The sale consideration mentioned in the sale agreement can never be taken as market value of the property intended to be sold, it may be higher rate above market value or even lesser than the market value.
The market value and guideline values are two different things.The relevant portion of the valuation of market value under different provisions of law is given below for your reference which may be gone through
At a glance a ready reference chart of relevant sections and rules for Valuation Officers is given as follows :
Various Acts and section there-under are given below in a tabular form with brief remarks :-
Sr. No. Reference to be Under : Made Purpose Remarks Act Section [deleted] Wealth-tax Act, 1957
16 A To estimate the market value of an immovable property in accordance with rule-20 of part II of Schedule
III indicated in subsection (I) of section 7 of the Act. On receiving reference under this section, V.O.
shall examine whether rule 3 of Schedule-III of the Act is applicable or not. If Rule-3 is applicable, clarification may be sought from the Assessing Officer as to why reference under 16 A is made. In this connection provisions of rule 8 of Schedule-III of the Act shall be kept in view.
2.1 Income-tax Act, [deleted] C To estimate fair market value of an immovable property as on the date of transfer for the purpose of computing income from capital gains.
Following conditions need to be fulfilled
before the Assessing Officer refer the case under this section :
i)The assessee is to claim that the fair market
value of the property as on the date of
transfer is less than the value adopted or
assessed by the stamp valuation authority
for the purpose of payment of stamp duty
in respect of such transfer.
Provisions of Acts for Reference to Valuation Cell 17
ii) Value adopted or assessed by the stamp
valuation authority has not been disputed
in appeal or revision or no reference has
been made before any other authority,
court of the High Court. If the Assessing
officer is silent on the above aspects at the
time of making reference, necessary
clarifications may be sought from him as
to whether provisions of sub section (2) of
section 50 C have been fully complied
with.
2.2 Income-tax Act,1961 55 A To estimate fair market value of an immovable property as on 01.04.1981 or date of transfer both for the purpose computing income from capital gains.
It is imperative to know the date or date s for which valuation is required. If any clarification of required in this regard the same may be obtained immediately on receipt of the reference.
2.3 Income-tax Act, 1961 142 A To estimate value of investment made by the Assessee. This investment can be land or land and building or in construction of building.
Previously reference for cost of construction
cases was being made under clause (d) of
subsection (I) of section 131 under garb of
issuing commission. However, the Hon’ble
Supreme Court in Amiya Bala Paul case
Guidelines for Valuation of Immovable Properties 18
pronounced that the power of the Assessing
Officer u/s 131(1) did not include the power
to refer a matter to the Valuation Officer. It is,
therefore, necessary that cost of construction
case referred u/s 142 A.
2.4 Income-tax Act,
1961
269L To determine the fair market value
an immovable property on the
date of transfer to initiate
proceedings for acquisition of the
property and to determine amount
of compensation u/s 269 J.
These provisions ceased to be applicable in
relation to the transfer of property made after
30.09.1986.
3 Estate Duty Act,
1953
41 To determine the principle value
an immovable property on the
date of death of deceased.
Under this section the controller of Estate Duty
authorizes a person to inspection the property
and report the value to him for the purpose
of levying Estate Duty. This is an advisory
reference. Estate duty has been abolished
w.e.f. 16.03.1985.
4 Gift Tax Act,
1958
15(6) To determine fair market value of
an immovable property on the
date on which the gift was made
As per the schedule-II of the Gift Tax Act, the
value of any property shall be determined in
accordance with the schedule –III of the W.T.
Provisions of Acts for Reference of Valuation Cell 19
Act, 1957. Therefore, remarks against Sl. No.
1 are also applicable in this case. This act
ceased to operate w.e.f. 01.10.1998.
Guidelines for Valuation of Immovable Properties 20