The Hindu Business Line : Right value

There is a strong case for scrapping Section 50C and restoring Chapter XX-C of the Income-Tax Act which has even more stringent conditions, such as understatement of consideration by more than 5 per cent, for acquisition of property by the government, as this will protect the honest taxpayer and penalise evaders.

The value adopted or assessed by the State Government for the purpose of stamp duty payment is wholly arbitrary.

In the case of Chennai, the guideline value for land is "streetwise", independent of the location of the property, extent/shape of land, width of the street, availability of parking space, encroachments and nearby slums.

In the case of old buildings, which are generally in a dilapidated condition and occupied by tenants paying meagre rents, and unauthorised sub-tenants, and encroachments, the owner has to face many years of litigation for "fixation of fair rent" or getting the defaulting tenants to vacate or remove encroachers.

Such buildings also considerably depress the value of the entire property (including the land), as the prospective buyer factors in the waiting period to get vacant possession and constructing a new building after purchasing the property.

The value of property also depends on the Vastu considerations such as the shape of land, its direction and so on.

Properties adjacent to flyovers have lost value overnight and so have those along busy bus routes due to noise and dust pollution.

With great strides in electronics and communications, the relevance of certain locations for specific businesses has been lost; what was prime location earlier is no longer so.

It is patently unfair to adopt a notional value for property and expect payment of Capital Gains Tax on money never received.

I sincerely hope that the chambers of commerce and industry as also senior tax lawyers and practitioners will be able to persuade the government to scrap Section 50C and avoid litigation in courts on this account.

R. Vijay Raghavan

Chennai

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