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TMI Blog1994 (12) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... issue involved in these references is the valuation of the properties situated at No. 150-A and 123-A, Mount Road, Madras, in which the assessees had shares as under : --------------------------------------------------------------------------------------------------------------------------------------------------- Property Name of the assessee Share/half --------------------------------------------------------------------------------------------------------------------------------------------------- 150-A Navratanmull Chordia 1/2 Prafulchand Chordia 1/4th Shrenikraj Chordia 1/4th 123-A Navratanmull Chordia 1/3rd Khivara Chordia 1/3rd Dhevaraj Chordia 1/3rd --------------------------------------------------------------------------------------------------------------------------------------------------- The assessees returned the value in respect of the property at 150 A. Mount Road, Madras ; the value adopted by the Wealth-tax Officer and the value taken by the Appellate Assistant Commissioner were as under : --------------------------------------------------------------------------------------------------------------------------------------------------- A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at eight per cent. for all the assessment years. For the portion C, the finding of the Tribunal is as under : 1. The rate of capitalisation should be ten per cent. for all the assessment years ; 2. Rate of redemption of capital at six per cent. adopted by the Appellate Assistant Commissioner is confirmed ; 3. Rate of return for purposes of deferred Value should be at eight per cent. for all the assessment years ; 4. Vacancy allowance at five per cent. is confirmed ; 5. Value of land at Rs. 60,000 per ground is confirmed for 1972-73 but held that this rate should be taken for all the other assessment years also. The Tribunal further agreed with the Departmental valuer that in computing the value of the land reduction of 3.61 grounds for common private roads given by him was sufficient as against the assessee's claim of seven grounds. Regarding the property at 150-A, Mount Road, Madras, the Tribunal held as under : (a) The rate of capitalisation should be ten per cent. for all the assessment years (the Appellate Assistant Commissioner has adopted this rate only for 1973-74). (b) Rate of redemption of capital at six per cent. as adopted by the Appellate Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that, while the materials are available on record, the Tribunal was not reasonable in accepting the valuation determined by the Appellate Assistant Commissioner in respect of the properties in question. The Valuation Officer was not correct in adopting the average of the two methods. On the other hand, learned counsel for the assessee, while supporting the order passed by the Tribunal, submitted that the method of valuation adopted by the Tribunal is in accordance with the nature of the property. In so far as the value of the land is concerned, the Tribunal took into account the lands useful for residential purpose and for commercial exploitation. The Tribunal also took into consideration the potentiality of the future value on the basis of deferred interest. Therefore, it was submitted that the valuation adopted by the Tribunal is on scientific basis which requires no interference. We have heard learned counsel for the Department as well as for the assessees. So far as the property at 123, Mount Road, is concerned, the valuation was done by an approved valuer. The valuation of this property had been done by him in three parts : 1. Valuation of the land of the buildi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived at the capitalised value of Rs. 1,23,200. Along with that he added the deferred value for seven years at five per cent. return on Rs. 5,62,500 being the present value of the land and computed the value of this portion of the property roundly at Rs. 5,23,000 as on March 31, 1972. Learned standing counsel for the Department justified the Depart mental valuer's valuation contending that regarding the third portion, viz., the land leased out to ESSO, since the unexpired period of lease was only seven years, the assessee would take back the land, the potential value of which then would be very high and, therefore, the deferred value became important. It is the case of the assessee that the only basis would be the value per ground as adopted by the assessee's valuer. We consider that the Departmental valuer's method of valuation was not a realistic one. This method was on a two-tier basis, i.e., one on the existing rental basis and the other by forecasting the deferred value as vacant land, considering the life of tenancy in the case of leased lands and the estimated life of the structure in the case of buildings. We are also of the opinion that in respect of the properties situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were given for corporation tax, urban land tax, probable vacancies at five per cent. and outgoings, 1/6th for repairs and six per cent. for collection charges, etc. Thereafter, the net income was thus computed at Rs. 1,13,796. This was capitalised at eight per cent. return and reduction of capital at 4 1/2 per cent. for 31 years. Thus, the capitalised value was computed at Rs. 60,000 per ground. Thus, the total value of portion B was determined at Rs. 13,90,500 as on March 31, 1972. The assessee's valuer, on the other hand, valued this portion (Sire Mansion) at Rs. 11,33,000 by taking the average of valuation on replacement basis and valuation on rental capitalisation method. On replacement basis, the value of the building was fixed at Rs. 7,50,527 and in doing so, the valuer has allowed depreciation at 1 1/2 per cent. of the value of the building at the commencement of the year, i.e., on March 31, 1975. At the commencement of the year, the value was taken at Rs. 10,95,660. The value was arrived at with regard to the building at Rs. 7,50,527. For the land, the valuer adopted the rate of Rs. 23,000 per ground and deter mined the value at Rs. 3,45,000 and the total value for the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken at ten per cent. for all the assessment years. The redemption of capital should be taken at six per cent. for 31 years. The rate of return for the purpose of deferred value should be set at eight per cent. The vacancy allowance should be taken at five per cent. This conclusion arrived at by the Tribunal is well founded. Therefore, we are not inclined to interfere with the same. In so far as the portion marked as C in the property at 123, Mount Road, is concerned, the Departmental valuer adopted the rent capitalisation method. He added the deferred value for 33 years at five per cent. The actual rent received was taken at Rs. 1,52,251. From the said rent, five per cent. for probable vacancies, corporation tax and urban land tax and outgoings, 1/6th for repairs and six per cent. for collection charges were deducted, The net income arrived at was Rs. 77,849. Capitalising this at eight per cent. return and the redemption of capital at 4 1/2 per cent. for 33 years, he worked out the capitalised value at Rs. 8,30,415. He took the value of 31.39 grounds after deducting 3.61 grounds for common private roads at Rs. 20,000 per ground and took the deferred value of 33 years at five per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Appellate Assistant Commissioner enhanced the vacancy allowance from three per cent. to five per cent. The Appellate Assistant Commissioner also enhanced the rate of return from eight per cent. to nine per cent. and the redemption of capital from 4 1/2 per cent. to six per cent. He also increased the deferred value from five per cent. to six per cent. Thus, the Appellate Assistant Commissioner computed the total value of the property at Rs. 16,22,989 and gave a reduction of ten per cent. considering the high value of the property and the fact that there will be few potential purchasers in the market. Thus, the Appellate Assistant Commissioner fixed the value of the property at Rs. 14,60,690 as on March 31, 1972, Rs. 14,78,620 as on March 31, 1974, and Rs. 14,69,770 as on March 31, 1973. However, the Tribunal held that its finding and reasonings in respect of the property at 123, Mount Road, would apply equally to this property also. Accordingly, the Tribunal held that the rate of capitalisation should be at ten per cent. in all the assessment years under consideration. The rate of redemption of capital should be at six per cent. The rate of return for the purpose of deferred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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