Chapter IV - Computation of Total Income
Section 91
Section 91: reference to Valuation Officer
Section 91 gives the Assessing Officer the power to refer the valuation of a capital asset to a Valuation Officer, for the purpose of ascertaining its fair market value under the capital gains chapter, in specific circumstances - either when a registered valuer's estimate looks at variance with fair market value, or when the claimed value differs substantially from the Assessing Officer's own view of fair market value.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) For ascertaining the fair market value of a capital asset for this Chapter, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer,— (a) if the value of the asset claimed by the assessee is as per the estimate by a registered valuer, but the Assessing Officer is of the opinion that the value so claimed is at variance with its fair market value; (b) in any other case, if the Assessing Officer is of the opinion that— (i) the fair market value of the asset exceeds the value claimed by the assessee by more than the percentage of value of such asset or amount, as may be prescribed; or (ii) having regard to the nature of the asset and other relevant circumstances, it is necessary so to do.
(2) The provisions of section 269(3) to (8) shall, with necessary modifications, apply in relation to such reference made under sub-section (1).
Introduction
Section 91 sets out when the Assessing Officer may obtain a Valuation Officer's view of an asset's fair market value for capital-gains computation. The route differs according to whether the assessee supports the claimed value with a registered valuer's estimate.
Key takeaways
Valuation reference
For capital-gains purposes, the Assessing Officer may refer a capital asset's fair market value to a Valuation Officer when the conditions in this section are met.
Two routes to reference
The statute distinguishes a taxpayer's registered-valuer estimate that the officer considers at variance with fair market value from other cases involving prescribed value differences or the asset's circumstances.
Procedure
Specified procedure in Section 269(3) to (8) applies to the valuation reference with necessary modifications.
When a reference can be made
The Assessing Officer may refer the valuation of a capital asset to a Valuation Officer, for the purposes of this Chapter, in two situations: first, where the value claimed by the assessee is based on a registered valuer's estimate but the Assessing Officer believes that value is at variance with the fair market value; and second, in any other case, if the Assessing Officer is of the opinion that the fair market value exceeds the value claimed by the assessee by more than a prescribed percentage or amount, or that it is otherwise necessary to make a reference having regard to the nature of the asset and other relevant circumstances.
Procedure for the reference
The provisions of Section 269(3) to (8) apply, with necessary modifications, to a reference made under this section - meaning the procedural rules that govern valuation references elsewhere in the Act (such as timelines, the Valuation Officer's powers, and how the valuation report is used) apply here as well.
Two referral routes
Where the claim follows a registered valuer's estimate, the Assessing Officer must form an opinion that it varies from fair market value. In other cases, the officer applies the prescribed excess-value threshold or considers the asset's nature and surrounding circumstances.
Step-by-step flow for applying Section 91
- 1
Does the Assessing Officer need the fair market value of a capital asset for the capital gains Chapter?
- No: Section 91 is not relevant.
- Yes: Go to the next step.
- 2
Is the value claimed by the assessee based on a registered valuer's estimate?
- Yes: The AO may refer if of the opinion that the claimed value is at variance with fair market value (clause (a)).
- No: Go to the next step.
- 3
In any other case, does one of the clause (b) grounds exist?
Either the fair market value exceeds the claimed value by more than the percentage or amount prescribed by rules (the Act does not state it), or a reference is necessary having regard to the nature of the asset and other relevant circumstances.
- No: No reference under Section 91.
- Yes: The AO may refer the valuation to a Valuation Officer.
- 4
Follow the reference procedure
Section 269(3) to (8) applies, with necessary modifications, to the reference.
Practical checklist
Do
- Preserve the valuation report and the basis for the amount claimed.
- Check which subsection (1) referral route applies and the procedural provisions of Section 269(3)–(8).
Avoid
- Do not describe every disagreement about value as an automatic referral.
- Do not assume the prescribed threshold applies to the registered-valuer route.
Illustrative example
Scenario: valuer's report questioned by the Assessing Officer
Hypothetical facts (illustration only, not a real taxpayer): Mr. Kapoor computes a capital gain on an old building using a fair market value taken from a registered valuer's report. The Assessing Officer, comparing local sale records, thinks the value is out of line.
Which route
Because the claimed value is a registered valuer's estimate, clause (a) is the relevant route; the AO must form the opinion that the value is at variance with fair market value.
Reference
The AO may refer the valuation of the building to a Valuation Officer.
Procedure
The reference proceeds under Section 269(3) to (8) as applied with necessary modifications, so Mr. Kapoor should keep the valuer's report and supporting comparables ready.
Outcome
- The valuation is examined by a Valuation Officer rather than settled on the AO's view alone.
- Had there been no registered valuer's report, the AO would need a clause (b) ground, such as the prescribed variance threshold set by rules or the nature of the asset.
Glossary
- Registered valuer
- A valuer whose estimate supports an asset-value claim in the subsection (1)(a) route.
- Fair market value
- The asset value being ascertained for the capital-gains chapter.
Frequently asked questions
Can the Assessing Officer always send a valuation to a Valuation Officer?
No. A reference can only be made where a registered valuer's estimate appears at variance with fair market value, or where the Assessing Officer believes fair market value exceeds the claimed value by more than a prescribed threshold, or where it is otherwise necessary given the nature of the asset and other relevant circumstances.
What procedure governs a Section 91 valuation reference?
The procedure set out in Section 269(3) to (8) applies, with necessary modifications, to references made under Section 91.
What percentage difference triggers a reference under clause (b)(i)?
The Act does not state it. Section 91(1)(b)(i) refers to a percentage of value or an amount as may be prescribed, so the figure comes from the rules.
Need help applying this provision to your situation?
Get help responding to a capital asset valuation referenceLast updated 9 October 2026