9911796707
TMI Blog1988 (3) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... arned WTO erred in not applying rule 1BB of the WT Rules. Without prejudice to the above, it is further stated that the officer erred in capitalising the rental income at 14 times in place of 10 times and in not deducting the unearned intt. payable to DDA on sale." 2. It is seen that this appeal was earlier heard and disposed of vide order dated13-10-1986of 'A' Bench of the ITAT,Delhiand is seen to have been allowed for statistical purpose. Subsequently the assessee moved a misc. application No. 134 (Delhi) 87 and as a result thereof the order dated13-10-1986is seen to have been recalled by order dated7-8-1987in the said misc. application and, therefore, the appeal came up before us to be heard again. The appeal was heard against the above background. 3. The assessee is an individual by status and the relevant valuation date was31-3-1978. The assessee owns two properties, i.e., (a) C-9, Hauz Khas,New Delhi, and (b) 17-Shopping Centre, Panchsheel,New Delhi. Both the properties being of commercial nature are rent bearing. The gross rent for the first property was taken at Rs. 81,000 and for the second property at Rs. 1,03,081, as is clear from the copy of the assessment to order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th-tax. It was contended that the multiplier at 14 times applied and confirmed was excessive. Reliance by Shri Aggarwal was placed on the ratio in the case of Special LAO v. P. Veerabhadarappa [1985] 154 ITR 190 (SC) at page 197 for the purpose that multiplier of 10 was considered adequate for arriving at the annual letting value for the assessment year 1971-72. Mention was also made of the finding of Jabalpur Bench of the ITAT in the case of Udhoji Shrikrishandas Bidi Mfrs. v. ITO [1985] 11 ITD 35 for the purpose that the multiplier at 8.5 was considered adequate for 1979-80. Reliance was also placed by the learned counsel on the ratio in the case of CWT v. P. N. Sikand [1977] 107 ITR 922 (SC) for the purpose that for arriving at the ALV unearned increase at 50 per cent was required to be deducted in the like of properties we are concerned with. 7. On the basis of the above submissions the learned counsel submitted that the fair market value of the properties should be determined keeping in view the above authorities and the submissions and determination of such value was the issue before the Bench. Shri Aggarwal during arguments conceded that item No. 2 at page 1 of the paper b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent on Udhoji Shrikrishandas Bidi Mfrs.' case we are tempted to follow the latter decision of the Tribunal. Even in P. Veerabhadarappa's case the multiplier of 12.5 was applied. No doubt may be for the assessment year 1971-72 but the multiplier is relevant as the principle is laid down by the highest court of the land. Thus on the question of multiplier, in our considered view, the relief is possible to the extent that instead of 14, a multiplier at 12.5 be applied. The finding on this point to this extent is modified. 10. Next point raised by the learned counsel was that deduction should be allowed on account of co-ownership of the property while determining the ALV. IN the present case we are not concerned with a situation where the properties are intended to be transferred. The issue before us is simple and straight to determine ALV. Thus the co-ownership, in our view, cannot affect the rent bearing capacity of the properties. We see no force on the point. 11. It was also very vehemently argued by the learned counsel that while determining the ALV, 50 per cent should be allowed on account of unearned increase, in terms of the ratio in the case of P. N. Sikand. In our view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes of this appeal reads as under : "7. (1) Subject to any rules made in this behalf, the value of any asset, other than cash, for the purposes of this Act, shall be estimated to be price which in the opinion of the Wealth-tax Officer it would fetch if sold in the open market on the valuation date. Explanation : For the removal of doubts, it is hereby declared that the price or other consideration for which any property may be acquired by or transferred to any person under the terms of a deed of trust or through or under any restrictive covenant I any instrument of transfer shall be ignored for the purpose of determining the price such property would fetch if sold in the open market on the valuation date. 3. It is an admitted position that there is no instance of any comparable sale of any immovable property in either of the two localities where these properties ar situated. Hence, the recourse has to be to section 7(1) of the Act and on these facts, the rent capitalisation method had to be adopted, since in my considered opinion, on the stated facts, this will give the objective valuation. 