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TMI Blog2002 (8) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ers' conference, annual general meeting, providing food to the visitors was entertainment expenses under section 37(2A) - The fourth question is whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the market value of the building as on January 1, 1964, should be computed on the basis of the rent capitalisation method for the purpose of section 55A of the Income-tax Act in preference to the estimated value submitted by the registered valuer. - - - - - Dated:- 21-8-2002 - Judge(s) : R. JAYASIMHA BABU., K. P. SIVASUBRAMANIAM. JUDGMENT The judgment of the court was delivered by R. JAYASIMHA BABU J.-Four questions have been referred to us for our consideration, at the instance of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing food to the visitors was entertainment expenses under section 37(2A) for the assessment year 1984-85. By the very terms of section 37(2A) entertainment expenditure includes expenditure on hospitality extended by the assessee to any person whether by way of provision of food or beverages or in any other manner whatsoever. The expenditure incurred on providing food and entertainment at the time of annual general meeting is clearly covered by that provision. The question is, therefore, required to be and is answered in favour of the Revenue and against the assessee. The fourth question is whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the market value of the building as on Janua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer should not have rejected the report given by the registered valuer and should have referred the matter to the valuation cell. Section 55A of the Income-tax Act provides for reference to a Valuation Officer at the option of the Assessing Officer, in the cases referred to in clauses (a) and (b) thereunder. Clause (a) deals with a situation where the Assessing Officer is of the view that the valuation made by the registered valuer is less than the fair market value. Clause (b) deals with a situation where the Assessing Officer is of the opinion that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so claimed or by more t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apitalisation method by adopting a notional rent, which was much higher than the actual rent received, and then averaging the two values. No material was placed before the Tribunal nor has any such material been placed before us to show that such a hybrid valuation made by the registered valuer is the correct method or the appropriate method. We cannot find fault with the Assessing Officer for not adopting that method, especially, when the registered valuer had not taken the actual rent received but had taken the notional rent which was much more than the actual rent for computing the value on the basis of the rent capitalisation method. The adoption of the rent capitalisation method by the Assessing Officer cannot be regarded as an arbit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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