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November 12, 2019

SHC directs FBR to reconsider fixing valuation of properties in Hyderabad

Karachi

November 12, 2019

The Sindh High Court on Monday directed the chairman of the Federal Board of Revenue (FBR) to reconsider a notification with regard to fixing the valuation of properties in Hyderabad within two months.

The direction came during a hearing of petitions of Akhtar Mubeen Sehito and others, who impugned the FBR’s SRO with regard to the fixing of the valuation of the properties in Hyderabad.

The petitioners’ counsel submitted that the valuation of the properties in the Hyderabad city fixed in the impugned SRO issued by the FBR was highly impractical, excessive and arbitrary and it was fixed without properly determining the fair market value of properties in the area.

They stated that the entire matter of transfers of properties has come to a standstill, as at the time of transfer of a property, the relevant department applies the value of property as per the value given in the table of the impugned SRO, which highly excessive and rates of properties are even higher than in some of posh areas of Karachi.

The FBR counsel submitted that as per provisions of Section 68 of the Income Tax Ordinance, 2001, the department had the authority to fix the market value of properties and such value of properties had been fixed by the department as per the fair market rate and the petitioners had to abide by the rates as determined in the SRO.

A division bench headed by Justice Irfan Saadat Khan observed that there was no cavil to the proposition that rates of properties are fixed to be more than rates of some posh areas of Karachi.

The court observed that there seems to be discrimination in the fixing of valuation, as while fixing the rates of properties situated in Sukkur the collector rates has been applied, whereas the rate of Rs25,000 per square yard for residential and Rs100,000 per square yard for commercial property has been increased against the previous Rs2,640 and Rs6,812 per square yard rates for residential and commercial properties.

The court observed that no doubt escalation in prices of properties was a major and important factor but equally true was the fact that fair market value had to be reasonable which could widely be considered to be the sale price of a property if sold in the open market.

To a court query about discrimination with regard to the application of rates for Hyderabad and Sukkur, the FBR counsel submitted that the valuation could be reconsidered if it sent to the FBR.

The court by consent of the counsel sent the matter to the FBR chairman with regard to fixing the valuation of properties in Hyderabad on some rational basis. It directed the FBR chairman to complete the exercise within two months in accordance with the law. It observed that since the matter was pending before the registration authority it would remain pending and if the FBR failed to notify the new rates within two months the matter of petitioners would be considered and decided as per rates prior to the issuance of the impugned SRO.

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