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TMI Blog1978 (7) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The buildings were more than 100 years old. (c) The property was let out to tenants. (d) The estimated fair market value of the property was Rs. 1,80,000. By a letter dated the 3rd August, 1974, the IAC Acquisition, Range I, Calcutta, the competent authority within the meaning of s. 269A(b) read with s. 569B of the Act, referred the matter under s. 269L(1)(a) of the Act to the Valuation Officer, Unit-III, to determine the fair market value of the said property and to submit a report. Thereupon, the said Valuation Officer inspected the said property on the 6th September, 1975, and submitted his valuation report to the competent authority, inter alia, as follows : (a) The locality was a good residential-cum-commercial locality. (b) The, main building was a traditional load-bearing brick-built double storeyed one with terraced roofing on wooden beams and bargas having sanitary, water and electricity connections. (c) The out-house to the rear side of the main building was a single storeyed brick-built load-bearing one with terraced roofing on wooden beams and bargas. (d) The out-houses facing the road were single storeyed brick-built building with A.C. Sheet/C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 Total value of the property1,01,732 plus 1,71,087 2,72,819 Say 2,73,000 The said Valuation Officer in determining the market value of the land of the said property took into consideration the value of the land at 47, Shakespeare Sarani, on 29th August, 1964, at Rs. 27,468 per cottah and observed that since the beginning of 1973 speculation of residential flats in multi-storeyed buildings has sent the price of land soaring very high. On the 29th September, 1973, the competent authority, under s. 269C of the Act, recorded his reasons for initiation of proceedings for acquisition of the said property, inter alia, stating that on the basis of the said valuation report of the Valuation Officer the value of the said property exceeded the apparent consideration by 51% and directed issue of notice under s. 269D of the Act. On the same date, i.e., 29th September, 1973, a notice under s. 269D(1) of the Act was issued inviting objections against the said proposed acquisition in terms of s. 269E of the Act which was published in the Gazette of India on the 13th October, 1973. Copies of the said notice were also served on the transferor and the transferees in terms of s. 269D(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t restriction legislations the tenants could not be evicted. (d) The valuation of land made by the Valuation Officer was based on no evidence and on conjectures and surmises. (e) The locality in which the said property was situate was not a good residential locality at all and was surrounded by motor car repairing, and other machine shops, cobblers, mistries and workers in machine shops, a neglected tank and an old abandoned cemetry. (f) The buildings in the said property did not outlive their economic life as stated by the Valuation Officer. (g) The speculation of the Valuation Officer that the property must have been purchased for construction of a multi-storied building was baseless. (h) No construction could be made on the vacant land of 115 ft. x 45 ft. as under the building regulations of the Corporation of Calcutta 50% of the total land of the said property had to be kept vacant. (i) The basis of valuation of the Valuation Officer that the said property would become vacant after 25 years and further development could be made thereafter was wholly imaginary. The transferees also cited as a comparable unit the sale of premises No. 9, Acharya Jagadish Chand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the consideration for the transfer of the said property as agreed to between the parties had not been truly stated in the said instrument of transfer with the object as referred to in s. 269C(1)(a), (b) of the Act and the fair market value of the said property exceeded by more than 25 per cent. of the apparent consideration. The transferees made an application before the competent authority for correction of certain mistakes in the said order which was refused. Both the transferor and the transferees appealed to the Income-tax Appellate Tribunal against the said order of the competent authority for the acquisition of the said property. Both the said appeals were heard together by the Tribunal and were disposed of by a common order. Apart from the above-noted contentions that were urged before the competent authority that the said property was sold by the transferor at the fair market value, the transferees relied on a further fact before the Tribunal that in Title Suit No. 524 of 1966 instituted by India Cable Co. Ltd., one of the tenants of the said property against Jayanta Nath Ghosh, the transferor in the City Civil Court, Calcutta, a decree had been passed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 2, raised a preliminary objection that the appeal was time barred. The said order of the Tribunal was received by the appellant on the 3rd October, 1975, while the appeal was preferred on the 3rd December, 1975, after the expiry of 60 days from the date of service of notice of the said order of the Tribunal as provided in s. 269H of the Act as will appear from the statements made in para. 9 of the petition of the appellant for admission of the appeal and the notice of motion taken out. Mr. Ajit Sengupta, the learned counsel for the appellant, submitted that the appeal was not time-barred as the date, 3rd October, 1975, mentioned in para. 9 of the petition was a mistake which should be 4th October, 1975. In view of the dispute between the parties as to the date of receipt of the said order of the Tribunal by the appellant, we directed the appellant to make a formal application for correction of a mistake in para. 9 of the said petition, if any, and to satisfy this court that the appeal was not time barred. On 21st July, 1978, the appellant made the said application and from the records produced before us, we were satisfied that the copy of the said order of the Tribunal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n