KNOWLEDGE BANK FROM B KANAGA SABAPATHY SIR 

LET KNOWLEDGE SPREAD

CHOOSE THE RIGHT ANSWER – YES / NO

1. Cost inflation index (C.I.I.) is prescribed by the Central Board of Direct Taxes every year. Is it right? ….. Yes / No
2. Cost inflation index and Cost index are one and the same. Is it right? ….. Yes / No
3. The meaning of cost of construction is the amount that has gone into the building construction. Is it right? ….. Yes / No
4. When certifying the cost of construction of the building constructed 5 years back, depreciation is to be considered. Is it right? ….. Yes / No
5. UDS = Super built up area / FSI. Is it right? ….. Yes / No
6. FSI = Plot area / built up area. Is it right? ….. Yes / No
7. 99 years lease with renewal clause is called a perpetual lease. Is it right? ….. Yes / No
8. The rights of lessor / lessee do not depend on the conditions stipulated in the lease deed. Is it right? ….. Yes / No
9. The Acts prevailing in the locality affect the market value of property? Is it right? ….. Yes / No
10. Guideline value plays an important role while certifying market value for security purpose to bank. Is it right? ….. Yes / No

11. From FY 2017 – 18, the criterian of 36 months has been reduced to 24 months for short term capital gain. Is it right? ….. Yes / No
12. There is a standard, prescribed and exclusive valuation format for capital gain purposes. Is it right? ….. Yes / No
13. While doing valuation for the purpose of cost of construction, the value of land is not to be included?. Is it right? ….. Yes / No
14. A registered valuer under Companies Act and a registered valuer under Central Board of Direct Tax are the same. Is it right? ….. Yes / No
15. The term “Super built up area” holds good only when there is a common area. Is it right? ….. Yes / No
16. While fixing joint venture ratio, the promoter’s profit is to be considered. Is it right? ….. Yes / No
17. The word “covenant” indicates the terms and conditions stipulated in any deed. Is it right? ….. Yes / No
18. A man can grant a lease to himself as an individual. Is it right? ….. Yes / No
19. Violations from the approved drawing will affect the housing loan amount sanctioned by the bank. Is it right? ….. Yes / No
20. While calculating depreciation for any building for any purpose, the minimum percentage of depreciation to be applied is 20%. Is it right? ….. Yes / No

21. When the property was acquired in 1972 and when it was sold on 01.04.2017, the FMV has to be ascertained as on 01.04.2001. Is it right? ….. Yes / No
22. The percentage for long term capital gain for companies is 30%. Is it right? ….. Yes / No
23. Registered valuer under Companies Act alone can not issue a report on cost of construction. Is it right? ….. Yes / No
24. While determining the cost of construction by accounting method, a rebate of 7.5% can be considered towards self supervision. Is it right? ….. Yes / No

25. Common area in an apartment is expressed in terms of percentage. Is it right? ….. Yes / No
26. The approximate rate of return a flat owner gets in his flat located in a mofussil town as on 2019 is 12%. Is it right? ….. Yes / No
27. Perusal of registered lease deed is the first duty of a valuer if he wants to value a leasehold rights. Is it right? ….. Yes / No
28. If the unexpired period of lease is short, the value of lessee’s share will be more. Is it right? ….. Yes / No
29. Undivided share of land do not enjoy market value for security purpose in general. Is it right? ….. Yes / No
30. All landlocked lands can be valued at 75% less than the prevailing market rate. This is a rule. Is it right? ….. Yes / No

31. Shifting base year from 1981 to 2001 is made for capital gain calculation. This amendment will take effect from AY 2018 – 19. Is it right? ….. Yes/No
32. The validity period of a valuation report for cost of construction is 12 months. Is it wrong? ….. Yes/No
33. The C.I.I. can be used in the reverse direction. Is it right? ….. Yes/No
34. When the FSI is less, the composite rate will be more. Is it right? ….. Yes/No
35. Referring the title deed, legal opinion and approved drawings is a must while preparing report on cost of construction. Is it right? ….. Yes/No
36. UDS of land alone in an apartment enjoys market value. Is it right? ….. Yes/No
37. Net rent = Gross rent – Outgoings. Is it right? ….. Yes/No
38. A valuer cannot issue a valuation report on market value without physical inspection of a property even though it may be a revaluation. Is it right? ….. Yes/No
39. Higher the rate of capitalisation, higher is the value of the asset. Is it right? ….. Yes/No
40. Auction value of any property will always fetch 30% less than the present market value. Is it right? ….. Yes/No

