Sub-section (1) lets the Assessing Officer refer the valuation of a capital asset to a Valuation Officer for ascertaining its fair market value for the Chapter. Under clause (a), where the value claimed is as per a registered valuer's estimate but the Assessing Officer is of the opinion that it is at variance with fair market value. Under clause (b), in any other case, where he is of the opinion either that fair market value exceeds the value claimed by more than the percentage of the value of the asset, or the amount, as may be prescribed — sub-clause (i) — or that, having regard to the nature of the asset and other relevant circumstances, it is necessary to do so — sub-clause (ii).
Sub-section (2) applies section 269(3) to (8), with necessary modifications, to a reference made under sub-section (1).
Why it is there
Fair market value feeds several computations in the Chapter, and a value stated by the assessee is a claim rather than a finding. The section gives the Assessing Officer a route to an independent valuation, separating the case where a registered valuer's estimate already stands behind the number from the case where nothing does.
Who it applies to
An assessee who has claimed a fair market value for a capital asset
A registered valuer whose estimate the claimed value rests on
The Assessing Officer making the reference and the Valuation Officer receiving it
The figures, and what each one turns on
Read the condition in the same row. A figure quoted without it is a wrong answer with a citation attached.
What
Figure
The condition on it
Where
Excess of fair market value over the value claimed that opens the clause (b)(i) route
A percentage of the value of the asset, or an amount, as may be prescribed — the section states no number
Only in a case not covered by clause (a), and only on the Assessing Officer's opinion
Sub-section (1)(b)(i)
What this means in practice
The two routes are not interchangeable, and which applies is decided by whether a registered valuer's estimate stands behind the claimed value. On the clause (a) route the Assessing Officer's opinion of variance is enough; on the clause (b)(i) route he must form an opinion about a gap measured against a percentage or amount the section leaves to be prescribed, so that clause carries no measure of its own on the face of the Act. Clause (b)(ii) needs no measurement at all. Whichever route is taken, the reference is discretionary and the procedure comes from section 269(3) to (8).
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
An assessee returns a capital gain on a building using a registered valuer's estimate of Rs 3 crore. The Assessing Officer, forming the opinion that this is at variance with fair market value, refers the valuation under clause (a) — and no prescribed percentage gap has to be shown, because that condition sits only in clause (b)(i), which applies where the claim is not backed by a registered valuer's estimate.
Where you meet this section
You meet it first as a communication from the Valuation Officer taking up the reference, and then as a valuation report relied on in the assessment. The procedure that follows is drawn from section 269(3) to (8).
The words themselves
the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer
Section 91(1), Income-tax Act, 2025.
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
Section 91(1)(b)(i), Income-tax Act, 2025.
What people get wrong
Reading clause (b)(i) as fixing a percentage. The section states no figure — the percentage of value, or the amount, is left to be prescribed.
Applying the clause (b)(i) test where a registered valuer's estimate exists. That case falls under clause (a), which needs only the opinion of variance.
Assuming clause (b)(ii) needs a quantitative gap. It rests on the nature of the asset and other relevant circumstances.
Treating a reference as compulsory. Sub-section (1) says the Assessing Officer "may" refer.
Forgetting the borrowed procedure in sub-section (2).
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
Rules of the Income-tax Rules, 2026 that work section 91. Where the rule’s own heading names the section we say so; the rest are marked on reading the rule, which is our derivation and not the department’s. A rule that serves the section silently and that we have missed will not appear here.
Rule 55 — Conditions for reference to Valuation Officers under section 91(1)(b)
Rule 173 — Jurisdiction of Valuation Officers as per section 2(110) read with section 269 — on reading the rule
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 91. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
Dilip N. Shroff v JCITSupreme CourtHelps taxpayertagged s.55A Is a valuation you put on an asset 'inaccurate particulars' if the officer disagrees with it?
CIT v Daulal Mohta (HUF)High CourtHelps taxpayertagged s.55A I used a registered valuer's fmv as my cost of acquisition. Can the AO send it to the dvo?
Naina Saluja v DCITITATHelps taxpayertagged s.55A The officer sent my property to the Valuation Officer. Does that give him extra time to finish the assessment?
What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.
