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TMI Blog1982 (6) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... e written submission and the papers submitted by him. The first Authority on which the ld. Counsel for the appellant has relied on is the Arbitrator's award for the asst. yr. 1966-67 in connection with the W.T. appeal before the ITAT 'A' Bench, Calcutta referred to above. The ld. Arbitrator Sri R.N. Sen has not given any reason why the Municipal tax has been taken @ 30. 5% instead of the tax actually levied by the Calcutta Corporation. However, an indication of the reason is available on page-5 of the AAC. Range-VI's order dt. 22-3-80 which is quoted below: "Tax paid is much less than what the Municipality is entitled to charge under their Act. As this will be taken in consideration by any prudent purchaser, we have calculated the tax that would be paid if the assessment was based on the above rent which his very fair." I do not agree with the ld. Counsels contention that from the gross rent receivable, the Corporation/Municipal tax to be deducted, is the maximum tax which is payable under the Municipal Tax Act, 1951. Calcutta Corporation, while fixing the tax, does not fix the maximum tax in respect of every building but takes into consideration the various factors while fix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion that the deduction should be granted on the basis of tax leviable according to law. It is a matter of common knowledge that some times the assessees show the rents to be lower than the sums actually received by them to avoid payment of proper municipal taxes. But now that the parties are agreed over the amounts of rent, which are received by the assessee and his co-sharers, it may be open for the Municipal Corporation to reopen the tax matters of the assessee. In any case, a prospective buyer would certainly compute the net annual rent after deducting the taxes payable on the annual rent that has actually been received. The department cannot do both eat the cake and have it too that is to say it cannot contend that the actual amount of rent received by the assessee is higher than the one entered in the municipal records and therefore the multiple should be applied to that figure but for the purpose of deduction of municipal taxes a lower rent should be computed." Although the assessee has taken a somersault in the present case in as much as he wants the market value of the properties to be computed by applying multiple on the rental value estimated by the Municipal A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal on 29th November 1979, the judgment of the Calcutta High Court in Ashima Sinha (1978) 112 ITR 26 (Cal) and all other relevant matters were considered. One of the arguments accepted by the Bench in the case of Monohar Kr. Kankaria was the old condition of the building and the existing old tenants. However, when we consider this fact in the light of the further facts that rents in case of old tenants are always less, whereas the market value of the properties is going up day by day. There is absolutely no reason why a still lower multiple of rent should be applied in case of such buildings because the lower rent will itself result in estimation of a lower market value. We, therefore, see no reason to reduce the multiple to any figure than 12 as has been taken by the AAC in this case. 6. The next ground is rather a new one. It has been contended that u/s 7 (1) of the WT Act, the estimated value of the properties is a notional value. But even after determining that value a deduction has to be granted of all liabilities u/s 2(m) of the WT Act. Now when the property would be sold at its market value according to the present rent, it will involve some capital gain. In other word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has given a categorical finding that the entire building has already been let out and letting out cannot be considered to be the assessee's business. If a room or two is used for the purpose of collecting rent or allowing a Darwan to stay it can hardly be said that it becomes the assessee's business premises. The income from this property has been assessed under the head "income from property" and not "income from business". Statutory expenditure under the head "collection charges" has been allowed. Therefore, the ground that the building itself is a business premises for the purpose of computation of additional wealth-tax has no substance. The ground is accordingly rejected. 9. Ground No. 7 is a general ground relating to tax liabilities as being debts owed for the purpose of s. 2(M) of the WT Act. This ground does not appear to have been specifically discussed by the AAC. We need only observe that such liabilities as are permissible to be deducted u/s 2(m), i.e. tax liabilities which are not being contested in appeal and which are not outstanding for more than 12 months on the respective date of valuation would certainly be allowable and the WTO will give corresponding deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t: It was held: "Reversing the decision of the High Court, that, as neither was any claim made before the Income-tax Officer regarding the relief under section 84 nor was there any material on record in support thereof, and from the mere fact that such a claim had been allowed in subsequent years it could not be assumed that the prescribed conditions justifying a claim for exemption under section 84 were also fulfilled, the Tribunal was not competent to hold that the Appellate Assistant Commissioner should have entertained the question of relief under section 84 or to direct the Income-tax officer to allow the relief." We are, therefore, not inclined to allow this ground in view of this conclusion by the Hon'ble Supreme Court. 11. Even on merits we do not find much force in this ground. In fact this matter was thoroughly considered by the C-Bench of the Tribunal (to which the dictating Member was again a party) in WTA Nos. 786-794 (Cal) of 1980 in the case of Kishorilal Dhandhania decided on 16th Feb., 1982. Therein the actual rate of rent charged from some of the tenants was less. But even then the Bench held that it is the rent that the property could fetch in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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