41. While computing capital gain, the expenses made for brokerage can be deducted from the sale price. Is it right?….. Yes/No
42. While ascertaining the capital gains, the FMV as on 01.04.1981 / 01.04.2001 can be determined only by land & building method -Is it right?….. Yes/No
43. A valuer can give report on cost of construction for a building constructed in a land not legally owned by the assessee. Is it right?….. Yes/No
44. By adopting composite rate, we can value a commercial shop. Is it right? ….. Yes/No
45. Nature of occupancy, tenure, town planning acts and rent control acts affect the cost. Is it right?….. Yes/No
46. The composite rate is Rs. 6,000/-. The building is 30 years old. Life 60 years. Depreciated composite rate is 50% of Rs. 6,000 = Rs. 3,000. Is it right?….. Yes/No
47. Licence and lease are not same. Is it right?….. Yes/No
48. An approved valuer of land and building alone cannot do valuation of plant & machinery. Is it right?….. Yes/No
49. A rent is not governed by the Rent control act. A licence is not governed by the Easement act. A lease is not governed by theTransfer of Property act. Is it right?….. Yes/No
50. Perusal of title deed and legal opinion are not necessary while doing valuation of collateral security to bank. Is it right?….. Yes/No

51. While doing a valuation of a property by income approach, the value of land by adopting suitable market rate is not to be added. Is it right? ….. Yes/No
52. A commercial complex can also be valued by composite rate method. Is it right? ….. Yes/No
53. The value of land is separately assessed and to this the value of the building is added. This method is called composite rate method. Is it right? ….. Yes/No
54. In a shopping complex, shops in upper floors always command a higher premium than shops in ground floor. Is it right? ….. Yes/No
55. In rental valuation method, a valuer does not give importance to violation with respect to the approved drawings. Is it right? ….. Yes/No
56. Rent capitalisation method is a better method to value a fully tenanted property. Is it right? ….. Yes/No
57. The market value of a land always escalates. Is it right? ….. Yes/No
58. In the case of industries which earn low profit, profit method of valuation is suitable. Is it right? ….. Yes/No
59. The basis of valuation will depend upon the purpose for which valuation is required. Is it right? ….. Yes/No
60. Market value depends upon the factor “supply and demand”. Is it right? ….. Yes/No

61. When the FSI achieved is less, the value arrived at by income approach will give an accurate result. Is it right? ….. Yes/No
62. NPA means Non Performing Assessee. Is it right? ….. Yes/No
63. The guideline value cannot be taken as market value for collateral security purposes. Is it right? ….. Yes/No
64. Gold and real estate are the sources where black money is not only be concealed and also be generated. Is it right? ….. Yes/No
65. Valuation cell officers are the staff recruited by the Income Taxdepartment. Is it right? ….. Yes/No
66. Annuity is the Gross Annual return on investment of the capital invested. Is it right? ….. Yes/No
67. Floating FSI is the concept built on the idea that the development potential of one plot can be utilised or transferred to another plot.
Is it right? ….. Yes/No
68. The DCF methodology expresses the present value of a business of its future cash earnings capacity. Is it right? ….. Yes/No
69. A valuer cannot issue any number of valuation reports on the same day for different values if the purposes are different. Is it right? ….. Yes/No
70. A transaction between relatives known to each other is called as “Arm’s length transaction”. Is it right? ….. Yes/No

71. With the housing loan obtained from the bank, the borrower constructs a house. After completion, the bank directs its panel valuer to submit the cost report. Is it right?….. Yes/No
72. Liability against a professional arises only when he is an active participants in a plan to defraud the bank CBI vs K. Narayana Rao – (2012) 9 SCC 512 – SC / 21.09.2012. Is it right? ….. Yes/No
73. A cinema hall / marriage hall must be valued always by profit method. Is it right? ….. Yes/No
74. When compared to a tenanted property, self occupied properties in general enjoy a better value. Is it right? ….. Yes/No
75. Valuation tables were prepared by Mr. A.E. MIRAMS, a prominent valuer of the past. Is it right? ….. Yes/No
76. Under Income approach, landlord is called as lessor. Tenant is called as lessee. Is it right? ….. Yes/No
77. A lease of immovable property is defined under section 105 of the Transfer of Property Act. Is it right? ….. Yes/No
78. Year’s purchase = (100 / rate of interest). Is it right? ….. Yes/No
79. In any ready made valuation format, the first column must be : “What is the purpose of valuation?”. Is it right? ….. Yes/No

