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

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ITA 2143/CHNY/2019Status: DisposedITAT Chennai20 November 2019AY 2016-175 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the fair market value of a property must be determined considering various factors including location, size, willingness of parties, market demand, surrounding infrastructure, educational institutions, hospitals, and future development potential. Guideline values and comparable instances in the locality are also crucial. The Tribunal found that these factors were not adequately considered by either the authorities below or the assessee. Therefore, the Tribunal set aside the orders of both the authorities and remitted the issue of determining the fair market value as on April 1, 1981, back to the Assessing Officer for re-examination. The Assessing Officer was directed to consider all relevant factors and was permitted to refer the matter to the Departmental Valuation Officer if deemed necessary. The assessee was also given the option to furnish a valuation report from a registered valuer.

What were the facts?

The assessee, Shri K. Srinivasamurthy, filed an appeal against the order of the Commissioner of Income Tax (Appeals) -2, Chennai, for the assessment year 2016-17. The core issue revolved around the determination of the fair market value of a property as on April 1, 1981, for the purpose of computing capital gains. The Assessing Officer and the CIT(Appeals) had determined this value. The assessee's representative argued that no guideline value was available as of April 1, 1981, nor were there comparable cases. The revenue's representative stated that the Assessing Officer estimated the value by backward working from a sale deed registered in 2016, as no guideline value or comparable instances were available.

What were the issues?

1. Whether the fair market value of the property as on April 1, 1981, was correctly determined by the authorities below, considering the absence of guideline values and comparable instances. Assessee's Contention: The assessee argued that since no guideline value was available as of April 1, 1981, and no comparable cases existed, the matter should be remitted back to the Assessing Officer for reconsideration. The assessee also highlighted that valuation methods have changed from acreage/cent basis to square feet basis. Revenue's Contention: The revenue contended that in the absence of guideline values and comparable sale instances, the Assessing Officer had estimated the fair market value as on April 1, 1981, by performing backward working from a sale deed registered in 2016.

Which sections of the Income-tax Act were involved?

Not specified

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRIN.R.S. GANESAN & SHRI S. JAYARAMAN

For Appellant: Shri R.T. Vijayaraghavan, CA
For Respondent: Shri AR.V. Sreenivasan, JCIT
Hearing: 17.10.2019Pronounced: 20.11.2019

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

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.

2.

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.

On a query from the Bench whether the matter was referred to Valuation Officer of the Department or the assessee has filed any registered Valuer’s report, the Ld. representative clarified that it was neither referred to DVO nor the assessee has furnished any valuation report. The Ld. representative submitted that the matter may be remitted back to the file of the Assessing Officer for reconsideration.

3.

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.

4.

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.

5.

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.

5. With the above observation, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the court on 20th November, 2019 at Chennai.

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