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TMI Blog1987 (6) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... eir proper perspective and the facts relating thereto which we ascertained at the hearing and about which there is no dispute. 3. Mr. R.K. Shanmugam Chettiar passed away in 1953. In terms of his will, in a property known as " Hawarden " in Coimbatore, his wife Smt. S. Rajambal had a life interest. After the lifetime of Smt. Rajambal, her life interest was to pass to her three daughters, Smt. Savithri Shanmugam, Smt. Saraswathi Krishnaswamy and Smt. Janaki Ramaswamy. On the expiry of the life interest of any of these persons, the absolute rights in the share of such person in the immovable property were to pass absolutely in equal shares in their children. Smt. Rajambal passed away in 1964 and Smt. Savithri Shanmugam, Smt. Saraswathi Krish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per Tables for the age of 64 - 5.419 (5) Value of life interest :--- Income Rs. 33,333 x 5.419 Rs. 1,80,632 (18) (6) Remainder value for S. Nalini Rs. 1,52,702 (15) 18 : 15 " In the income-tax return of Smt. Savithri Shanmugam, the value of Rs. 1,80,632 was shown as capital gain and the same was also duly assessed for the assessment year 1979-80 in the assessment made on 26-3-1982 where the total income finally assessed was Rs. 44,400 which was as returned after making due adjustments according to the statement accompanying the return. The original assessment in the case of Nalini was also completed accepting the capital gain as shown of her remainder interest of Rs. 1,52,702. 7. This assessment was made on 29-12-1980 acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anmugam branch, Rs. 61,776 was deducted as the value of life interest and the balance of Rs. 2,71,558 was determined as the sale consideration of the appellant Miss Nalini as against Rs. 1,52,702 determined originally. The capital gain was recomputed by deducting proportionate cost about which we need not dwell at length because it is really not in issue. Consequently, the ITO also felt that there was a deemed gift. The quantum of the deemed gift, according to the ITO acting as Gift-tax Officer, was the difference between the value of life interest paid to the mother of Miss Nalini of Rs. 1,80,632 less what according to him was the real life interest of Rs. 61,776 or Rs. 1,18,856. This amount was brought to tax as a deemed gift in the gift- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the life interest up to the period ending on the valuation date reduced (in each case) by the average of the expenses incurred on the collection of such income in those years : Provided that the amount to be reduced shall, in no case, exceed five per cent of the average of the annual gross income : Provided further that in case the income so derived is for a period exceeding three years, only that income derived during the three year sending on the valuation date shall be taken into account." According to the learned Departmental Representative, therefore, since the property was getting an income from rent of Rs. 3,000 per month, the computation had to be made with reference to this actual income received and the share from such inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Practice of Valuation" by A.K. Mitra, Second Edition, there is a mention at page 300 that such an interest rate would require an upward revision. What has to be determined is in evaluating the life interest what would be the maintainable average annual income. The property had been let for several years at a rental which obviously, if capitalised, would not have reflected the real market value. That is why the sale value of the property was as high as Rs. 10 lakhs. Therefore, to pin the assessee down to the rent actually received as the maintainable annual income would not be correct. The component of average annual income hence calls for fresh determination. What the assessee did in the present case as seen from the computation set ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould lead to the conclusion that the computation as made by the assessee was erroneous. The invoking of the provisions of sec. 147(b) is, therefore, only on the basis of a change of opinion. There is, in our view, an inherent lack of jurisdiction and on this point, which the learned counsel stressed, the assessee has to succeed. That apart, even on merits, the computation made by the assessee at the time of filing the original return cannot be faulted as having been the result of mere guesswork or a leap in the dark or an estimate without any basis. It was an estimate arrived at having due regard to the age of the life interest holder, the probable yield and a scientific formula for capitalising such yield to arrive at the life interest. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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