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TMI Blog1984 (7) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... each of the four assessment years under appeal was considered to be low by the WTO. He, therefore, referred the matter of valuation to the Departmental Valuation Officer, who determined the value of the property at Rs. 10,44,000. Accordingly, the WTO completed the assessments of the four years under appeal, taking the value at Rs. 10,44,000. 3. The assessee appealed to the AAC and contended that the WTO was not justified in estimating the value of the property at Rs. 10.44 lakhs for each of the four years ignoring the fact that ground, first and second floors of the building were tenanted and that the third floor was occupied by the assessee herself for own residence. It was urged that when the property was tenanted, rental method was to be adopted. It was further urged that the DVO, while applying the rental method, had taken into consideration the reversionary value of land separately which he should not have done keeping in view the principle laid down by the Calcutta High Court in the case of CIT vs. Smt. Ashima Sinha (1979) 116 ITR 26 (Cal) and J. N. Bose vs. CWT (1976) 104 ITR 83 (Cal). It was also urged that on a consideration of the facts and circumstances of the case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined by the DVO. He took us through the DVO's report and urged that the DVO has taken into consideration the entire factual aspect of the matter. He pointed out that the plan was sanctioned by the Municipal Authority for construction of a 7- storeyed building by the assessee and that the assessee gifted the roof of third floor and the donee also had constructed structures thereon. The ld. Departmental Representative vehemently urged that there was some potentialities for construction of the building above third floor which AAC failed to consider. He also urged that the DVO has rightly included the proportionate value of rent while determining the value of the property in question. He also urged that even the AAC, while estimating the value of the house property on rental method, would not have applied a multiplying factor of 10 ignoring the provisions of r. 1BB of the WT Rules. In short, the ld. Departmental Representative contended that the AAC failed to consider the various aspects of the matter while the value of the property for each of the assessment years under appeal. The ld. Counsel for the assessee, on the other hand, supporting the orders of the AAC contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rental method. The Calcutta High Court in the case of Smt. Ashima Sinha held that when a property is valued on rental basis, the result is the value of the land and buildings taken together. The value of land cannot be added again. That would amount to valuation of land twice. Bearing the principles laid down in the aforesaid case, we are unable to concede to the submissions made by the ld. Departmental Representative and the DVO that the value of the land should be separately added while determining the value of the premises on rental method. Accordingly, it has to be hald that the AAC was justified in excluding the value of the land while determining the value of the property in question on rental method. We uphold the orders of the AAC on this point. 6. The next question which now remains to be considered is the approximate number of years' purchase that should be followed, i.e., determination of appropriate multiplying factor. It was the case of the assessee that at the material time the rate of interest on capital investment was not less than 10 per cent. So also, the rate of interest on fixed deposit with banks. In this connection reference may be made to decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of India. The rate of capitalisation should, therefore, not be unreal and must have regard to the commercial rate of return after taking into consideration the various constraint and insecurities in the property market. Bearing in mind the principle laid down in the aforesaid cases as also considering the facts and circumstances of the instant case, we are of the opinion that the AAC was justified in adopting the multiplying factor of 10.] 7. We, however, see that the AAC while determining the value of the property in question for the asst. yrs. 1973-74 and 1974-75 had not taken into consideration the value of the third floor which was under construction. As has been held by the Madras High Court in the case of CWT vs. S. Venugopala Konar & Ors. (1977) 109 ITR 52 (Mad), that in respect of any incomplete construction, normally there cannot be any market value as on successive valuation dates on the basis of the progress in the construction works and the only manner in which the value of such incomplete construction as on different valuation dates could be arrived at will be by finding out the actual amount spent on the construction as on the different valuation dates. That be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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