4. Before I proceed further, I will refer to the decision of the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment for the assessment year 1968-69, the assessee valued this property in its return of net wealth at Rs. 4,52,000 on the basis of a certificate obtained from M/s Anand Apte and Jhabvala, architects, who are approved valuers recognised by the department. The architects estimated the value of the property at Rs. 5,82,268 and from this figure, they deducted a sum of Rs. 1,30,000 representing 50 per cent of the unearned increase in the value of the land, which under the terms and conditions of the lease belonged to the lessor, and arrived at the value of Rs. 4,52,000. The Wealth-tax Officer did not accept the estimate of the valuation made by the architects and taking the annual rent of Rs. 1,30,000 fetched by the property as the basis, computed the net annual rent at Rs. 82,956 and arrived at the figure of Rs. 8,29,560 as the value of the property by applying the multiple of 10 to the annual rental value of Rs. 82,956. The Wealth-tax Officer rejected the claim of the assessee to deduct from the value of the property 50 per cent of the unearned increase I the value of the land on the ground that this claim was based 'merely on hypothetical presumptions', but reduced the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the findings of the Hon'ble High Court and after detailed discussion answered the above referred question in the negative and held that "in determining the value of the leasehold interest of the assessee in the land for the purpose of assessment to wealth-tax the price which the leasehold interest would fetch in the open market, were it not encumbered or affected by the burden or restrictions contained in clause (13) of the lease-deed, would have to be reduced by 50 per cent of the unearned increase in the value of the land on the basis of the hypothetical sale on the valuation date." 6. Now the facts of the case with which Hon'ble Supreme Court was seized of, are on all fours with the facts of the present case, since there also the property was built on leasehold land (the terms of lease being identical), rentals were taken as the basis and a multiple was applied in arriving at the resultant valuation. 7. Respectfully following the law laid down by their Lordships, on my part, I will hold as under : (i) In respect of first property C-9, Hauz Khas, New Delhi as also in respect of the second property 17-Shopping Centre, Panchsheel, New Delhi the assessed rentals will be take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply multiple at 100/10, to determine the value ?". 2. At the time of hearing it transpired that the point of difference has no been properly stated. After hearing both the parties and with their concurrence the points of difference have been reframed as under : "(1) Whether on the facts of the case 50 per cent of the unearned increase as payable to the Delhi Development Authority has to be deducted in valuing the two properties belonging to the assessee ? (2) Whether in respect of the property at 17-Shopping Centre, Panchsheel a deduction of 10 per cent has to be further allowed on account of joint ownership ? (3) What should be the base and the multiple to apply for valuing the two properties ?" 3. The facts briefly are : That the assessee had shown the value of two properties in its wealth-tax return. The first property was C-9, Hauz Khas,New Delhi. The other property was 50 per cent share in 17-Shopping Centre at Panchsheel,New Delhi. Both the properties are commercial properties constructed on leasehold lands belonging to the Delhi Development Authority. The point of difference relates to the valuation of these two properties. 4. Taking the third point of difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nearned increase to be taken for valuing the property. Shri S. S. Mehra, Judicial Member was of the view that the ratio of the decision of P. N. Sikand was not applicable in this case. The reason given by him is that the land as such was not being valued in this case and the valuation was being made on the basis of annual rental value. Shri S. P. Kapur, however, has quoted in detail from the decision of the Supreme Court and has held that the liability to pay the unearned increase in the value of the land was itself a disadvantage attached to the leasehold interest of the land and its value was liable to be deducted from the value of the property in arriving at the net wealth of the assessee. He, therefore, considered that the decision of that case would be applicable. 8. Having heard the parties, I am of the view that in case the properties in question were subjected to the payment of unearned increase at the time of sale, the assessee's share of the unearned increase would be deductible while valuing the property on a particular valuation date. I am not making any observation. On the issue whether the properties in question were in fact subjected to that liability. I am also no ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
