JAINAND NARAYANAN,CHENNAI vs. ITO, CHENNAI

There was a delay of 52 days in filing this appeal by the assessee. The assessee has filed a petition for condonation of delay. We have heard the Ld. representative for the assessee and the Ld. Departmental Representative. We find that there was sufficient cause for not filing the appeal before the stipulated time.

Shri B. Ramakrishnan, the Ld. representative for the assessee submitted that the assessee has adopted the cost of acquisition at Rs.8,93,982/- as on 01.04.1981 and claimed indexed cost of acquisition at Rs.35,08,950/-. The Sub-Registrar, Mylapore informed the Assessing Officer that the guideline value of the property as on 01.04.1981 was Rs.22,000/- per ground. The AO again referred the matter to the Department Valuation Officer who valued the property at Rs.2,07,527/- as on 01.04.1981. Referring to the assessment order more particularly page 2, the Ld. representative for the assessee submitted that the Joint Sub-Registrar-I, Central Chennai by his letter dated 06.03.2015 informed the assessee that the guideline value of the property as on 01.04.1981 was Rs.80,000/- per ground. Therefore the value adopted by the Department Valuation Officer at Rs.22,000/- per ground as given by the Joint Sub-Registrar-I, Central Chennai is not correct. The AO by rejecting the explanation of the assessee computed the FMV as on 01.04.1981 at Rs.2,07,527/- by adopting the value of the land at Rs.22,000/- per ground. According to the Ld. representative, the CIT(Appeals) without examining the material on record confirmed the order of the AO.

On the contrary, Shri M.M. Bhusari, the Ld. Departmental Representative submitted that the Sub-Registrar by letter dated 29.12.2014 informed the AO that the value of the property as on 01.04.1981 is Rs.22,000/- per ground. The assessee claimed before the Assessing Officer that the guideline value of the property as on 01.04.1981 was Rs.80,000/- per ground. The AO has adopted Rs.22,000/- per ground, estimated the FMV at Rs.2,07,527/-. On appeal by the assessee, the CIT(Appeals) confirmed the order of the AO by adopting the FMV as on 01.04.1981 at Rs.22,000/- per ground.

We have considered the rival submissions on either side and perused the material available on record. The AO by placing reliance on the letter of the Sub-Registrar, Mylapore dated 29.12.2014, adopted the value of the property as on 01.04.1981 as Rs.22,000/- per ground. The assessee appears to have collected information under Right to Information from Joint Sub-Registrar-I, Central Chennai. The Joint Sub-Registrar-I, Central Chennai by his letter dated 06.03.2015 informed the assessee that the value of the property as on 01.04.1981 is Rs.80,000/- per ground. Now, there are two guideline values one given by Sub-Registrar, Mylapore and the other given by the Joint Sub-Registrar-I, Central Chennai. As per the letter of Sub-Registrar, Mylapore, the guideline value of the property as on 01.04.1981 was Rs.22,000/- per ground. However, by letter dated 06.03.2015 by Joint Sub-Registrar-I, Central Chennai, the guideline value was Rs.80,000/- per ground. No comparative sale transaction was filed by the assessee. The AO also has not taken any pain in collecting the comparable sale transaction during the relevant period.

Fair Market Value (FMV) is nothing but a price that may be agreed between a willing purchaser and willing seller. The FMV cannot be a constant figure. It may change depending upon various factors, such as the location of the property, area of the property, infrastructure facilities available in and around the property, potential for future development etc. The guideline value is one of the factors to be considered for the purpose of estimating the FMV. Guideline value may not reflect the FMV or the market value in all cases. FMV is for guiding the Sub-Registrar to arrive at the market value for the purpose of collecting stamp duty at the time of registering the documents.

In the result, the appeal of the assessee is partly allowed.