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TMI Blog2005 (3) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... e of wealth-tax valuation - - - - - Dated:- 18-3-2005 - Judge(s) : K. S. RADHAKRISHNAN., C. N. RAMACHANDRAN NAIR. JUDGMENT The judgment of the court was delivered by K.S. Radhakrishnan J. - The Income-tax Appellate Tribunal, Cochin Bench, in compliance with the direction of this court in O.P. No. 22358 of 1997 referred certain questions of law which are consolidated as redrafted by us as follows for our consideration under section 27(3) of the Wealth-tax Act, 1957: "Whether, on the facts and circumstances of the case, was the Tribunal justified in upholding the valuation of the building under section 7(1) of the Wealth-tax Act based on market rent or rent receivable after ignoring municipal valuation which was based on actual re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that basis determined the market value by the rent capitalisation method using the multiplying factor of 12.4844. The market value of the property thus arrived at was Rs. 27,44,721 for all the four assessment years. Aggrieved by the valuation the assessee took up the matter before the Commissioner by filing appeals which were rejected. Further appeals preferred before the Tribunal were also rejected. Counsel appearing for the assessee, Sri M. Pathrose Mathai, submitted that the Tribunal was not justified in upholding the assessment on the basis of the valuation made by the District Valuation Officer. Counsel submitted that in respect of Swapna Jewellery the rent was fixed as Rs. 1,500 per month as per the lease deed and there is no provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of gross maintainable rent as reduced by the amount of taxes levied by any local authority in respect of the property and a sum equal to fifteen per cent, of the gross maintainable rent. "Gross maintainable rent" is dealt with in rule 5, which we extract below for easy reference. "5. Gross maintainable rent how to be computed.-For the purposes of rule 4, 'gross maintainable rent' in relation to any immovable property referred to in rule 3, means- (i) where the property is let, the amount received or receivable by the owner as annual rent or the annual value assessed by the local authority in whose area the property is situated for the purposes of levy of property tax or any other tax on the basis of such assessment, whichever is high ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure on repairs in respect of the property is borne by the tenant, by one-ninth of the actual rent; (iii) where the owner has accepted any amount as deposit (not being advance payment towards rent for a period of three months or less), by the amount calculated at the rate of 15 per cent, per annum on the amount of deposit outstanding from month to month, for the number of months (excluding part on a month) during which such deposit was held by the owner in the previous year, and if the owner is liable to pay interest on such deposit, the increase to be made under this clause shall be limited to the sum by which the amount calculated as aforesaid exceeds the interest actually paid; (iv) where the owner has received any amount by way of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer should have considered the annual value assessed by the local authority and not the rent received for the adjacent building. Counsel placed reliance on the decision in CIT v. Upnishad Investment (P) Ltd. [2003] 260 ITR 532 (Guj). Rule 5(i) states that where the property is let, the amount received or receivable or the annual value assessed by the local authority is the gross maintainable rent, but the assessing authority has to adopt the rent whichever is higher. In a case where the property is not let, the amount of annual rent assessed by the local authority for the purpose of levy of property tax would be the gross maintainable rent. For the building let out there is no compulsion that the authority should adopt the rent for whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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