done by the rental method...... after capitalisation of the rent you cannot deduct the depreciated value of the buildings on the land, and say that the result is the definite value of the land. " Mr. B. L. Pal also cited a decision of the Supreme Court in Rustom Cavasjee Cooper v. Union of India [1970] 40 Comp Cas 325 (SC). One of the questions involved in this case was whether compensation payable under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969, meant a just equivalent in money of the property acquired or did not mean such just equivalent and if the court could go into the propriety or adequacy or reasonableness of the compensation under art. 31 of the Constitution. The Supreme Court held that a statute which provided for acquisition must either fix the compensation or specify the principles on which and in the manner in which the compensation was to be determined. The following principles laid down by the majority judgment at page 383 was relied on : " The important methods of determination of compensation are : (i) market value determined from sales of comparable properties, proximate in time to the date of acquisition, similarly situate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenanted. He relied on the decree dated 25th July, 1969, passed by the learned judge, 4th Bench, City Civil Court, Calcutta, in Title Suit No. 524 of 1966 (Indian Cable Co. Ltd. v. Jayanta Nath Ghosh) granting a permanent injunction restraining the defendant, his agents, servants and/or factors from making any construction or digging earth or making holes whatsoever or raising any wall in the plaintiff's tenancy at 8, Lower Circular Road (Acharya Jagadish Chandra Bose Road), Calcutta-17, or any part thereof and/or doing anything in any way changing the nature or character of the said tenancy and/or encroaching upon its tenancy rights and not to enter in or upon the open space (vacant land) including the lawn to the north of the main building and out-houses up to the northern boundary of the said premises which was noted and considered by the Tribunal. Mr. Pranab Pal, therefore, submitted that in view of the said injunction no construction was possible on any part of the vacant land in the said property. In any event, under the building regulations under Calcutta Municipal Act, 1951, not less than 50% of the land had to be kept vacant in the area where the said property was situated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be determined on the basis of the limitations imposed by the statute." It was further observed at pp. 769-770 as follows: " When a person buys a property, he does so for two purposes, (a) to obtain an annual income, (b) to obtain security for his capital. If the property was merely a vacant land, it might be developed and made to yield such income, as it was capable of, in a metropolitan area where some sort of scarcity for accommodation prevails. The property was, however, burdened with a tenanted house and the income therefrom was controlled by a statute. This control on income was bound to react on the value of the property and the application of the land and building method would not have been a proper method in the instant case." (b) J. N. Bose v. CWT [1976] 104 ITR 83 (Cal). Here, it was held by this court in the context of the W.T. Act that there were different methods of valuation of immovable property and the one suitable for a particular property would depend upon the particular features thereof. (c) CED v. Bijay Kumar Khandelwal [1977] 108 ITR 864 (Gauhati). In this case, the Assam High Court confirmed the order of the Tribunal in determining the market value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be left open but the land left open being approximately 7 cottahs 3 chittaks was less than the requirement under the said building regulations. In our view, there is, therefore, no scope for development of the said property either immediate or in the near future, so long as the existing building and outhouses remained and so long as the tenants did not vacate, who are, no doubt, protected under the rent control legislations. In Rustom Cavasjee Cooper [1970] 40 Comp Cas 325 (SC), the Supreme Court was dealing with the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969, and considered what would be the fair compensation where the property was compulsorily acquired and not what would be the fair market value when the same was voluntarily transferred by the owner for consideration. The Supreme Court observed that the application of the yield or rental method in valuing a vacant business premises in urban areas on the basis of the estimated rental income would lead to misleading results and would not ensure adequate compensation. In that context, the Supreme Court, at page 387 of the report, observed as follows: " Under Explanation 2, clause (1), 'ascertaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r years to come, its valuation should be made by applying the de rental " method. The " land and building " method might, however, be applied even in such a case only to check the valuation arrived at by the SC rental " method but it is not the opinion of Parks that the result arrived at by " land and building " method in such a case is to be accepted in preference to that arrived at by the "yield or rental" method. On the contrary, the opinion of Parks is that in valuing a property the depreciated value of the building cannot even be deducted from its valuation arrived at by the rental method. The said property is fully developed and let out to tenants in its entirety. There is no dispute as to the quantum of rent realised which has been duly ascertained and such rent is likely to remain unaltered for years to come. The method indicated in Parks on Valuations at page 37, therefore, clearly applies to the facts of this case and, in our opinion, the Tribunal rightly applied the " yield or rental method " for valuation in the present case. We find that the Tribunal had correctly applied in this case the principles laid down in Radha Devi Jalan [1968] 67 ITR 761 (Cal) with which w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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