1981 (1) TMI 127 - AT - Wealth-tax

Issues Involved:
1. Valuation of properties
2. Deductions on account of repairs and collection charges
3. Multiple to be applied to net annual letting value
4. Inclusion of reversionary value of land
5. Application of Section 7(4) of the Wealth-tax Act and Rule 1BB of the Wealth-tax Rules

Detailed Analysis:

1. Valuation of Properties:
The assessee, a joint owner of multiple properties, valued them based on a report by an approved valuer, while the Wealth-tax Officer (WTO) referred the valuation to the Departmental Valuation Cell under Section 16A of the Act. The WTO's valuations differed significantly from those of the assessee, leading to appeals and cross objections. The Appellate Assistant Commissioner (AAC) of Wealth-tax revised the valuations, which were further contested by both the Department and the assessee.

2. Deductions on Account of Repairs and Collection Charges:
The dispute centered on the appropriate deductions for repairs and collection charges from the gross rental value to determine the net Annual Letting Value (A.L.V.). The Departmental Valuer suggested deductions of 1/12th for repairs and 4% for collection charges, following CBDT instructions. The assessee's valuer argued for 1/6th and 6% respectively, as per the IT Act. The Tribunal agreed with the assessee, citing the Calcutta High Court's decision in CIT v Smt. Ashima Sinha, which allowed deductions of 1/6th and 6%.

3. Multiple to be Applied to Net Annual Letting Value:
The Departmental Valuer proposed a multiple of 17.68 for the Halsey Road property and 15 for Birhana Road properties, while the assessee's valuer used a multiple of 16 for both. The Tribunal sided with the assessee, deeming a multiple of 16 reasonable for capitalizing the net annual letting value of the properties.

4. Inclusion of Reversionary Value of Land:
The Department argued for including the reversionary value of the land in the valuation, citing a Tribunal decision in ITA Acquisition No. 629/Alld/1979. The assessee's counsel referenced Calcutta High Court decisions and Tribunal precedents, asserting that the fair market value should be based solely on capitalizing yield. The Tribunal upheld the AAC's view, excluding the reversionary value from the valuation.

5. Application of Section 7(4) of the Wealth-tax Act and Rule 1BB of the Wealth-tax Rules:
The AAC's decision to reduce the market value for the assessment year 1973-74 was contested by the Department. The Tribunal agreed with the Department, stating that the net annual letting value and the multiple should remain constant across the years under consideration. The Tribunal also addressed the valuation of properties at Generalganj, Kanpur, which were self-occupied or partially rented. The AAC's method of valuing land and buildings was deemed fair and reasonable. However, the Tribunal set aside the AAC's order regarding the application of Section 7(4) and Rule 1BB, remanding the matter for fresh consideration.

Conclusion:
The Tribunal partially allowed the Department's appeals and the assessee's cross objections for statistical purposes. The AAC's valuations were largely upheld, with specific instructions for reevaluation of certain aspects in accordance with the law.

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