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LESSON 1
BASIC PRINCIPLES OF VALUATION
Question 1
What is the difference between cosf, price & value ?
Opinion 1
Cost : lt is the expenditure to produce a commodity having a value.
Price : lt is the cost of a commodity plus additional reward to the producer for his labour
and capital.
Value : lt is not inherent in the property itself, but will be determined in the open market
-by the forces like demand and supply. Value is a function
of time, place
and purpose.
COST IS A FACT
PRICE IS A POLICY
VALUE IS AN OPINION
Question 2
What are the few kinds of properties forwhich valuation is required ?
Opinion 2
Land and Building Plant & Machinery Agricultural Lands Mines and Quarries
Jewellery Coffee Tea Rubber Estates
Forest Stocks Shares Debentures
Works of Art
Question 3
What are the different purposes of valuation ?
Opinion 3
Purchasi ng for investment Selling
Present value of Old Properties Purchasing for Self Occupation
Mortgaging Arbitration
. Revision cf Capitals Collateral Security
Assessing Property Tax lnterim Reports of Execution
Auctioning lncome Tax
Wealth+a+ Compensation for Land Acquisition
Probate CapitalGains
To calculate betterment Charges Speculation
lnsurance Court fee Stamp, Partitions / settlements
Stamp Duty Rent Fixation
Amalgamation and separation bf companies, Visa, Educational Loan etc.,
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Question 4
What are the few kinds of val'ue ? '' ^.
Opinion 4 €
r' v
MarketValue GuidelineValue ReplacementValue
Depreciationvalue v PresentValue v lnsuranceValue r-
DistressValue BookValue - SalvageValue-
scrap Value PotentialValue specurative Varue
Monopoly Value SentimentalValue FancyValue
Liquidation Value lntrinsicValue lnvestmentValue
Cost Value Warranted Value, True Value
written down Value Going concern Value commercialvalue
Rental Value Exchange Value Appraisal Value
Face Value UtilityValue UseValue
Loss Value TaxValue EconomicValue
Sale Value Condemnation Value Cash Value
Future Value CapitalValue Mortgage loan Value
Forced sale Value, etc.
Question 5
Values will be the same for the above kinds of values ?
Opinion 5
No. The meaning of different values are different. Value will vary with the purpose.
Value is a function of place, purpose and date.
Question 6
What are the factors affecting the value in general ?
Opinion 6
Supply and Demand Rent ControlAct
Cost of reproduction UtilityValue of the property
Town Planning Act Coastal Regulation Act
Land acquisition act Any abnormal conditions like War, Riots etc.
Question 7
What are the different methods of valuation ?
Opinion 7
Land and Building Method Rent Capitalisation Method
Development Method Profit Method
Composite Rate Method Comparable Sale lnstanceMethod
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' (lu""tion 8
What are the few sources of valuation works available for the valuers ?
Opinion I
Banks
lncome tax department
Private housing societies
Oilcorporations
Financial institutions like L.l.C., Canfins, HDFC.
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Arbitrators \r*"{''c,'1, ft'' ' iri
Public Liquidator etc.
Central Excise
Question 9
How to become a valuer ? .,^ .'':
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- Opiniong ' C\
There are two types of valuers.
1. Approved valuers recognised by the lnstitution of Valuers
2. Registered valuers recognised by lncome tax department (CBDT).
To get recognition for the first category, one shoutd apply to the lnstitution of Valuers,
4,5&6 Vishal Market, Mukherjee Nagar (W), Civli Lines, New Delhi - 110 009.
To get recognition for the second category, one should apply to the Chief
Commissioner of lncome tax of his State.
A Registered valuer can call himself as an approved valuer or Government
approved valuer whereas a valuer recognised by the lnstitution of valuers cannot
call himself a Registered valuer or Government approved valuer unless he gets
registered with the lncome tax department.
The registered valuers can do valuation for all purposes whereas the valuers
approved only by the lnstitution of valuers cannot do the valuation works for the
purpose of taxation.
While some financial institutions including some banks accept the reports of any
registered valuer, many financial instutions have their own panels.
Question 10
What are the good reference books in the subject "Valuation" ?
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Opinion 10
s1.
Name of the Book Author
No.
