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2011 (8) TMI 656 - AT - Income TaxCapital Cain - Circle rate - fair market value vis value adopted by Registration authority - Assessee sold 1/9 share in her property measuring 33 ground - Property purchased from previous owner took FMV as 1, 00, 000 on 01.04.81 - Revenue argued the value of land at 15, 000 on the basis of Registered authority - Held That - Case was decided by 3 member bench and following principle was laid down - market value cannot be worked out mathematical accuracy - guideline value collected from the Sub-registrar Office need not be the market value all the time (Thulasimani Ammal (Madras High Court)) - Likewise assessee also has not stated the basis of fixing the fair market value at 1, 00, 000/- valuation report is not a comprehensive as it did not state the parameters on which it is possible for anybody to say that the value has been worked out on the basis of certain materials. Case refereed back
Issues Involved:
1. Determination of fair market value of the property as on 01-04-1981 for computing long term capital gains. 2. Validity of the valuation methods used by the Assessing Officer (AO) and the assessee. 3. The role of guideline values provided by the Sub-Registrar versus the valuation report by an approved valuer. 4. The necessity of further inquiries and evidence to support the valuation. Issue-Wise Detailed Analysis: 1. Determination of Fair Market Value: The primary issue revolves around the determination of the fair market value of the property as on 01-04-1981 for computing long term capital gains. The assessee adopted a value of Rs. 1 lakh per ground, supported by a registered valuer's report estimating Rs. 1,20,000 per ground. The AO, however, adopted Rs. 15,000 per ground based on the guideline value obtained from the Sub-Registrar's office. 2. Validity of Valuation Methods: The AO's method involved collecting information from the Sub-Registrar, who indicated a value of Rs. 15,000 per ground. The assessee contested this, providing a valuer's report estimating Rs. 1,20,000 per ground. The CIT(A) sided with the assessee, directing the AO to adopt Rs. 1 lakh per ground, citing the valuer's report and the property's prime location near significant landmarks. 3. Role of Guideline Values vs. Valuer's Report: The CIT(A) and the Tribunal recognized that guideline values from the Sub-Registrar were not conclusive proof of market value, as established by the Hon. Jurisdictional High Court in Thulasimani Ammal v. CIT. The guideline value has evidentiary value but does not establish market value by itself. The valuer's report, considering the property's specific location and other factors, was given more weight. 4. Necessity of Further Inquiries: The Judicial Member disagreed with the Accountant Member's conclusion, emphasizing the need for further inquiries to establish a fair market value. The Judicial Member noted that neither the AO nor the CIT(A) had conducted sufficient investigation or provided a solid basis for their valuations. The Third Member agreed, highlighting the need for comprehensive inquiries, including comparable sales and other relevant data, to determine a fair market value. Separate Judgments: - Accountant Member's Judgment: Upheld the CIT(A)'s decision to adopt Rs. 1 lakh per ground, rejecting the AO's reliance on the guideline value. - Judicial Member's Judgment: Disagreed, advocating for setting aside the orders of the authorities below and remitting the matter back to the AO for further inquiries. - Third Member's Judgment: Agreed with the Judicial Member, emphasizing the necessity for the AO to conduct detailed inquiries and gather relevant materials to determine the fair market value accurately. Final Order: Based on the majority view, the Tribunal set aside the orders of the authorities below and remitted the issue back to the AO for fresh consideration in accordance with law, directing the AO to conduct proper inquiries and gather necessary evidence to establish the fair market value as on 01-04-1981. Conclusion: The appeal of the Revenue was allowed for statistical purposes, and the matter was remitted back to the AO for reconsideration, emphasizing the need for detailed and justified valuation methods.
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