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Valuation of acquired property under the Land Acquisition Act based on capitalization of net annual income. Analysis: The appeal arose from a reference made to the Subordinate Judge of Kumbakonam regarding the valuation of a property acquired under the Land Acquisition Act. The property in question was a site with a building, wells, and trees. The Land Acquisition Officer valued the components separately and awarded a total compensation after applying a statutory allowance. The appellant conceded that the proper valuation method for such property is based on capitalization of the net annual income. The parties agreed on the gross and net annual rental values, leaving the determination of the number of years' purchase for capitalization as the main issue. Several past decisions were cited to determine the appropriate number of years' purchase for capitalization. The case law discussed various approaches to valuation based on the prevailing rate of interest on gilt-edged securities at the time of acquisition. The judgment analyzed past cases like The Collector of Kistna v. Zamindar of Challapalli and Land Acquisition Officer, Calicut v. Subba Rao to establish the principle of capitalization of net annual income with reference to the prevailing interest rates. The court emphasized the importance of considering economic factors and prevailing interest rates in determining the number of years' purchase for capitalization. After considering all relevant cases and principles, the court concluded that the valuation should follow the basis adopted in Land Acquisition Officer, Calicut v. Subbarao. This involved capitalizing the annual rental value at a specific number of years' purchase based on the prevailing interest rate on gilt-edged securities at the time of acquisition. The court determined the appropriate number of years' purchase for capitalization, added the statutory allowance, and allowed the appeal with costs in favor of the appellant. The judgment provided a detailed analysis of past decisions and principles to arrive at the final valuation of the acquired property based on the capitalization of net annual income.
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