80. The valuation report is useless and dangerous if the exact purpose is not mentioned. Is it right? ….. Yes/No

81. The term “Written down value” holds good for the land also. Is it right?.….. Yes/No
82. With FSI as 2, value of a new residential flat is estimated by composite rate method and also by land and building method. The second method will give a higher value. Is it right? .….. Yes/No
83. Urban land ceiling Act is existing now. Is it right? .….. Yes/No
84. A plot with less frontage and larger depth enjoys a higher value than a plot with large frontage and smaller depth. Is it right? .….. Yes/No
85. Rental method, yield method, return on investment method are different from each other. Is it right? .….. Yes/No
86. Discounted cash flow techniques (DCF) is a part of market approach. Is it right? .….. Yes/No
87. It is a 99 years lease with a clause for renewal. Such type of perpetual property can not be considered as a freehold property in the hands of lessee. Is it right? .….. Yes/No
88. A flat in top floor always fetches a lower value. Is it right? .….. Yes/No
89. Sale proceeds minus indexed cost of acquisition and indexed cost of improvement is called as Capital loss. Is it right? .….. Yes/No
90. Due to passage of time, cost either increases or decreases. Is it wrong? .….. Yes/No

91. Blacklisting a valuer cannot be done just like that without following the procedure and principles of natural justice as per W. P. (C) No. 10647 of 2014 Orissa High Court, Cuttack Dt. 29.09.2014. Is it right?.….. Yes / No
92. The term plinth area cannot be used for all the floors in a building. Is it right? .….. Yes / No
93. There are two types of tenures of land – freehold and leasehold. Is it wrong? .….. Yes / No
94. Capitalising the gross income is the basis for profit method. Is it right? .….. Yes / No
95. Rate of return, rate of interest and rate of capitalisation convey the same meaning. Is it right? .….. Yes / No
96. Government securities are considered as safe investment. Is it right? .….. Yes / No
97. Gilt edged securities are bonds issued by the government. This paper certificates had a gilt edge. Hence they are known as gilt edged securities or GILTS. Is it right? .….. Yes / No
98. The gilt edged securities are backed by Government of India. Is it right? .….. Yes / No
99. Money available for investment or accumulated wealth having potential of generating income is called “Capital”. Is it right? .….. Yes / No
100. A figure multiplied by the historical cost will be the estimated reproduction cost. This figure is called as cost inflation index. Is it right? .….. Yes / No

ANSWER KEYS

1 – Yes
2 – No
3 – Yes
4 – No
5 – Yes
6 – No
7 – Yes
8 – No
9 – Yes
10 – No

11 – Yes
12 – No
13 – Yes
14 – No
15 – Yes
16 – No
17 – Yes
18 – No
19 – Yes
20 – No

21. Yes
22. No
23. Yes
24. No
25. Yes
26. No
27. Yes
28. No
29. Yes
30. No

31 – Yes
32 – Yes
33 – No
34 – Yes
35 – No
36 – No
37 – Yes
38 – Yes
39 – No
40 – No

41 – Yes
42 – No
43 – Yes
44 – Yes
45 – No
46 – No
47 – Yes
48 – Yes
49 – No
50 – No

51 – Yes
52 – Yes
53 – No
54 – No
55 – Yes
56 – Yes
57 – No
58 – No
59 – Yes
60 – Yes

61 – No
62 – No
63 – Yes
64 – Yes
65 – No
66 – No
67 – Yes
68 – Yes
69 – No
70 – No

71 – Yes
72 – Yes
73 – No
74 – Yes
75 – Yes
76 – Yes
77 – Yes
78 – Yes
79 – Yes
80 – Yes

81 – No
82 – No
83 – No
84 – No
85 – No
86 – No
87 – No
88 – No
89 – No
90 –yes

91 – Yes
92 – Yes
93 – no
94 – no
95 – Yes
96 – Yes
97 – Yes
98 – Yes
99 – Yes
100 – no

IMPORTANT ARTICLE BY B. KANAGA SABAPATHY SIR

Guidelines on valuation issued by various banks as on 07.04.2021

Sub : Sharing – Let knowledge spread – Part 217

Dear fellow Valuers,

1. On 07.04.2021, Punjab National bank and UCO bank have issued revised guidelines.

2. UCO Bank has mentioned in sl.no.4 of page 1..”Obtaining of indemnity from the valuer is not required”.

3. I have updated and consolidated the guidelines of 7 banks and I am happy to share these with my fellow valuers.

4. If you are willing, you can share them with others also.

5. Let knowledge spread.

With best wishes,

B. KANAGA SABAPATHY
bkvaluer@gmail.com
www.bkanagasabapathy.com

READ FULL GUIDELINES: