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TMI Blog1981 (3) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... pective valuation dates was involved in the appeals before the Tribunal leading to the present reference. The said property is a trust property. It was purchased on the 30th March, 1964, for Rs. 1,20,000 by the trustees for the benefit of the minor beneficiary. It may be mentioned that the trustees were the two major sons of the tenant of the premises and one at the relevant time was a solicitor of this court. The beneficiaries of the trust are the minor children of the settlor. The said property consists of a two-storeyed building and open land measuring 17 cottahs and 8 chattaks. The building consists of 7 rooms with a garage and a servant's quarters attached to it. The assessee's father was living in the said building as a tenant at a monthly rent of Rs. 434 when it was purchased by the trustees and he continued to live therein at the same monthly rent after it was purchased. Inasmuch as certain controversy has arisen as to whether the rent was fair or not, it is appropriate, in our opinion, to refer to the order of the AAC wherein he observed, inter alia, as follows : " The property was purchased for Rs. 1,20,000 in March, 1964. The appellant's father, Sri Shivo Charan Laul T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the rental method that was adopted by the WTO. At the same time the AAC, however, considered that the rate of Rs. 5,000 per cottah adopted by the assessee's valuer was too low and not at all consistent with the market value of the lands prevailing in the locality. He further held that even on a conservative estimate the value of the land in the area under consideration should not be less than Rs. 15,000 per cottah after allowing a deduction of 10% for the largeness of the area. The AAC valued the property in question, that is, 17 cottahs 6 chattacks, at Rs. 2,34,563. At the same time, he accepted the value of the building adopted by the assessee's valuer at Rs. 71,464. Though the value of the property in question on land-cum-building method came to about Rs. 3,06,027, the AAC estimated the value of the property in question at Rs. 2,75,000 on each of the aforesaid relevant valuation dates for the years under consideration against the value of Rs. 3,04,000 estimated by the WTO and Rs. 1,10,000 disclosed by the assessee. Aggrieved by the order of the AAC of Wealth-tax, both the assessee and the Revenue preferred two different sets of appeals before the Tribunal. The Tribunal dispo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch lands in the neighbourhood were sold near about the dates of valuation. This information can be obtained either from the Registrar's office or from the persons who purchased or sold lands in the neighbourhood of the property in question near about the relevant dates of valuation. As the question of the valuation of the land was not decided by the AAC on the basis of relevant material and as we do not find any basis for the rate of Rs. 15,000 per cottah adopted by the AAC we set aside his decision, restore the appeal to his file and direct him to dispose of them afresh in the light of the above observations." Upon these, the questions, as indicated above, have been referred to this court. There is no dispute in this case, from the narration of facts, that the entirety of the premises was let out. There is also no dispute that the premises was let out at least for 20 years prior to the relevant dates. It was let out on the same rent as on the respective valuation dates. The premises in question was let out to the father of the assessee. There has been no change in the property, that is to say, there is 17 cottahs of land and it consists of 7 rooms, servants' quarters, as we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent be enhanced except in a specified manner? These principles were again considered by this court in the context of the W.T. Act in the case of J.N. Bose v. CWT [1976] 104 ITR 83, where we had observed that the following principles emerged from the decided cases with regard to the valuation of a property for the purpose of the W.T. Act : (a) in respect of an immovable property, there was no fixed market, such as for shares or for other commodities like sugar, cloth, etc. ; (b) there must be certain amount of guess, but the guess must be an intelligent one based on certain objective factors which have a rational nexus with the valuation; and (c) there are different methods that which would be suitable for a particular property must depend upon the particular features of the property ; of those methods one should be preferred which could provide more objective data for reliance. More or less, similar principle was reiterated in the decision in the case of Debi Prosad Poddar v. CWT [1977] 109 ITR 760 (Cal), where we bad held that, (1) attempt must be made to find out the price which the immovable property would fetch on the valuation date, imagining a willing buyer to purchase the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common parlance and these became a controlled commodity and its effective value was its controlled value and not an imaginary commercial value. There, discussing the facts of the case, the court observed that where the land was fully developed by buildings erected thereon, when the property was let out at rent and the rent had been proved and was likely to be maintained for years to come, then the yield or the rental method of valuation should be applied to determine the market value of the premises. More or less, a similar view was expressed in another decision by the same Division Bench in the case of CIT v. Panchanan Das [1979] 116 ITR 272 (Cal). There also the Division Bench reiterated that where the land was fully developed by buildings erected thereon, when the property was let out at rent from which the fair rent could be ascertained and when the rent had been proved and was likely to be maintained for years to come then the rental method of valuation should be applied to determine the market value of the property. On behalf of the Revenue it was emphasised that in the last two cases, the court had laid stress on the fact that the land was fully developed and the fair rent w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent or the building was occupied by the owner himself. Therefore, in all such cases, the annual value of the building for purposes of house tax, whether under s. 3(1)(b) of the Punjab Municipal Act, 1911, or under s. 116 of the Delhi Municipal Corporation Act, 1957, was limited to the measure of the standard rent determinable on the principles laid down in the Rent Control Act and it could not exceed the standard rent. The Supreme Court observed at pp. 715-716 of the report as follows: "Now, it is true that in the present cases the period of limitation for making an application for fixation of the standard rent had expired long prior to the commencement of the assessment years and in each of the cases, the tenant was precluded by s. 12 from making an application for fixation of the standard rent with the result that the landlord was lawfully entitled to continue to receive the contractual rent from the tenant without any let or hindrance. But from this fact-situation which prevailed in each of the cases, it does not follow that the landlord could, therefore, reasonably expect to receive the same amount of rent from a hypothetical tenant. The existing tenant may be barred from mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso a method of valuation and according to the valuer's report, which the assessee himself had submitted, the rental method was not the proper method. Under the W.T. Act, s. 7, it is the duty of the WTO to form his opinion as to what would be the market value of the property on the relevant date. The submission of the valuer's report either one way or the other cannot be determinative of the value which a property will be supposed to fetch in an open market on the relevant valuation date, as has been aptly observed : " In any event, even if the valuer was an expert, be is not a witness of fact but a mere witness of an opinion. That opinion, therefore, cannot bind the court or the Tribunal or the income-tax authorities. " (See the observation of Chief justice P. B. Mukharji, in the case of Mahmudabad Properties (P.) Ltd. v. CIT [1972] 85 ITR 500 (Cal), at p. 528). In the light of the aforesaid facts, we would answer question No. 1 in the negative and in favour of the assessee. In that view of the matter, so far as question No. 2 is concerned, we would say that the rental method based on actual rent received from the property subject to variation permissible under the rent restri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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