2000 (10) TMI 177 - AT - Wealth-tax

Issues Involved:
1. Valuation of properties at Cunningham Road and Nandidurg Road.
2. Number of co-owners considered for assessment.
3. Method of valuation applied by the District Valuation Officer (DVO).
4. Objections raised by the assessees regarding the valuation method and rates.
5. Applicability of Schedule III of the Wealth Tax Act.
6. Rebate for joint ownership.
7. Reopening of assessment.
8. Status of the property as commercial for valuation purposes.

Issue-wise Detailed Analysis:

1. Valuation of Properties at Cunningham Road and Nandidurg Road:
The primary issue in these appeals is the valuation of properties located at Cunningham Road and Nandidurg Road. The properties were inspected, and their values were determined based on comparable sale instances and the land and building method. The DVO adopted land rates of Rs. 1,950, Rs. 2,250, and Rs. 3,940 per sq. mt. for the valuation dates 31st March 1986, 31st March 1987, and 31st March 1988, respectively, resulting in fair market values of Rs. 98.28 lakhs, Rs. 113.42 lakhs, and Rs. 198.49 lakhs.

2. Number of Co-owners Considered for Assessment:
The assessees objected to the AO considering only three co-owners instead of four. This objection was upheld, and it was directed that the AO should include only 1/4th share in the hands of each assessee.

3. Method of Valuation Applied by the DVO:
The DVO used the land and building method for valuation, considering the properties' commercial location and the existence of old buildings. The DVO's report included sale instances of smaller-sized properties, which the assessees contested as not comparable to their larger property.

4. Objections Raised by the Assessees Regarding the Valuation Method and Rates:
The assessees argued that the DVO's valuation was based on smaller-sized properties and was not proximate to the relevant valuation dates. They also contended that the rear portion of the land was less valuable due to its inclination and flooding during the rainy season. They suggested that the rent capitalisation method should be applied since the property was let out until 1988.

5. Applicability of Schedule III of the Wealth Tax Act:
The CWT(A) concluded that Schedule III was inapplicable, but the Tribunal found that the unbuilt area was below the 20% limit prescribed in Schedule III. Therefore, the Tribunal directed the AO to apply Schedule III and revalue the property for the valuation date 31st March 1986, using the rent capitalisation method.

6. Rebate for Joint Ownership:
The assessees claimed a rebate for joint ownership, which the CWT(A) allowed at 10%. The Tribunal upheld this decision, rejecting the assessees' claim for a higher rebate.

7. Reopening of Assessment:
The reopening of assessment for the years 1990-91 onwards was upheld as it was based on the CWT(A)'s direction to refer the matter to the DVO for earlier years.

8. Status of the Property as Commercial for Valuation Purposes:
For the assessment year 1993-94, the assessees claimed that the property should be excluded from valuation as it was a commercial property. This claim was rejected, as the Finance Act, 1992, included urban land in the definition of "assets."

Separate Judgment Delivered by T.A. Bukte, J.M.:
T.A. Bukte, J.M., agreed on the point of status and shares but expressed that no leniency should have been shown in adopting the rates for Cunningham Road, a posh and fully commercial road. However, he did not interfere with the leniency shown due to the lack of effort by the Department in adopting the actual market value.

Conclusion:
The appeals were allowed in part, with directions to the AO to revalue the properties considering the Tribunal's observations and applying the appropriate methods and rates for different valuation dates.

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