuer;
- Very limited number of registered Intermediaries (Merchant Bankers) compared to large number of companies getting covered by the impugned Rule; Chartered Accountants entitled to be registered valuers under the Wealth Tax Rules;
- Professional competence of Chartered Accountants – Recognition by Judicial Forum as sole expert in the area of accounting, auditing as well as connected valuations;
- Valuation Standards Board of ICAI – Focus on in-depth and comprehensive activities performed by Chartered Accountants in respect of valuation;
- Recognition of Accountant in line with Rule II UA(l )(c).
CBDT has been urged to reconsider the notification and for restoring the status quo before notification was issued