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TMI Blog1969 (12) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... of a lease of a vacant site with right of reversion to the lessor of the superstructure after the expiry of the lease, whether for the purpose of assessment under the Wealth-tax Act, 1957, the Tribunal is justified, in law in deeming the lessor as the owner of the superstructure and the other rights even before the expiry of the lease ? (2) On the facts and circumstances of the assessee's case, in the case of valuation of the property let out to the Indian Bank, whether the valuation adopted by the Appellate Tribunal is justified in law ? (3) Whether, on the facts and in the circumstances of the case, the assessee was rightly assessed in the status of an 'individual' for the assessment year 1963-64 ? " Question No. 1 does not disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay rent at the rate of Rs. 250 per month for the first 10 years, Rs. 450 per month for the next 10 years and Rs. 650 per month for the remaining 10 years of the lease. The lease deed gave an option to the lessee to renew the lease after the expiry of 30 years for a further period of 10 years. Under the terms of the lease, the lessee agreed to surrender the building constructed by him on the site to the lessor without claiming any compensation. After the execution of the lease, the lessee, Jayanthilal Thakoor, constructed a theatre on the land which is now called as the " Alankar Theatre ". The Wealth-tax Officer and the appellate authorities valued the building of the " Alankar Theatre " as on the date of the valuation, viz., March 31, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm was 24 years. To that has to be added another 10 years because under the terms of the lease the lessee has the option to renew the lease for a further term of 10 years. The value of the building, 34 years after the valuation date when the lessor would be entitled to its possession, has to be determined by allowing depreciation for the building. For a first class building the income-tax authorities allow depreciation at the rate of 2 1/2 per cent. per annum. The written down value of the building works out at Rs. 2,00,271 as on April 1, 1997. If the value of the building on April 1, 1997, when the assessee becomes entitled to recover possession of the building is Rs. 2,00,271, then the value of that right on March 31, 1963, would be Rs. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the original term of the lease expired in 1963, the term of the lease has been extended by 5 years at the same rent. It is clear that the yield from the property during a period of 10 years prior to the date of the valuation and also for the future period of 5 years from the said date was and is Rs. 1,000 per month. Under section 7, which provides for the valuation of the assets, the Wealth-tax Officer has to compute the value of the property on the basis of the value it would fetch if sold in the open market on the valuation date. What the Wealth-tax Officer is required to determine is the market value of the property on the valuation date. The market value of immovable property has to be determined on the basis of what value a willing sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant case are different from the facts in Commissioner of Wealth-tax v. V. C. Ramachandran ; but on principle we do not find any difference between the two cases. In the instant case, under the terms of the lease, the assessee has no right to claim enhancement of rent or to seek eviction of the lessee before the expiry of the lease. The rental value of the building is undoubtedly one of the factors to de taken into consideration in valuing the market value. For the purpose of determination of the market value it is open to the Wealth-tax Officer to take into consideration the value of buildings in similar circumstances if there are sale transactions. No such material has been relied on by the Wealth-tax Officer or the appellate authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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