1985 (2) TMI 80 - AT - Income Tax

Summary

Issues:
1. Determination of the appropriate multiple for computing the market value of a property for estate duty purposes.

Analysis:
The case involved the valuation of a commercial property located at 25A, Khagendra Chatterjee Road, Calcutta, for estate duty purposes following the death of the owner, Smt. Mina Devi Bengani. The dispute centered around the multiplier to be applied to the net rent received from the property to determine its market value. The Assistant Controller initially used a multiple of 12.5 times, valuing the property at Rs. 4,12,063. The Appellate Controller reduced the multiplier to 12 times, while the assessee contended for a multiplier of 8.5 times.

The Accountant Member, considering the Supreme Court decision in Union of India v. Smt. Shanti Devi and the Gujarat High Court decision in CIT v. Smt. Vimlaben Bhagwandas Patel, favored a multiplier of 8.5 times. However, the Judicial Member referred to the Special Bench decision in Biju Patnaik v. WTO and argued for a multiplier of at least 12 times. As the two members could not agree, the issue was referred to the Third Member.

The accountable person's counsel argued that since all godowns were let out, the property should be considered purely commercial, making rule 1BB and the Special Bench decision inapplicable. They contended that a multiplier of 8.5 times was reasonable, citing various legal precedents and expert opinions. On the other hand, the senior departmental representative argued for maintaining the multiplier of 12 times, emphasizing the need to consider the best sale price and distinguishing the cases relied upon by the counsel.

After considering the arguments, case law, and prevailing yields on investments, the Third Member concluded that a multiplier of 8.5 times was fair in this case. They highlighted that the property being wholly let out and commercial in nature warranted a lower multiplier, as indicated in previous court decisions. The matter was referred back to the original Bench for a final decision based on the Third Member's ruling.