INCOME TAX ACT, 1961

Section 45

Capital gains - Fair market value (FMV) of land - Rejection of registered valuer report without calling report from DVO -

AO made calculation of the land from the time, it was purchased in the year 1977 and increase in the price of land estimated at 20% per year, the AO calculated market price at Rs. 0.60 per square feet. The AO had himself estimated the fair market value of the land instead of referring the matter to the Departmental Valuer (DVO). The assessee on the other hand had taken fair market value of the land at Rs. 50 per sq.ft. determined by the Registered Valuer. CIT(A) as per reasons appearing in his order estimated the fair market value of the land with average annual growth rate of 25% at that particular point of time and thus, determined the value @Rs. 20 per sq. ft. Here also, the CIT(A) did not make any reference to the DVO. Held: It was admitted and undisputed fact that there was no reference made either by the AO or by the CIT(A) to DVO for determination of the fair market value of the land in absence of the DVO's report, the rejection by the Revenue Authorities of the registered valuer's report submitted by the assessee was not justifiable, rather, arbitrary, un-judicious, such action was required to be discarded. The order of the CIT(A) was set aside and AO was directed to take fair market value @ Rs. 50 per square feet as provided in the registered valuer's report submitted by the assessee.

Followed:Smt. Pramila M. Desai, HUF v. Dy,CIT ITA No. 04/Ahd/2012 for assessment year 2008-09Thulasimani Ammal v. CIT (2000) 158 CTR 5 (Mad) : 2000 TaxPub(DT0 906 (Mad-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10

INCOME TAX ACT, 1961

Section 50 Section 45

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