1989 (5) TMI 123 - AT - Income Tax

Summary

Issues: Valuation of property under Rent Control Act, valuation of bus shed, levy of interest under sections 53(3) and 70(2) of the ED Act

Valuation of Property under Rent Control Act:
The appeal involved the valuation of a building under the Rent Control Act. The accountable person admitted the building's value at Rs. 24,000, while the Asstt. CED fixed it at Rs. 50,000, later reduced to Rs. 40,000 by the Appellate Controller. The property was let out at a daily rent of Rs. 5, and the Rent Control Act applied to the area. The Tribunal determined that the rent capitalization method with a multiple of 8-1/2 times was appropriate for valuation. If the value arrived at was less than Rs. 24,000, the accountable person's value would prevail. The Tribunal modified the Appellate Controller's order accordingly.

Valuation of Bus Shed:
The dispute also concerned the valuation of a bus shed on a site of 1,288 sq. yds. The Inspector suggested a market value for the site and plinth area, leading to a valuation of Rs. 95,000 by the Asstt. Controller, later reduced by Rs. 5,000 by the Appellate Controller. The Tribunal noted that the wealth-tax records accepted the shed's value at Rs. 15,000, purchased for Rs. 6,000 in 1960. As the Revenue had accepted this value for wealth-tax purposes, there was no justification for increasing it to Rs. 90,000 based on the Inspector's report. The Tribunal modified the Appellate Controller's order in favor of the accountable person.

Levy of Interest under Sections 53(3) and 70(2) of the ED Act:
Regarding the levy of interest under sections 53(3) and 70(2) of the ED Act, the accountable person disputed the interest levied under both sections. The Tribunal analyzed the provisions and case laws cited by both parties. It held that the accountable person had the right to appeal against the levy of interest, particularly when the interest exceeded the prescribed rate. The Tribunal directed the Asstt. Controller to reduce the interest to 6% per annum. Additionally, the Tribunal addressed the levy of interest under section 70(2) of the ED Act, noting that it should only arise after a notice of demand is issued, not at the assessment stage. Therefore, the Tribunal deleted the levy of interest under section 70(2).

In conclusion, the Tribunal partly allowed the appeal, modifying the valuation of the property and bus shed, and directing the reduction and deletion of interest levied under sections 53(3) and 70(2) of the ED Act, respectively.