1988 (3) TMI 128 - AT - Wealth-tax

Issues Involved:
1. Valuation of Hauz Khas property.
2. Valuation of Panchsheel property.
3. Application of Rule 1BB of the Wealth-tax Rules, 1957.
4. Adoption of multiplier for rental income.
5. Deduction for unearned increase payable to DDA.
6. Co-ownership rebate.
7. Competence of revenue authorities to enhance property value without referring to Valuation Officer.

Detailed Analysis:

1. Valuation of Hauz Khas Property:
The assessee contested the valuation of the Hauz Khas property, which the Wealth-tax Officer (WTO) valued at Rs. 7,49,602, as opposed to Rs. 2,37,400 declared by the assessee. The WTO capitalized the rental income at 14 times, which the assessee argued was excessive and should have been 10 times. The Tribunal modified the multiplier to 12.5 times, citing precedents from the ITAT and Supreme Court (Special LAO v. P. Veerabhadarappa).

2. Valuation of Panchsheel Property:
Similarly, the WTO valued the assessee's 1/2 share in the Panchsheel property at Rs. 7,64,829, against Rs. 1,10,273 declared by the assessee. The same arguments about the multiplier and the application of Rule 1BB were raised. The Tribunal again modified the multiplier to 12.5 times.

3. Application of Rule 1BB of the Wealth-tax Rules, 1957:
The assessee argued that Rule 1BB should be applied for determining the value of the properties. However, the Tribunal noted that Rule 1BB was not applicable as the properties were commercial and not residential.

4. Adoption of Multiplier for Rental Income:
The Tribunal considered various precedents and concluded that a multiplier of 12.5 should be applied instead of 14, as initially used by the WTO. The decision was based on the principle laid down by the Supreme Court in the case of P. Veerabhadarappa.

5. Deduction for Unearned Increase Payable to DDA:
The assessee argued for a deduction of 50% of the unearned increase payable to the Delhi Development Authority (DDA). The Tribunal initially rejected this, but the dissenting opinion by another member cited the Supreme Court's decision in P. N. Sikand, which allowed such a deduction. The Third Member agreed with this view, allowing the deduction.

6. Co-ownership Rebate:
The assessee sought a rebate for co-ownership of the Panchsheel property. The Tribunal initially found no merit in this argument. However, the dissenting opinion argued for a 10% deduction due to the fractional ownership, which the Third Member upheld.

7. Competence of Revenue Authorities to Enhance Property Value Without Referring to Valuation Officer:
The assessee contended that the revenue authorities were not competent to enhance the property value without referring to the Valuation Officer. This issue was not pressed further during the hearing, and no specific ruling was provided on this matter.

Conclusion:
The Tribunal modified the valuation of the properties by applying a multiplier of 12.5 instead of 14. Additionally, it allowed a 50% deduction for unearned increase payable to the DDA and a 10% deduction for co-ownership of the Panchsheel property. The appeal succeeded in part, with the Tribunal directing the revenue authorities to reassess the value based on these modifications.

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