Value of any asset u/s.7(1) of Wealth-tax Act, 1957. - Income Tax - 1197/CBDT

INSTRUCTION NO. 1197/CBDT Dated : July 28, 1978 Section(s) Referred: 7(1) Statute: Wealth Tax Act, 1957 Under the provisions of sec.7(1) of the Wealth-tax Act, 1957 the value of any asset shall be estimated to be the price which in the opinion of the Wealth-tax officer, it would fetch if sold in the open market on the valuation date. The question is how to determine the fair market value of the land falling within the jurisdiction of municipalities etc. 2. The determination of value of such lands would depend on the facts and circumstances of each case. It involves various factors depending on localities, municipal bye laws development schemes and size of the land etc. No hard and fast rules can be prescribed . However for ascertaining the value of such lands, some of the factors to be taken into consideration are as under:- i) The actual sale of comparable land in the proximity of time and place if such data is available ; ii) If comparable sale of land in the proximity of time and place is not available a suitable adjustment may be made in respect of sale which is not in the proximity of time and place; iii. In cases where reliable land rate data for comparative land parcels is not available the land value any be worked out by development scheme or building scheme; iv) In development scheme the land rate of large parcels of land is worked out on the basis of available data of land rates for smaller plots giving suitable discounts for expenses of development time required for development and the common areas required for roads parks etc. which are not saleable; v)In building scheme the value of land is worked out on the basis of capitalised value of Income-yielding capacity of the building that can be constructed on the land suitable discounts are given for the anticipated expense on the construction of the building and the time required for the completion of construction.