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TMI Blog2010 (7) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... rty on the basis of said market rent. The facts and basis referred in D.V.O. report pointwise are not seen and appreciated which are not presumptions but appreciation of facts. The facts therein are basis and material evidence on record and piece of evidence. (3) Deleting the addition on account of value of jewellery Rs.76,610/-. 2. During the Wealth tax proceedings, it was noted by the Assessing Officer that the respondent-assessee was having a property known as "Poonam Chambers' at Bombay. For the purpose of valuation, the matter was referred to the Valuation Cell at Bombay. The valuer has valued the property at Rs.28,90,000/- as against the value disclosed by the assessee at Rs.4,02,850/-. In a brief and cryptic manner, the Assessing Officer in the impugned assessment order passed u/s.16(3) of the Wealth Tax Act, 1957 dated 31/10/1984 has held that the value of the said property was to be determined as adopted by the Valuation Officer of the Revenue Department. Consequently, the addition was made. The matter was carried before the first appellate authority. Before the Learned CWT(Appeals), it was explained that the said property was given on rent to M/s.Antifriction Bearing Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Departmental Valuation Officer (DVO) by the Learned CWT (Appeals). The DVO has replied that the rent as shown by the assessee was a depressed figure and did not correspond to the going rates of tenanted properties in the area, hence, he has adopted the "Rent Capitalization" on the basis of "Standard Rent" as per the procedure. That "Standard Rent" was fixed on the basis of the prevailing interest rate of Reserve Bank of India primarily because of the reason that in one of the judgements the Hon'ble Supreme Court has stated that provisions relating to the "Standard Rent" were unreasonable. In the said reply, decision of C.W.T. vs. Ashwinkumar Govardhanbhai Patel reported as (1990) 184 ITR (ST) 33 and F.S. Gandhi vs. CWT reported as (1983) 141 ITR 105(All.) have been cited, wherein the rate of return at 10% has been upheld. After hearing the contentions from both the sides, the Learned CWT(Appeals) has stated that the Valuation Officer is the creature of the Statute and is bound by the provisions of the Statute as also the Rules made thereunder unless there is something else which indicates otherwise. The Valuation Officer is bound to value a property as per Rules forming part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side of the respondent-assessee, Shri M.K. Patel Learned Authorised Representative of the assessee appeared and primarily argued that the rent as accepted in the Income-tax proceedings should also have been made the basis for the valuation of the property for wealth-tax purposes. For Assessment Year 1983-84 an assessment u/s.16(3) of the W.T. Act, 1957 was made, wherein the value was adopted at Rs.4,02,850/-. For Assessment Year 1984-85 against an assessment was made u/s.16(3) of the Wealth Tax Act, 1957 order dated 01/10/1983 and the same value was assessed. The Learned Authorised Representative of the assessee has then drawn our attention to the assessment order passed u/s.143(3) of the I.T. Act, 1961 dated 31/10/1984 for Assessment Year 1985-86 to demonstrate that the "property income" was assessed at Rs.75,000/-. The Learned Authorised Representative of the assessee has cited a decision of Diwan Daulat Rai vs. New Delhi Municipal Committee reported as (1980) 122 ITR 700 for the proposition that annual value must not exceed the "Standard Rent" if a property is located where rent restriction law are enforced. It was argued by him that the property in question was also situated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the question of the applicability of "standard rent" whether to be taken into account for the purpose of valuation, an another dispute had also cropped up in respect of the "annual rent", i.e. whether it was the correct actual rent received by the assessee. This question has an answer in the statute itself. Explanation- (1) to Rule-5 of Part-B of Schedule-III defines "annual rent", which says that where the property is let throughout the year; the actual rent received or receivable by the owner in respect of such year is the "Annual Rent". Thus, this definition of "Annual Rent" also supports the contention of the assessee. Once the admitted position is that the rent disclosed by the assessee has already been assessed under Income Tax Act, therefore, the "gross maintainable rent" as well as "net maintainable rent" can easily be lifted from the Income Tax proceedings and should be taken into account for the purpose of valuation of the property under Wealth Tax Act, 1957. Naturally, two different figures ought not to be adopted; one for the purposes of the Income Tax Act and the other for the purposes of the Wealth Tax Act, 1957 , particularly for the purpose of valuation of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the rent it could have fetched if it had been let out to some other tenant. According to the Hon'ble Court, the position in law is that if there had been no rent restriction law in operation, then Revenue could make a fair and an objective estimate of the rent which the property might have fetched, but the operation of the Rent Restriction Act makes all the difference . 7. An another interesting question has also been raised by Ld. DR, during the argument that whether the DVO has the right or not to determine the valuation of the property by adopting a rent capitalisation method . Undisputedly he has to determine the valuation of a property as per the rules of rent capitalisation method but the method of determining the rent as adopted by him was not as per the prescribed rules. For ascertaining the correct Gross Rent / Net Rent an authority under the W.Tax Act has to follow the prescribed rules as discussed herein above. A mandatory provision has to be obeyed in its letter and spirit. In the case of Bharat Hari Singhania reported as 207 ITR 1 the Apex Court has commented, while dealing with the issue of the applicability W.T.Rules, that the Rules making authority ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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