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TMI Blog1976 (3) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... ross under-valuation of the sale price in terms of the actual market price. The building was situated in the best locality of Davangere. The site value as extracted from the sales in the sub-registrar's office ranged from Rs. 8 to Rs. 10 per sq. ft. and this itself would be understated value generally. Even adopting the minimum rate of Rs. 8 per sq.ft. and allowing 50 per cent depreciation for the constructed building, the total market value will not be less than Rs. 1,30,000. The local enquiries revealed that there was a firm offer for Rs. 1,00,000 which was rejected by the sellers. Taking this fact into consideration, the ITO adopted Rs. 1,00,000 as the fair market value of the building and assessed the capital gains accordingly. 3. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igher capital gains tax and gift-tax. Accordingly, the AAC had deleted the addition of Rs. 42,000 under the head 'undisclosed income' in the case of the vendee. The present appeal was, however, against the assessment of capital gains under s. 52(2) and what had to be decided was the fair market value and not the actual consideration which passed on from the vendee to the vendor. Under s. 52(2), the ITO had to take the fair market value as the full value of consideration. From the records, the AAC found that the ITO had information that there was a firm offer to purchase the property at Rs. 1,00,000, but the vendors wanted Rs. 1,10,000. Even otherwise, the ITO, by collecting the evidence from the sub-registrar's office had substantiated his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,000. The second ground given by the ITO is that there was a firm offer for Rs. 1,00,000 to the assessee for this property which had been refused. However, none of these surmises is borne out from the material on record. We had asked the learned Departmental Representative to obtain material on which the ITO had stated that the assessee had firm offer of Rs. 1,00,000 which had been refused. The Departmental Representative told us after enquiry that the statement of the person who was said to have made the firm offer of Rs. 1,00,00 for the purchase of this property was recorded on oath by the ITO but the statement is missing from the record. The ITO does not state in his assessment order that he had recorded such a statement on oath. All th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that on merits the Department seems to have a very weak case, we are of the opinion that the ITO should have obtained the expert valuer's valuation or should have asked the assessee to furnish it before coming to the conclusion as to the exact value of the property. That he has not done. There is, however also a legal infirmity in the order itself. The transaction is between the vendor and vendee. The vendee claimed to have paid Rs. 58,000 only as the sale consideration and the AAC accepted that proposition and the Department accepted the AAC's order and did not challenge that before the Tribunal. The position, therefore, is that the order that the vendee paid only Rs 58,000 has become final. According to the Karnataka High Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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