1988 (8) TMI 139 - AT - Wealth-tax

Issues Involved:
1. Addition on account of reversionary value of land for tenanted property in Muzaffarnagar.
2. Applicability of multiple in valuation of properties in Mussoorie.
3. Valuation of tenanted property in Muzaffarnagar with State Bank of India.
4. Valuation of land underneath Kamal Theatre leased to HUF.

Detailed Analysis:

1. Addition on Account of Reversionary Value of Land for Tenanted Property in Muzaffarnagar:

The Revenue appealed against the CWT (A)'s decision to knock down the addition made by the WTO based on the reversionary value of a tenanted property in Muzaffarnagar. The property was let out to the State Bank of India during the assessment years 1982-83, 1983-84, and 1984-85. The WTO made an addition based on the Valuation Officer's report, which was contested by the Revenue. However, the Tribunal held that since the property was continuously tenanted and valued on a rent capitalization basis, there was no justification for adding any reversionary value. The Tribunal cited the Allahabad High Court decision in CWT vs. Ram Saran Kajriwal, which stated that the valuation method should not include reversionary value unless the property was very old or obsolete. Consequently, the Revenue's appeals were rejected.

2. Applicability of Multiple in Valuation of Properties in Mussoorie:

The assessee contended that a multiple of 100/9 should be applied for the valuation of three properties in Mussoorie, namely Willow Bank, Theanat Lodge, and White House. Both the WTO and CWT (A) applied a multiple of 100/8. The Tribunal noted that the properties were situated in a hill station and had old tenants. Given the government securities return and the old tenancy, the assessee's suggestion of a multiple of 100/9 was deemed reasonable. The Tribunal accepted the assessee's contention, allowing the appeal in this respect.

3. Valuation of Tenanted Property in Muzaffarnagar with State Bank of India:

For the tenanted property with the State Bank of India, the assessee did not press the claim for collection charges for the assessment years 1982-83 and 1983-84 but did so for 1985-86. The WTO had applied a multiple of 100/8, whereas the assessee suggested 100/9. The Tribunal directed the WTO to consider the collection charges allowed in income tax proceedings for 1985-86 and adopt the multiple of 100/9 for valuation, consistent with the Mussoorie properties.

4. Valuation of Land Underneath Kamal Theatre Leased to HUF:

The valuation of a plot of land measuring 3894 sq. yds. underneath Kamal Theatre, leased to Shri V.K. Singh HUF, was contested. The CWT (A) had confirmed the valuation at Rs. 9,23,500 for 1982-83, Rs. 10,15,850 for 1983-84, Rs. 11,08,200 for 1984-85, and Rs. 12 lacs for 1985-86. The assessee argued against this valuation, citing the lack of collusion and comparative sales. The Tribunal found the valuations by both the assessee and the Revenue to be extreme. It restored the matter to the WTO to re-adjudicate the valuation de novo, considering the valuation guidelines provided by the Supreme Court in Chimanlal Hargovinddas vs. The Special Land Acquisition Officer. The WTO was directed to give the assessee a chance to rebut the valuation assigned by the District Magistrate and to consider whether the valuations pertained to leased properties or open land without encumbrances.

Conclusion:

The appeals by the Revenue were dismissed, while those by the assessee were partly allowed for statistical purposes. The Tribunal provided detailed guidelines for the reassessment of the valuation of the land underneath Kamal Theatre, emphasizing the need for a common-sense approach and adherence to Supreme Court guidelines.

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