01 Theory and Practice of Valuation Roshan H. Namavati
22, Bombay Samachar Marg.,
Fort, Mumbai - 400 023
Q2 Valuation in Court Roshan H. Namavati
03 Professional Practice Roshan H. Namavati
(Estimating and Valuation)
04. Valuation of Real Properties S.C. Rangwala
Book available at : Charotar Book Stall,
Tulsi Sadan, Station Road, Anand, Gujarat State
05. Valuation of lmmovable Properties M.N. Dange
11, Sheh, ASH Lane, Dadar, Mumbai - 400 028
06. Tax Valuation S. Rajaratnam
12,3rd Street, Poes Road, Teynampet
Chennai - 600 018
07. Valuation Practice of C.H. Gopinatha Rao
lmmovable Properties 19, Oliver Road, Mylapore, Chennai - 600 004
08. Practical Valuation - Volume I B. Kanaga Sabapathy
1, Prestige Flats, 6, Reynolds Road
Tiruchirappalli - 620 001
09. PracticalValuation - Volume ll B. Kanaga Sabapathy
10. Practical Valuation - Volume lll B. Kanaga Sabapathy
11. Practical Valuation - Volume lV B. Kanaga Sabapathy
12. Practical Valuation - Volume V B. Kanaga Sabapathy
13. Practical Valuation - Volume Vlrvrr,rf,r B. Kanaga Sabapathy
14. Valuation Formats for Banks B. Kanaga Sabapathy
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15. Guidelines on Valuation for Banks B. Kanaga Sabapathy
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16. Fixatation of Fair Rent (Tamilnadu) B. Kanaga Sabapathy
17. Concise Hand Book on Valuation V. Shanmugavel
Flat No. 8,G-Appasamy Umapathy Street Extn.
West Mambalam, Chennai - 600 033
18. Valuation of Land in lndia A"P. Jayaram
A6/6, "Sriram", G.O.C.H. Colony, Besant Nagar
Chennai - 600 090
Chapter - 1 4 415
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s/ Name of the Book Author
No.
19. Development and Valuation of P.K. Ratho
Urban Properties Book Availabler at : Vigyan Prasar
C-24, Qutab lrrstitutional Area, New Delhi-110 016
20. Principles & Praclice of Valuation D.N. Baneriee
Mr. John A. Parks Book Availabler at : Eastern Law House P!'t. Ltd.
54, Ganesh Clrunder Avenue, Kolkatta - 700 013
21. Professional Valuation Practice Dr. Ashok Naiin
Tata McGra'"v liill Publishing [Link].
7, West Patel Nagar, New Delhi - 110 008
22. Valuation of Real Properties Shyamales Datta
Book available, at : Eastern Law House Pvt. Ltd.
54, Ganesh Clrander Avenue, Kolkatta - 700 013
23. Valuation of lmmovable Properties Girish Chand Gupta
Under Direct Taxes Book Availabler at : Bharat Law House
15, M.G. Marg, Allahabad - 211 AO1
24_ Theory and Practice of Valuation A.K. Mitra
Book Available at : Eastern Law House Pvt. Ltd.
54, Ganesh Clrunder Avenue, Kolkatta - 700 013
25. Practical Valuation of lmmovable Jag Mohan & Mittal .
properties in Uttar Pradesh Kanpur Bharat Sevak Samaj, Vimala Bhawan,
1131247, Swaroop Nagar
Kanpur - 208 002 (U.P)
26. Valuation under Direct H.V. Vasa
Tax Laws - Vol. I Central Law Agency, 11, University Road
Allahabad.
27. Valuation under Direct [Link]
Tax Laws - Vo!. ll
28. Philosophy & Practice of S.S. Rathore
Valuation Ward No. 22, app. Pawar Hostel,
Balaghat - 481 001 (M.P.)
29. Valuation of Plant & Machinery Kirit Budhbhatti
(Theory & Practice) Ami,.3A Rainbow Park, Vidyanagar Road
Karamsad - 388 325, Gujarat
30. Valuation of machinery and Shrikant Joglekar
Plant - Hand Book Best Mulyankan Consultance
307, Best Commercial Complex
Opp. Rail Station, Andheri (W)
Mumbai- 400 058
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