9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2005 (7) TMI 34 - HC - Wealth-tax1. Whether having regard to the provisions of rule 1BB(2)(a)(ii) read with the Explanation to the said rule, the Appellate Tribunal is right in law in holding that the maintainable rent should be arrived at on the basis of rent of Rs. 7,000 per month, when the actual rent received in the relevant previous year was Rs. 2,414 per month? 2. Whether Tribunal is right in law in valuing the property on the basis of gross maintainable rent taken at Rs. 7,000 per month in accordance with sub-clause (i) of rule 1BB(2)(a)? - held that for the purpose of determining the gross maintainable rent of a residential building which was lying vacant as on the date of the gift, if it is found that the building was let out immediately after the gift in question, drawing a presumption backwards as permitted under section 114 of the Evidence Act and fixing the gross maintainable rental value based on such actual rental received cannot be said to be wrong or unreasonable or contrary to rule 1BB of the Wealth-tax Rules, especially in the absence of any other materials on record to show otherwise. Accordingly, we answer the questions referred to us in the affirmative, in favour of the Revenue and against the assesee
Issues Involved:
1. Determination of maintainable rent for property valuation under rule 1BB of the Wealth-tax Rules. 2. Valuation of property based on gross maintainable rent. Issue-Wise Detailed Analysis: 1. Determination of Maintainable Rent for Property Valuation under Rule 1BB of the Wealth-tax Rules: The primary issue was whether the Appellate Tribunal was correct in holding that the maintainable rent should be based on Rs. 7,000 per month when the actual rent received during the relevant previous year was Rs. 2,414 per month. The Tribunal found that rule 1BB was applicable for valuation and concluded that the maintainable rent should be Rs. 7,000 per month, based on the rent received from the Central Ground Water Board immediately after the gift. The Tribunal reasoned that the rent from a government department provided a correct picture of the market rent. The court examined rule 1BB, which stipulates that the gross maintainable rent should be the sum for which the house might reasonably be expected to let from year to year, or the actual rent received if it exceeds this sum. The court noted that the property was lying vacant at the time of the gift, and the rent of Rs. 2,414 was from a period long before the gift. Given that the property was let out for Rs. 7,000 per month immediately after the gift, the court found it reasonable to presume this amount as the maintainable rent, applying the principle of continuity. 2. Valuation of Property Based on Gross Maintainable Rent: The second issue was whether the Tribunal was right in valuing the property based on a gross maintainable rent of Rs. 7,000 per month. The Tribunal had applied the multiple factor as per rule 1BB, concluding that the value of the property would exceed Rs. 6,50,000, as fixed by the Commissioner of Income-tax (Appeals). The court upheld this valuation, noting that the assessee had not provided evidence of the reasonably expected rent of similar buildings in the locality and that the property was let out for Rs. 7,000 immediately after the gift. The court referenced the decision in CGT v. Mammen Mathew [1986] 158 ITR 466, affirming that in the absence of specific rules under the Gift-tax Act, the Wealth-tax Rules should be followed. The court also cited T.A. Abdul Khader v. CWT [2006] 280 ITR 421 (Ker), which held that the value of assets for Wealth-tax purposes should be determined under section 7 of the Wealth-tax Act, considering the higher of the actual rent received or the annual rental value assessed by the local authority. In conclusion, the court affirmed the Tribunal's decision to base the maintainable rent on the Rs. 7,000 per month received immediately after the gift, as it was a reasonable estimate of the property's rental value. The court answered both questions in the affirmative, in favor of the Revenue and against the assessee.
|
