Fair market value for capital gains must be determined independently under the Income-tax Act, not by guideline or wealth-tax values.

Fair market value for capital gains under the Income-tax Act must be determined under the Act itself, using the statutory meaning of price the asset would ordinarily fetch in the open market on the relevant date. Guideline value under stamp and registration laws and valuation adopted for wealth-tax purposes are not conclusive substitutes. The authorities must assess fair market value independently on proper material and relevant circumstances, including the property's location and sale history, and cannot treat the absence of an expert valuation report as decisive.

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Issues: Whether, for computing capital gains under the Income-tax Act, 1961, the authorities were justified in relying on the guideline value under the stamp and registration laws or the wealth-tax valuation instead of determining fair market value under the Act.

Analysis: Fair market value under Section 2(22B) of the Income-tax Act, 1961 means the price the capital asset would ordinarily fetch on sale in the open market on the relevant date. That statutory definition governs the computation of capital gains, and valuation under other enactments cannot substitute for it. The guideline value for registration and the value adopted for wealth-tax purposes are not conclusive indicators of fair market value. The authorities also erred in treating the assessee's failure to produce an expert valuation report as decisive, because they were still bound to determine fair market value on the basis of proper material and relevant circumstances, including the property's location and sale history.

Conclusion: The authorities were not justified in relying on the guideline value or the wealth-tax valuation, and the fair market value was required to be determined independently under the Income-tax Act, 1961.

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