Fair market value governs self-occupied house valuation for wealth-tax, and municipal rent was not a decisive guide.

For wealth-tax valuation of a self-occupied house, the controlling test was fair market value under Section 7(1) of the Wealth-tax Act, 1957. The municipal assessment and the annual reasonable rent under the U.P. Rent Control and Eviction Act, 1947 were not a safe or realistic guide where the property had never been let and was used by the owner for residence. The Tribunal was therefore justified in preferring the valuers' estimate and in accepting the house value at 1,40,000. No legal infirmity or error in principle was shown in that valuation, so the valuation was upheld in favour of the department.

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Issues: Whether the valuation of a self-occupied house for wealth-tax purposes had to be determined by applying the U.P. Rent Control and Eviction Act, 1947, and whether the Tribunal was right in accepting the valuation of Rs. 1,40,000.

Analysis: For valuation under Section 7(1) of the Wealth-tax Act, 1957, the relevant test is fair market value. The municipal assessment and the annual reasonable rent contemplated by the U.P. Rent Control and Eviction Act, 1947 did not furnish a safe or realistic guide where the house had never been let and was occupied by the owner for residential use. The Tribunal was justified in preferring the valuation arrived at by the valuers rather than treating municipal annual letting value as decisive. No legal infirmity or error in principle was shown in the adoption of the valuation of Rs. 1,40,000.

Conclusion: The valuation fixed by the Tribunal was upheld and the answer was in favour of the department and against the assessee.

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