As per Section 2(22B) of the Income Tax Act, 1961, unless the context otherwise requires, the term “fair market value”, in relation to a capital asset, means-
(i) the price that the capital asset would ordinarily fetch on sale in the open market on the relevant date; and
(ii) where the price referred to in sub-clause (i) is not ascertainable, such price as may be determined in accordance with the rules made under this Act.
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Also refer Explanation in Section 56(2)(vii)(c) which states that the “fair market value” of a property, other than an immovable property, means the value determined in accordance with the method as may be prescribed.
It may be noted that Income Tax Rule 11UA spell out the necessary prescribed procedure for determination of ‘fair market value’ of a capital asset for the purpose of Section 56, whereas Rule 11 defines certain terms used under Rule 11UA, which has also been amended to provide for specific valuation principles applicable to unquoted equity shares u/s 56(2)(viib).