Notional rent and capital gains valuation must follow facts: professional use, allotment date, and actual consideration prevailed.

Notional annual letting value could not be enhanced mechanically where the assessee substantiated that one bungalow was used for film-direction and writing work, and the factual condition of the other properties did not support a higher rent estimate; the Commissioner (Appeals)' valuation was therefore sustained. Gain on sale of office premises was also correctly assessed as long-term capital gain because the holding period ran from the date of allotment with initial payment, and the actual sale consideration was accepted since the record supported it and stamp duty value was not required to be substituted on these facts. The revenue's challenge failed in full.

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Issues: (i) Whether the notional annual letting value of the assessee's house properties was correctly upheld by the Commissioner (Appeals), including the claim that one property was used for professional work and the remaining properties warranted a lower percentage of book value for valuation; (ii) Whether the Commissioner (Appeals) was justified in treating the gain from sale of the office premises as long-term capital gain and in accepting the actual sale consideration instead of the stamp duty value for computation.

Issue (i): Whether the notional annual letting value of the assessee's house properties was correctly upheld by the Commissioner (Appeals), including the claim that one property was used for professional work and the remaining properties warranted a lower percentage of book value for valuation.

Analysis: The assessee showed that the Lonavala bungalow was used for film-direction and writing work, and there was no contrary material to displace that finding. Mere non-claim of depreciation did not justify rejection of the professional-use claim. For the other two properties, the record supported the finding that they were in a slum-surrounded area, lacked features supporting higher rent, and one property lacked occupation certificate, making the higher percentage adopted by the Assessing Officer unsustainable.

Conclusion: The valuation adopted by the Commissioner (Appeals) was upheld and the revenue's challenge failed on this issue.

Issue (ii): Whether the Commissioner (Appeals) was justified in treating the gain from sale of the office premises as long-term capital gain and in accepting the actual sale consideration instead of the stamp duty value for computation.

Analysis: The date of allotment, together with the initial payment, was treated as the relevant starting point for computing holding period, making the asset a long-term capital asset. On valuation, the material on record, including the registered valuer's report and the condition of the property, supported acceptance of the actual sale consideration, and the mechanical adoption of stamp duty value was not warranted on the facts found.

Conclusion: The Commissioner (Appeals) was in directing assessment as long-term capital gain and in rejecting substitution of stamp duty value for the actual consideration.

Final Conclusion: The revenue's appeal did not succeed, and the relief granted by the Commissioner (Appeals) was sustained in full.

Ratio Decidendi: Where the assessee substantiates professional use of a property and shows factual circumstances negating higher notional rent, the annual letting value cannot be enhanced mechanically; likewise, for capital gains, the date of allotment may determine the holding period and stamp duty value cannot replace actual consideration absent reliable material showing a different market value.

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