COMMISSIONER OF INCOME TAX Vs. JOHN P VALAVI

JUDGEMENT

(1.) THE Tribunal, Cochin Beneh has referred the following question for our opinion:

(2.) IN the asst. yr. 1968-69 the question of capital gains tax payable by the assessee with reference to a sale that was effected by him on 11th May, 1967 during the relevant accounting period of 12.03 cents and an old building thereon arose for consideration. The consideration stated in the sale deed was Rs. 18,000. The question was whether this should be taken as the value of the property sold or whether the land value should be fixed at a higher amount to be consistent with the real market value. An adjoining land, also owned by the assessee, had been compulsorily acquired and the assessee had claimed compensation at the rates of Rs. 2,000 per cent for the land acquired. Treating this claim of the assessee as an admission that the value of the land sold was Rs. 2,000 per cent of the ITO assessed the difference to capital gains tax. In appeal by the assessee before the AAC the AAC stated in para 4 thus :--

(3.) THE question referred to this Court has been framed apparently on the basis of the observations in paras 7 and 8 of the order of the Tribunal. The question cannot be made to depend on the evidence of receipt of amounts in excess of what is stated in the document. The only question that can arise, in view of s. 52(2) is, we think, what is the real market value of the property sold at the time of sale. So the stated consideration in the document will not be final in all cases. In such cases the question must be to find out what is the real market value. As we understand para 9 of the order of the Tribunal there is a finding there that there was no material to indicate that the market value of the land was anything more than the stated consideration in the document. So the question has to be reframed thus : "In view of the finding entered by the Tribunal that there was no material to indicate that the market value of the property sold was higher than what is stated in the document, is the conclusion reached by the Tribunal that capital gains must be reckoned on the basis of the consideration stated in the document, right ?"