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Guideline value: where it exceeds real value

Sec. 50C would deem the value adopted by the stamp valuation authority for purposes of registration as sale consideration, but subject to the right of the assessee to agitate the value adopted either by disputing the same in appeal for revision or reference against the value adopted for stamp duty purposes under the relevant laws or he may choose to contest the same by seeking reference to the valuation by the departmental valuation officer.

In either case, the value adopted either in appeal against the stamp valuation or by the valuation officer, as the case may be, would be binding on the assessing officer. But then, the normal right of appeal to question such valuation is still available, where the assessee’s reported consideration is not accepted. If reinvestment of the sale proceeds is made either in a residential property under Sec. 54F or in approved bonds under Sec. 54EC, subject to conditions thereunder with reference to the larger consideration under Sec. 50C, tax could still be saved. A larger amount of such reinvestment may be warranted, so as to match the estimated consideration under Sec. 50C so as to avoid the problem.

If the valuation estimated by the valuation officer is less than the consideration admitted, such valuation will be ignored and the consideration as agreed between the parties in the document will be adopted. If the value estimated by the valuation officer, say, is Rs. 25 lakh in the facts above, the assessee is not bound by such valuation. He can go in for an appeal after pointing out the defects in the valuation report and further supplement his sale value with the valuation report from a registered valuer to justify the claim that the admitted value was the real market value as on the date of sale.

Guideline value or value as per Basic Valuation Register, as per expressions in vogue, is not binding even on the registering officer, who has discretion to make enquiry and adopt lower valuation, since the value is only for the guidance of the valuation officer for a particular area and not for any particular property.

It is for this reason that the Supreme Court has repeatedly held that valuation is not binding even on the registering officer in a number of cases as in Jawajee Nagnatham v Revenue Divisional Officer, Adilabad, A.P. (1994) 4 SCC 595; Smt. Prakashwati v Chief Controlling Revenue Authority, U.P. (1996) 4 SCC 657; State of Punjab v Mohabir Singh (1996) 1 SCC 699 and U.P. Jal Nigam Lucknow v Kalra Properties Pvt. Ltd. AIR 1986 SC 1170.

Such a view was taken in respect of pre-emptive purchase of property under Chapter XX-C (now deleted) in Mrs. Nirmal Laxminarayan Grover v Appropriate Authority (1997) 223 ITR 572 (Bom). The Madras High Court took a similar view under Chapter XX-C in Hindustan Motors Ltd. v Appropriate Authority (2001) 249 ITR 424 (Mad) and for gift tax purposes in CGT v R. Jawahar (1996) 217 ITR 59 (Mad). But the burden of proof is on the taxpayer to show that the value adopted in the document represents the fair market value of the particular property by distinguishing the special features, which would justify a lower value than the value fixed by the State for stamp duty purposes or where such value itself is abnormal. A registered valuer’s assistance either in questioning the guidelines value or for supporting value accounted for by the assessee as fair market value is advisable, where the value is significantly large.

S. RAJARATNAM

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