Fair market value under Chapter XX-A excludes stamp duty, brokerage and legal fees from open-market valuation, with remand ordered.

Under Chapter XX-A of the Income-tax Act, 1961, fair market value means the price the property would ordinarily fetch in the open market on the date of transfer, not that price reduced by incidental conveyancing expenses. Stamp duty, brokerage and solicitors' fees are therefore not deductible, though development-related outgoings may be relevant where undeveloped land is valued. The Bombay High Court also found no error in the treatment of the 801 sq. yards covered by a road, as that area had already been accounted for through development deductions. The Revenue's appeals were allowed and the matter was remanded for fresh findings on permissible development expenses and the applicability of Chapter XX-A.

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Issues: (i) Whether stamp duty, brokerage and solicitors' fees are deductible while determining the fair market value of immovable property under Chapter XX-A of the Income-tax Act, 1961. (ii) Whether the Tribunal had wrongly excluded the 801 sq. yards covered by the road while computing the property value.

Issue (i): Whether stamp duty, brokerage and solicitors' fees are deductible while determining the fair market value of immovable property under Chapter XX-A of the Income-tax Act, 1961.

Analysis: Fair market value under section 269A(d) means the price the property would ordinarily fetch in the open market on the date of transfer. The statutory concept is the market price of the property as sold, and not that price reduced by expenses that the purchaser may incur in completing the conveyance. Although development-related outgoings may be relevant in valuing undeveloped land, incidental conveyancing expenses such as stamp duty, brokerage and legal fees do not form part of a permissible deduction from the open-market price.

Conclusion: The deduction of stamp duty, brokerage and solicitors' fees is impermissible in law and the issue is decided in favour of the Revenue.

Issue (ii): Whether the Tribunal had wrongly excluded the 801 sq. yards covered by the road while computing the property value.

Analysis: The valuation exercise had already taken account of the area covered by the proposed road through the deductions allowed for road construction and related development loss. The apparent omission was only a misunderstanding of the Tribunal's calculation and did not show that the 801 sq. yards had been left out of consideration altogether.

Conclusion: No legal error was established on this point and the objection fails.

Final Conclusion: The appeals by the Revenue were allowed, the Tribunal's order was set aside, and the matters were remanded to the appellate authority for fresh findings on the permissible development expenses and the ultimate applicability of Chapter XX-A.

Ratio Decidendi: In determining fair market value under Chapter XX-A of the Income-tax Act, 1961, the open-market price of the property as transferred is the relevant figure, and incidental conveyancing expenses are not deductible from that price.

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