9911796707
TMI Blog1988 (4) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... rred the matter to the Departmental Valuation Officer, who determined the value of this property at Rs. 6,98,658. In doing so he determined the value of the building at Rs. 2,46,990. The house, inter alia, consisted of a main building measuring 201,01 sq. mts., 20 sq. mts. Of temporary sheds with IC sheet roof and 34.94 sq. mts. of canopy. In addition there was a compound wall with a steel gate. The Valuation Officer determined the value of the land at Rs. 1,200 per sq. mt. This came to Rs. 4,51,668. The assessee thereafter filed two valuation reports before the WTO. One is a report dated20-9-85by one Mr. Balraj Taneja, who determined the value at Rs. 1,76,000 by adopting the rent capitalisation method. He worked on the basis of a standard rent although the property was in the self-occupation of the donor and possession was delivered to the donee at the time of the gift. Another report that was filed before the WTO was one by Sh. R. L. Kumar. This was the report dated20th October, 1975by which the cost of construction of the building was determined at Rs. 1,14,868. The GTO adopted the value as determined by the Valuation Officer and made the assessment accordingly. 3. On appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any adjustment. The learned CGT (A) has directed adjustment of only 25 per cent of the unearned increase on the ground that the transferee has not paid any unearned increase and it is for this reason that in its appeal the revenue contends that even the direction for adjustment of 25 per cent of unearned increase is erroneous. We are of the view that the learned CGT (A) erred in granting adjustment of only 25 per cent of the unearned increase. The question whether in the particular transfer before us any unearned increase was demanded by the DDA was not relevant. What we have determined is the fair market value of the property on a notional sale and since the lease deed provides for the payment of unearned increase to the lessor adjustment has to be made in the light of the ruling of Hon'ble the Supreme Court. In certain transfers by way of gifts, etc., to near relatives the DDA or the lessor does not charge any unearned increase. Such a special transfer, therefore, will not determine the fair market value of the property. The payment of unearned increase is nothing but a sharing of the profit between the lessor and the lessee. When the lessee is gifting the property to another, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as determined by the Valuation Officer. According to him, rule 1BB is not applicable to gift-tax proceedings and there is, therefore, no question of determining the value of the property according to that rule. It was also contended that the registration of the gift deed showing a valuation of Rs. 2 lakhs can act only as a piece of evidence and cannot be binding on the Gift-tax Officer. 9. A copy of the Valuation Officer's report has been placed by the assessee in the paper book. It would show that the Valuation Officer determined the cost of reproduction of the construction at Rs. 2,46,990. It is important to note that it was after this report that the assessee filed written submissions before the ITO. The assessee also filed a report by his own valuer Shri Balraj Taneja. In his report Shri Balraj Taneja has not disputed the cost of reproduction of the building as determined by the Valuation Officer. He determined the value of this building by adopting the rent Capitalisation method and taking the standard rent as the basis. According to this method the value of the property came to Rs. 1,21,700 only. He also adopted another method according to which he took the cost of construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctly determined the same. He has referred to certain auction sales in Shalimar Bagh. There is nothing on record to show what are the terms of those auction, what is the nature of the rights conveyed and the Valuation Officer has not bothered to show how the rates of land in Shalimar Bagh can be used as exemplars for determining the value of lands in Ashok Vihar. He has nowhere stated that the two localities are identical in their advantages or disadvantages or that the terms of grant by auction were similar to those pertaining to the property in question. He has mentioned that 50 per cent of unearned increase is payable to the lessor but he has not bothered to find out what would be the exact amount payable to the DDA on that account. It is common knowledge inDelhithat the Land Development Officer of the Govt. of India prescribes rates for various localities at which unearned increase will be calculated. It is according to those rates that unearned increase has to be paid to the lessor irrespective of the actual price charged. It was the duty of the Valuation Officer to obtain a copy of that circular and append the same to his report and take rates prescribed therein for Ash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a flat for the purpose of estate duty was involved. Section 36(3) of the Estate Duty Act which came on the statute book w.e.f.1-3-1981was pressed into service on behalf of the accountable person. According to the revenue that section could not be availed of as the deceased Late Justice Chagla died on9-2-1981, i.e., before the enactment of section 36(3). The newly incorporated sub-section (3) of section 36 provided that in respect of one residential house belonging to the deceased the market value for the purpose of estate duty was to be the market value of such house as included in the net wealth of the deceased on the valuation date immediately preceding the date of his death. A single Judge of Hon'ble the Bombay High Court held that harmonious construction demands that an identical method should be employed while determining the value u/s 36(1) of the Estate Duty Act even in cases where death occurred prior to March 1, 1981 and since for the wealth-tax assessment the value as determined in accordance with Rule 1BB was to be adopted, the same value has to be adopted for assessment to estate duty. The ruling is thus not directly to the point but we can adopt the principle laid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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