9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (12) TMI 544 - HC - Income TaxValuation of property - determination of FMV as on 1.4.1981 - Held that - The assessee has failed to file the valuation report of the qualified valuer - A duty was cast on the authorities to assess the fair market value independent of the evidence adduced by the assessee - The Assessing Officer himself could have referred the matter to a valuator to get the valuation done under Section 55A of the Act, which he has not resorted to - The property is situated in the heart of Bangalore city, in a prime commercial locality where the value of the property has multiplied automatically over the years - The authorities committed a serious error in relying on an inadmissible evidence and in not taking into consideration the undisputed facts as well as the memo of calculation filed by the assessee, which is more proper - Decided in favour of assessee.
Issues:
1. Valuation of property for calculating capital gains. 2. Justification of relying on guideline value for determining fair market value. 3. Failure to produce a valuation report and its impact on assessment. 4. Consideration of property location and market value in valuation process. Issue 1: Valuation of property for calculating capital gains The appellant challenged the order confirming the valuation adopted by the Assessing Officer and the Appellate Authority in calculating capital gains. The property in question was purchased in 1964 and sold in 2000. The appellant claimed the property's value as of 1.4.1981 at Rs.2,75,000. The Assessing Authority, lacking a valuation report, determined the property value at Rs.110 per sq.ft. as of 1.4.1981. The Appellate Authority upheld this valuation, leading to the appellant's appeal to the Tribunal, which also dismissed the appeal based on the appellant's failure to provide adequate evidence. The Tribunal considered the value declared in wealth tax filings in 1992 but dismissed the appeal. The appellant then appealed to the High Court. Issue 2: Justification of relying on guideline value for determining fair market value The High Court re-framed the substantial question of law to determine if authorities were justified in relying on guideline value for stamp duty, registration charges, or value under the Wealth Tax Act to determine fair market value under the Income Tax Act. The definition of "fair market value" under the Income Tax Act specifies it as the price the property would fetch on sale in the open market. The Court emphasized that for capital gain tax calculation, fair market value must reflect the property's actual market value, not guideline or wealth tax values. The Court criticized the authorities for relying on inadmissible evidence and failing to consider the property's location and market value. Issue 3: Failure to produce a valuation report and its impact on assessment Although the appellant did not provide a valuation report, the Court noted that this alone should not lead to adverse inferences. The Assessing Officer could have independently assessed the fair market value or sought a valuation from a qualified valuator, which was not done. The appellant's valuation memo based on wealth tax filings was deemed inadequate for determining fair market value. The Court highlighted the need for authorities to consider all relevant factors and not rely on insufficient or inadmissible evidence. Issue 4: Consideration of property location and market value in valuation process The Court emphasized the significance of the property's location in a prime commercial area of Bangalore. Considering the significant increase in property value over the years, the Court found the appellant's claimed value of Rs.2,75,000 plausible based on the property's historical purchase and sale prices. The Court criticized the authorities for not considering these undisputed facts and calculations provided by the appellant. In conclusion, the High Court allowed the appeal, setting aside all impugned orders, and ruled in favor of the appellant, emphasizing the importance of determining fair market value accurately for capital gains tax calculation based on actual market conditions rather than guideline or wealth tax values.
|
