Fair Market Value determination: Tribunal adopts intermediate valuation and remits reinvestment deduction claim to Assessing Officer for verification.

Determination of fair market value for capital gains computation requires selecting a value that reasonably reflects comparables and the overall factual matrix; where competing valuation reports diverge and one is evidently low, an intermediate rate may be adopted, resulting here in a fair market value fixed at Rs. 60 per sq. m. as on 01/04/1981. Claim for deduction under the reinvestment provision (section 54) is not disallowed on record but is remitted to the assessing officer for factual verification and allowance if statutory conditions are satisfied.

---

---

Issues: (i) Determination of fair market value of land as on 01/04/1981 for computation of capital gains; (ii) Entitlement to deduction under section 54 for the capital gains arising from the sale.

Issue (i): Determination of fair market value of land as on 01/04/1981 for computation of capital gains.

Analysis: The authorities produced two valuation sources: a government registered valuer report adopting Rs. 110 per sq. m. and a District Valuation Officer report suggesting Rs. 26 per sq. m. The District Valuer's comparables ranged from Rs. 9.62 to Rs. 64.82 per sq. m. The average of the comparables exceeded Rs. 33 per sq. m., and the District Valuer's final suggested rate of Rs. 26 per sq. m. was found to be on the lower side in the overall factual matrix. Considering the location, available comparable instances and the respective valuations, a reasonable market value for 01/04/1981 was determined by adopting an intermediate rate reflecting the overall facts and comparables.

Conclusion: Fair market value as on 01/04/1981 shall be adopted at Rs. 60 per sq. m. for computation of capital gains.

Issue (ii): Entitlement to deduction under section 54 for the capital gains arising from the sale.

Analysis: The assessee filed details to claim deduction under the relevant reinvestment provision. The appellate record did not establish failure to meet statutory conditions; therefore the deduction claim requires factual verification by the assessing authority before final allowance.

Conclusion: Deduction under section 54 is to be allowed by the Assessing Officer on verification of requisite conditions and compliance by the assessee.

Final Conclusion: The appeal is partly allowed - the fair market value for capital gains computation is revised and the deductibility claim is remitted for verification and allowance if statutory conditions are satisfied.

Ratio Decidendi: Where competing valuation reports exist, the appropriate fair market value for capital gains computation is one that reasonably reflects comparables and overall factual matrix; the Tribunal may adopt an intermediate value if one report is evidently low and another unsupported by adequate comparables.

---