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2018 (1) TMI 183 - AT - Income TaxAddition on account long term capital gain - estimating the fair market value by adopting rent capitalization method - Held that:- Basically the property was a residential property. The property was let out but it was constructed in the back portion of the plot of land. The District Valuation Officer has treated the property as fully commercial, which is not justified. It is also a fact that no site plan was sanctioned by the local bodies, which the assessee could submit to the District Valuation Officer, therefore, the District Valuation Officer’s observation was that the assessee did not file site plan is factually incorrect. Further it is also important to note that to invoke the rent capitalization method, the period of tenancy has to be considered. Further the termination date of tenancy is also relevant factor to invoke the rent capitalization method. The dispute with tenant is also very relevant aspect which needs consideration while valuing the property. No lease deed was executed with the bank due to dispute in the property. The strong room facility was not constructed due to dispute with the owner. It was only constructed in setback area illegally. Further the stairways were common and other facilities like overhead water tank were also common with part owner of plot, which reduces the fair market value in terms of salable price and also in terms of the rent. It is also important to note that the property was in dispute and the court cases were going on. The assessees were residing outside the Jaipur. It was difficult for them to travel to Jaipur every time to negotiate the deal when they were senior citizens. The structure was very old as it was constructed in 1972. Considering all we hold that the District Valuation Officer has not considered all these various aspects which has direct bearing on the fair market value of the land on the date of transfer. The facts of the case also suggest that it can be termed as distress sale, therefore, the District Valuation Officer was not justified in estimating the fair market value by adopting rent capitalization method, therefore, direct to delete the same.
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