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TMI Blog1988 (11) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... tes in his impugned order that the said fact revealed from a note appended to the Income-tax return filed by the assessee from asst. yr. 1982-83. The valuation dates for asst. yr. 1980-81 to 1982-83 are 31st March, 1980, 31st March, 1981 and 31st March, 1982. Having regard to the proximity of the valuation dates to the agreement of sale which the assessee entered into with above said 2 parities the learned Commissioner felt that the value of the said property viz., 1-1-141 and 144, Sarojinidevi Road, Secunderabad, was under -assessed for all the 3 assessment years. He gave a notice to the assessee who entered appearance through her Chartered Accountant and got her objection filed on 17th March 1987, besides submitting oral arguments. It was stated before the learned CIT that the assessee was under an obligation to get all the tenants occupying the premises vacated, for which she has to incur heavy amounts. Further, she has to pay to the brokers who secured the purchasers besides incurring expenditure towards lawyer s fees, etc., and in view of the heavy expenditure liable to be incurred by the assessee on the above and other grounds, the value adopted by the learned WTO for the 3 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the earlier year s stand. He held that in view of that he feels that the issue has to be looked into afresh as the WTO failed to examine all the aspects of the case. He had set aside the assessments for the 3 assessments years viz. 1980-81 to 1982-83 with the direction to redo the same afresh after taking the points considered by him in his impugned orders. He directed that a fresh opportunity to the assessee should be provided before computing her wealth. 3. Against this impugned order, the assessee came up in appeal before this Tribunal. The grounds of appeal are the same and, therefore, all these appeals can be disposed of by common order for the sake of convenience. 4. It is undisputed that the property which was the subject matter of the 2 agreements viz., the agreement dt. 25th Feb., 1980, and 10th June, 1981, was with reference to a building situated in an extent of 13805 sq. yds. of land. It was submitted before us that it was totally built up and fully developed. It is also stated that it was fully tenanted and 6 tenants were actually occupying the whole of the said property. We were told that the property was constructed in 1940 whereas the tenants were occupying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immediately after securing the statutory permission under the Urban Vacant Land (Ceiling Regulation) Act, 1976 and clearance certificate under the IT Act. However, the tenants will be required to attorn themselves to the purchasers. The balance of consideration will, however, be paid by the purchasers only after it secures full and complete vacant possession of the entire schedule property. All expenses required for vacating the tenants including expenses for conducting legal proceedings and compensation, if any, payable to the tenants will be borne by the vendor exclusively. The said agreement was cancelled by the cancellation agreement dt. 1st Sept., 1982, a copy of which is provided at pages 69 to 73 of the assessment paper book. The agreement dt 10th June, 1981, with M/s Navketan Enterprises, Bombay is third in the series. The sale consideration agreed upon was Rs. 12 lakhs for the impugned property. The purchaser purchased this property alongwith another property in order to demolish the present structures and buildings standing thereon and to construct multi-storeyed buildings to be used for commercial/residential purposes. The vendor agreed to apply to the Hyderabad Munic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find a copy of the assessment order for asst. yr. 1981-82. The also the value of this property was computed after capitalising the maintainable rent derived over this property. At pages 31 32 a copy of the assessment order for asst. yr. 1981-82 was furnished. While valuing this item of the asset it is stated that the WTO was taking the value at Rs. 1,31,400 for the reasons mentioned in the earlier year. Therefore, the learned counsel argued that the WTO had adopted rent capitalisation method while arriving at the correct value of the property. The total extent of the property is 1384 square yards. It is fully developed and fully tenanted and is also governed by the provisions of A.P. Rent and Eviction Control Act, 1960. In those circumstances, the rents chargeable from the tenants cannot be increased. In those circumstances, the learned counsel argued that rent capitalisation method is only the appropriate method to be adopted while arriving at the market value of the impugned building. In support of his proposition he relied upon the following authorities. CWT vs. E.C. Ramachandran(1966) 60 ITR 103 (Mys) CED vs. Radhadevi Jalan (1968) 67 ITR 761 (Cal) Deviprasad Poddar