Fair market value for capital gains can be proved beyond a wealth-tax valuation when better evidence supports a higher figure.

For capital gains purposes, a valuation adopted in wealth-tax proceedings is only evidentiary and not conclusive when determining fair market value as on 1-1-1964. A valuation stated in a return or adopted in another tax proceeding is treated as an opinion, not as an admission creating estoppel, because there is no estoppel in tax matters. The assessee may therefore challenge the earlier figure and rely on other material showing a higher market value. Evidence of an adjacent property sale in April 1964 was accepted as relevant, and the prior wealth-tax valuation was treated as routine and insufficiently examined, leading to acceptance of the higher fair market value for capital gains computation.

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Issues: Whether the assessee was bound by the value adopted for wealth-tax purposes while determining the fair market value of the property as on 1-1-1964 for capital gains, and whether the higher claimed market value could be accepted on the basis of other evidence.

Analysis: The determination of value under wealth-tax proceedings was held to be only a piece of evidence and not conclusive for capital gains purposes. A valuation stated in a tax return or adopted in another proceeding was treated as an opinion and not as an admission creating estoppel. The Court held that there is no estoppel in tax matters and that the assessee could show that the earlier valuation was incorrect or incomplete. The evidence of sale of an adjacent property in April 1964 was accepted as relevant material showing a higher market value, and the wealth-tax valuation was found to have been made routinely without full enquiry.

Conclusion: The assessee was not precluded from disputing the wealth-tax valuation, and the fair market value of the property as on 1-1-1964 was accepted at Rs. 3 lakhs for computing capital gains.

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