Leasehold property valuation under Schedule III applies where possession continues and renewal remains only subject to future approval.

Leasehold properties and superstructures remained subject to the normal Schedule III valuation method under Rules 3 and 4 of the Wealth-tax Act because the lessee continued in possession, used the properties, sub-let godowns and earned rent. The government communication did not extinguish the leasehold rights; it only meant that any future extension or renewal required prior approval under the Major Port Trusts Act. The possibility of non-renewal was therefore only a contingent future event and not a present basis to adopt Rule 20 or a nil valuation. On the stated facts, Rule 8 did not displace Rules 3 and 4.

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Issues: Whether the assessee's leasehold properties and superstructures were liable to be valued under Rules 3 and 4 of Schedule III to the Wealth-tax Act, 1957, or whether Rule 8 attracted Rule 20 valuation on the footing that the lease would expire within 15 years and no renewal option survived.

Analysis: The relevant valuation had to be made as on the valuation dates, but the Government communication relied on by the assessee did not extinguish the leasehold rights altogether. It only indicated that any extension or renewal beyond the initial period would require prior approval under section 34(1) of the Major Port Trusts Act, 1963. On the facts, the assessee continued to occupy and use the properties, sub-let the godowns, earned rental income, and faced no eviction proceedings. The technical expiry of the original lease term did not, by itself, make the property devoid of value or justify ignoring the statutory valuation scheme in Rules 3 and 4. The contingency of future non-renewal was not treated as a present basis to adopt Rule 20.

Conclusion: Rule 8 did not displace Rules 3 and 4, and valuation under Rule 20 was not warranted. The leasehold properties were rightly brought to wealth-tax under the Schedule III valuation method.

Ratio Decidendi: Where a lessee continues in possession and enjoyment of leasehold property and the only impediment is a future requirement of governmental approval for renewal, the property is not to be valued on a nil or purely speculative basis, and the normal Schedule III valuation under Rules 3 and 4 applies.

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