v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as the assessee. During the discharge of his functions as a G.P.A. holder Shri R.P. Karai misappropriated certain amounts. The Manager, Shri R.P. Karai operated many bank accounts to suit his convenience with the result that large amounts were misappropriated and since the position regarding the amounts due to the assessee, from Shri N.S. Chenoy Rs. 18,080 and B.V. Mistry, Rs. 41,916 are not cleared. The amounts so receivable are not declared while computing the wealth for 1981-82 and 1982-83. In asst. yr. 80-81, in the return the assessee did not show the embezzled amount belonging to the assessee, by Shri R.P. Karai. However, the WTO included the said sum of Rs. 2,36,000 in the net wealth of the assessee. Against the said addition, the assessee filed an appeal, which was stated to be pending before the AAC. For asst. yr. 1981-82 and 1982-83, the WTO did not add the amount of Rs. 18,080 due to the assessee from Shri N.S. Chenoy and the amount of Rs. 41,916 due to the assessee from Shri B.B. Mistry were not rightly included. 8. Countering the arguments of the learned counsel for the assessee, Shri K.K. Viswanadham learned Deptl. Res. argued that the WTO while making the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buildings and compounds in a city, which are in the possession of tenants and the tenants cannot be either vacated or the rent payable by them enhanced except in accordance with the provisions of Rent Control Act, the only appropriate method of valuation is to capitalise the annual rent by certain number of years. The method of valuing the site and the building separately and adding it up to the valuations would be improper in such cases. 67 ITR 761, is a case decided under the provisions of ED Act. However, while valuing the buildings in the occupation of tenants, the Calcutta High Court held the following as per the headnote of the decision. "In case of buildings which are in the possession of tenants and the tenants cannot either be evicted or the rent payable by them enhanced except in accordance with the provisions of the Rent Control Act, the only appropriate method of valuation is to capitalise the annual rent by certain number of years purchased. The method of valuing the land and the building separately and adding up the valuations would be improper in such cases because that would ignore the impact of the Rent Control Acts on the value of the land and the building." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive estimate of the rent which the property might have fetched if a willing lessor wanted to let out the property to a willing lessee; but, if the property is subject to Rent Restriction Acts, in estimating the rent at which the property was capable of being let out, the Controller is bound to take into account the restrictions imposed by the Rent Restriction Acts and to arrive at the figure of fair rent accordingly." 10. Suffice to say that the other decisions also support the same ratio, which is already extracted, it is no doubt true that the property was offered and was in fact sold under three agreements. However there was a clause in the latter 2 agreements that ultimately the vacant possession should be delivered to the purchaser and the whole cost of vacating the tenants from the premises should be borne by the assessee. It is also be seen that ultimately the assessee had to pay a sum of Rs. 3,81,000 for vacating these tenants from the premises. Further, under the 3rd agreement the assessee had to apply for approval of plans to build multi-storeyed buildings in the site. Besides this, she has to pay commission for the broker and also meet advocate s fees, etc. 11. Havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the AAC had jurisdiction to direct the WTO to refer the matter to the Valuation Officer as provided by s. 16A. 13. In view of the above 2 decisions, we have to hold that the direction to the WTO to refer the question of valuation to the Valuation Cell before making fresh assessment order is also not a valid order which is supportable under law. The decision of the Punjab Haryana High Court cited by the learned Deptl. Res. does not apply to the facts of the case, as the difference between the returned value and the assessed value does not exceed Rs. 50,000. In this case the returned value was Rs. 95,000, the accepted value was Rs. 1,31,400. The difference is only 36,400 but not exceeding Rs. 50,000. Therefore, r. 3B of the WT Rules does not apply and consequently the WTO is not obliged to refer the question of valuation to the Valuation Cell, under s. 16A of the WT Act. The further question whether the word may occurring in s. 16A, should be considered as mandatory which was decided in favour of the Department, by the Punjab Haryana High Court dose not arise for consideration in the case before us. Therefore, we will have to hold that one of he assets held by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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