2013 (10) TMI 1493 - AT - Income Tax

Summary

Issues Involved:
1. Adoption of Fair Market Value (FMV) of land and built-up area for computing capital gains.
2. Justification of FMV adopted by the assessee based on the Registered Valuer's report.

Summary:

Issue 1: Adoption of Fair Market Value (FMV) of land and built-up area for computing capital gains

The Revenue's appeal contested the CIT(A)'s decision to adopt the FMV of land at Rs. 900 per sq. yard and built-up area at Rs. 100 per sq. ft. for computing capital gains. The Assessing Officer (AO) had initially adopted the FMV based on SRO values, which were Rs. 75 per sq. yard for land and Rs. 34.10 per sq. ft. for the built-up area. The AO rejected the assessee's higher FMV claims, supported by a Registered Valuer's report, and relied on the SRO values, citing decisions from the Visakhapatnam Bench of the Tribunal and the Andhra Pradesh High Court.

The CIT(A), however, considered the prime location of the property in Banjara Hills and comparable cases, concluding that Rs. 900 per sq. yard for land and Rs. 100 per sq. ft. for the built-up area were reasonable FMVs. The Tribunal upheld the CIT(A)'s decision, noting that the jurisdictional High Court in CIT V/s. Ashwin Datla had established that SRO values are not scientifically prepared and cannot be adopted as FMV.

Issue 2: Justification of FMV adopted by the assessee based on the Registered Valuer's report

The assessee's cross-objection challenged the CIT(A)'s adoption of Rs. 900 per sq. yard for land instead of the Rs. 1,000 per sq. yard claimed based on the Registered Valuer's report. The Tribunal found that the Registered Valuer's report lacked specific comparable cases to justify the higher valuation and only vaguely mentioned local enquiries. Consequently, the Tribunal upheld the CIT(A)'s valuation of Rs. 900 per sq. yard, finding no apparent error.

Conclusion:

The Tribunal dismissed both the Revenue's appeal and the assessee's cross-objection, affirming the CIT(A)'s adoption of Rs. 900 per sq. yard for land and Rs. 100 per sq. ft. for the built-up area as reasonable FMVs for computing capital gains. The Tribunal emphasized that SRO values cannot be considered FMV and that the assessee failed to provide sufficient evidence to justify a higher valuation.