Fair market valuation must consider all relevant comparable sales and property-specific features, or the assessment becomes unsustainable.

In fair market valuation under the comparable sales method, all materially relevant sale instances must be considered and the property's special characteristics must be factored into the comparison. The Karnataka HC note states that excluding transactions from a more important locality, relying on a single larger nearby sale without proper adjustments, or ignoring advantages and disadvantages of the properties amounts to misapplication of valuation principles and disregard of relevant evidence. On that basis, the valuation was not legally valid and the valuation orders were liable to be set aside.

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Issues: Whether the determination of the fair market value of the property was legal and valid.

Analysis: The authorities adopted the comparable sales method, but ignored relevant sale instances from a more important locality in the same city and also failed to appreciate that the property in dispute had special features affecting valuation. Transactions in a prominent comparable locality could not be excluded merely because some sales in the immediate locality were available. The valuation exercise also treated a larger nearby sale as the sole basis without properly adjusting for the distinct advantages and disadvantages of the properties compared. This amounted to misapplication of legal principles and disregard of relevant evidence.

Conclusion: The determination of fair market value was not legal and valid, and the valuation orders were liable to be set aside.

Ratio Decidendi: In determining fair market value by the comparable sales method, all materially relevant comparable transactions must be considered and the valuation must account for the special characteristics of the property; exclusion of relevant evidence or application of an improper comparable renders the determination unsustainable.

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