K. SRINIVASAMURTHY,,CHENNAI vs. ACIT, NCC - 2 (1),, CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -2, Chennai, dated 24.05.2019 and pertains to assessment year 2016-17.

Shri R.T. Vijayaraghavan, the Ld. representative for the assessee, submitted that the only issue arises for consideration is determination of fair market value as on 01.04.1981. According to the Ld. representative, the Assessing Officer as well as the CIT(Appeals) found that there was no guideline value available as on 01.04.1981 in the Sub-Registrar Office. Moreover, no comparable cases are also available. The Ld. representative further submitted that as on 01.04.1981, the valuation was made as per acreage / cent basis and presently it is valued on square feet basis.

We heard Shri AR.V. Sreenivasan, the Ld. Departmental Representative also. According to the Ld. D.R., there was no guideline value available and there was no comparable sale instance. Therefore, according to the Ld. D.R., the Assessing Officer estimated the value as on 01.04.1981 on the basis of the sale deed registered in the year 2016 and the fair market value was determined on backward working.

We have considered the rival submissions on either side and perused the relevant material available on record. The guideline value was determined by the Government of Tamil Nadu in the entire State for the purpose of guiding the respective officers / Sub- Registrars to determine the fair market value after considering the guideline value. Therefore, it is obvious that guideline value is not the market value. It is only a guidance to determine the market value. The market value may fluctuate depending upon various factors. Moreover, when the Government fixed guideline value for entire State of Tamil Nadu, it may not be correct to say that for a part of land situated in the district of Dindigul, the guideline value was not available. Kodaikanal is also part of Dindigul district and part of Tamil Nadu, therefore, it is for the authorities concerned to find out the guideline value from the concerned registration authorities.

Fair market value has to be determined on the basis of location of the property, size of the property, willingness of the vendor and purchaser, demand in the market, availability of infrastructure facilities around the property, availability of educational institution, availability of hospitals and other infrastructure facilities around the property. It also needs to be considered the potential for future development. Guideline value and comparable instances in the locality are also to be taken into consideration while determining the fair market value as on 01.04.1981. These facts were not apparently considered either by both the authorities below or by the assessee while furnishing the fair market value as on 01.04.1981. Therefore, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer. Accordingly, orders of both the authorities below are set aside and the issue of determining the fair market value as on 01.04.1981 for the purpose of computation of capital gain is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter and determine the fair market value as on 01.04.1981 after considering all those factors. It is open to the assessee to furnish valuation report from a registered Valuer of his choice. The Assessing Officer also may refer the matter to the Departmental Valuation Officer if he finds necessary.