INCOME TAX ACT, 1961

Section 48

Capital gains - Cost of accquisition - Sale of land - Computation of fair market value

Assessee sold certain piece of land. CIT(A) estimated cost of acquisition of the immovable property as on 1-4-1981 at Rs. 350 per sq.yd. relying on the market value of the property certified by the Joint Sub-Registrar as on 17-2-1987. AO's case was that this value could not be adopted as on 1-4-1981. As per the letter issued by the District Registrar, the value of the land was Rs. 8,000 per Acre as on 1-4-1981, which translated to Rs. 1.65 per sq.yard and AO rightly took this rate while adopting cost of acquisition and thereby computing the capital gains on sale of land. Held: Fair market value of a capital asset is the value which would ordinarily fetch on sale in the open market on the relevant date and not on the value adopted for stamp duty purposes. In the absence of a confirmed fair market value as on 1-4-1981, AO had also not referred the matter to Departmental Valuation Officer (DVO) for valuation of property as on 1-4-1981. CIT(A) estimated the value at Rs. 350 per sq yd based on the valuation provided by the Joint Sub-Registrar, Rajahmundry as on 17-2-1987. In the absence of any evidence of fair market value, not being provided by both assessee and AO since the property was located within a distance of one kilometre from the RTC Complex, within the Rajamundhry municipal limits, estimate made by CIT(A) was reasonable and no interference was required.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

Section 271D

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