2017 (4) TMI 775 - HC - Income Tax

Calculation of the long term capital gain - Adopting / determining market value as on 1/4/1981 - Held that - We are in complete agreement with the view taken by the learned CIT(A) as well as the learned tribunal while adopting / estimating the value of the land as on 1/4/1981 at ₹ 25/- per sq.mtr. As observed hereinabove, as such, the revenue has accepted the valuation of the land of the same village at ₹ 18/- per sq.mtr. That thereafter, considering the location advantage etc. and by giving cogent reasons when the learned CIT(A) estimated the value of the land as on 1/4/1981 at ₹ 25/- per sq.mtr. it cannot be said that the same is erroneous. The findings recorded by the learned CIT(A) confirmed by the learned tribunal are on appreciation of evidence.

Summary

Issues:
- Dispute over fair market value determination as on 1/4/1981 for calculating long term capital gain.
- Justification of valuation adopted by the Assessing Officer (A.O.) versus the valuation proposed by the assessee.
- Comparison of valuation accepted in a related case and its impact on the current case.

Analysis:

1. Fair Market Value Dispute:
The primary issue in this case revolved around the determination of fair market value as on 1/4/1981 for calculating long term capital gain for the assessment year 2007-08. The A.O. adopted a value of ?2.23 per sq.mtr. based on the Sub-Registrar's report, while the assessee contended that the value should be ?40 per sq.mtr. However, the A.O. rejected this contention and stuck with the lower valuation. The learned CIT(A) then determined the market value at ?25 per sq.mtr. considering the location and surroundings of the land in question.

2. Valuation Justification:
The Assessing Officer's valuation of ?2.23 per sq.mtr. was challenged by the assessee, citing a related case where the revenue accepted a valuation of ?18 per sq.mtr. for land in the same village. This comparison raised questions about the consistency and fairness of valuations across similar cases. The learned CIT(A) justified the valuation of ?25 per sq.mtr. by highlighting the locational advantages of the land, such as proximity to roads, amenities, and developed industrial areas, which could fetch a higher value. This reasoning was upheld by the learned tribunal.

3. Legal Justification and Conclusion:
The High Court, after considering the arguments presented by the revenue's counsel and examining the reasoning behind the valuation adopted by the CIT(A) and tribunal, found no error in estimating the land value at ?25 per sq.mtr. as on 1/4/1981. The Court emphasized that the valuation was based on evidence and considerations of locational advantage, and it was not erroneous. Since the valuation was found to be reasonable and supported by facts, no substantial question of law arose. Consequently, the appeal was dismissed, affirming the valuation determined by the CIT(A) and the tribunal.

In summary, the judgment addressed the dispute over fair market value determination, evaluated the justifications for different valuations proposed by the parties, and ultimately upheld the valuation of ?25 per sq.mtr. as on 1/4/1981, dismissing the appeal based on the reasoning provided by the CIT(A) and the tribunal.