Rental yield valuation governs fully tenanted rent-controlled property; speculative reversionary land-and-building method is impermissible.

For a fully tenanted, rent-controlled property, market value should ordinarily be assessed on the yield or rental method because the existing statutory rent restriction materially governs the property's value. A land-and-building valuation with assumed reversionary value was rejected as speculative, since it effectively treated the land twice and ignored the continuing tenancy structure. Comparable sales of vacant land were found unsuitable for an old, wholly let property subject to rent control. The analysis confirms that valuation must reflect actual controlled rental income where rent is stable and unlikely to change, and not an unreal future reversionary possibility.

---

---

Issues: Whether, in the case of a fully tenanted and rent-controlled property, the proper method of valuation was the yield or rental method and whether the land-and-building with reversionary value approach adopted by the Valuation Officer and accepted by the competent authority was sustainable.

Analysis: The property was held to be fully developed and let out in its entirety, with rent that was neither shown to be abnormal nor likely to change for years. In such circumstances, rent control legislation materially affected the value and the valuation had to reflect the controlled rental income. The land-and-building approach, coupled with an assumed future reversionary value, was rejected because it effectively valued the land twice and rested on an unreal future possibility inconsistent with the existing tenancy structure. The comparable sales relied upon by the revenue were of vacant lands and were not truly comparable to an old, wholly tenanted property subject to statutory rent restrictions. The Tribunal's conclusion that the acquisition conditions were not satisfied was therefore not perverse.

Conclusion: The yield or rental method was the correct method of valuation, and the revenue's contrary valuation approach was rejected; the challenge to the Tribunal's cancellation of the acquisition order failed.

Final Conclusion: The acquisition order could not be sustained on the material before the Court, and the revenue appeal was dismissed.

Ratio Decidendi: For a fully tenanted property whose rent is controlled by statute and likely to remain stable, market value must ordinarily be assessed on the rental yield basis, and a speculative reversionary or land-and-building valuation that ignores the existing tenancy and rent-control restrictions is impermissible.

---