• FMV for sale of property as on 1.4.2001

One of my property bought before 2001( 1992) and I have sold it in 2018. To calculate the FMV as on 1.4.2001 , the govt approved evaluator takes guideline value as reference for calculation. In realistic world, guideline value will be less than the actual market price. If he quotes a price/sqft higher than guide line value, do I/evaluator need any other supporting document to prove so? Naturally the property sold near by during that period would have registered with guideline value.
how much % difference can the assumption value be from guideline value. please state if any document needed to substantiate the same during scrutiny.
Note I have the guideline value from Register office.
Asked 3 months ago in Capital Gains Tax from Chennai, Tamil Nadu

The government approved valuer should mention the reasons or basis on which the valuer has taken such higher value if he has some proper reason then it may accepted otherwise not.

The income tax department also need some basis on which such amount has been calculated by valuer. If the basis are not strong your value will surely be rejected. You can check at what value the land were sold near by may be you find some high value transaction to support.

Or he needs to state something that near your land there is a road or something because of which value of your land needs to be higher than others.

If he finds any mistake then he will reject your valuation and at that time you need to ask AO to go to government approved valuer because he will take the least amount.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
1808 Answers
16 Consultations

5.0 on 5.0

It's difficult to get the AO convinced just with some justification if there are some documentary evidence like the pictures of your land and other land sold for 480 and he can describe that there is a road near your land or any such thing then may be, we can have a chance in front of CIT(A) or ITAT because as far as my experience goes AO's generally don't accept valuer report. If the AO is in a hurry to complete assessment he may skip to consult the DVO and in that case also you can use it as a point against AO.

 

Thank you

Naman Maloo
CA, Jaipur
1808 Answers
16 Consultations

5.0 on 5.0

Hello,

 

According to the Income-tax Act, 1961, FMV shall be the higher of the cost of acquisition of the property or the price that the property shall ordinarily sell for if sold in the open market.  There is no fixed formula to calculate FMV of a property. FMV can be ascertained by checking at the sale price of similar neighborhood properties or checking the guideline value of the property or taking the help of a registered valuer.

 

The Registered Valuer will have to mention the assumptions he has used to arrive at the FMV of the property in his report with proper evidence of the same if the value adopted is greater than the guideline value of the property. Generally, AO would accept the guideline value of the property to be the value used to ascertain the Capital gain but if there is an increase in value from the guideline value, he would definitely question it and then you and the registered valuer will have to provide the evidence of such increase in value and if needed, the valuer can even visit the AO for clarification on the report. 

 

There is no fixed % up to which assumed value can be from the guideline value, any difference would need to be substantiated.

 

I hope this answer satisfies your requirement.

 

Regards,

CA Hunny Badlani

Hunny Badlani
CA, Neemuch
591 Answers
1 Consultation

5.0 on 5.0

Hi

 

If you need a higher valuation of the property, it is up to the registered valuer. The valuation certificate would suffice all requirements. The registered valuer will take into consideration the guideline value plus other factors affecting the property valuation. 

Lakshita Bhandari
CA, Mumbai
3334 Answers
161 Consultations

5.0 on 5.0

Dear Sir,

 

There is no fixed % up to which assumption value can be differ from guidance value.

 

However, the valuation certificate is sufficient document.

 

The valuer will be able to justify the same.

 

Payal Chhajed
CA, Mumbai
2601 Answers
34 Consultations

5.0 on 5.0

Hi,

 

- Yes you can claim the higher guideline value on the basis of justification only. The valuation report should be comprehensive and self speaking. If you need any assistance in valuation report you can contact me.

 

Thanks

Vivek Kumar Arora
CA, Delhi
2789 Answers
128 Consultations

5.0 on 5.0

Yes, you can claim higher value on the basis of valuation report.

Payal Chhajed
CA, Mumbai
2601 Answers
34 Consultations

5.0 on 5.0

Hi

 

Valuation report is sufficient ,though you can take higher valuation also.

 

 

Hope it helps

Swati Agrawal
CA, Mumbai
1146 Answers
5 Consultations

5.0 on 5.0

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