Wealth-tax valuation of lessee-owned superstructure excludes reversionary value where ownership and valuation date control.

For wealth-tax valuation of a superstructure erected by joint lessees on leased land, the rental capitalisation method had to be applied by reference to the rent and the capitalisation period, without adding a reversionary element. The lessees had constructed the building at their own cost, owned it during the lease term, and were liable to wealth-tax on that superstructure. As the assessees had no reversionary interest in the building, the lessor's reversionary interest in the land could not be imported into the valuation of the superstructure. Valuation had to be made as on the valuation date, and the remaining lease term for the land did not reduce the value of the building owned by the lessees.

---

---

Issues: Whether, for wealth-tax valuation of a superstructure erected by joint lessees on leased land, the reversionary value of the superstructure could be included in the valuation.

Analysis: The lease deed showed that the joint lessees had erected the building at their own cost, remained its owners during the lease term, and were liable to pay wealth-tax on the superstructure. The valuation adopted was rental capitalisation, under which the relevant factors were the rentals and the period of capitalisation. The addition of a reversionary element was inappropriate because the assessee had no reversionary interest in the building; the approach taken from the lessor's interest in the land was irrelevant to the lessees' ownership of the superstructure. Wealth-tax valuation had to be made as on the valuation date, and the duration of the lease of the land did not alter the value of the building owned by the lessees.

Conclusion: The reversionary value of the superstructure could not be included in the valuation, and the question was answered in favour of the assessee.

---