Rent capitalisation valuation upheld for Chapter XX-A acquisition, and the property was held not acquirable.

In acquisition proceedings under Chapter XX-A of the Income-tax Act, fair market value need not be confined to the land-and-building cost method. The High Court approved valuation by capitalising annual rent and allowing for repairs, holding that this rent-based approach was a permissible method for determining market value on the facts found. As the Tribunal's valuation did not exceed the apparent consideration by the statutory margin, the property was held not acquirable. The Revenue's reliance on contrary precedent was rejected as not compelling a different result.

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Issues: Whether, in acquisition proceedings under Chapter XX-A of the Income-tax Act, 1961, the fair market value of the property should be determined on the basis of rent capitalisation or on the basis of the cost of land and building, and whether the property was acquirable on the facts found.

Analysis: The Tribunal had determined the fair market value by capitalising the annual rent and allowing for repairs, and on that basis found that the value did not exceed the apparent consideration by more than the statutory margin. The Court approved this approach, holding that valuation for the purpose of such proceedings is not confined to the land-and-building cost method and that, in the circumstances of the case, the rent-based multiple adopted by the Tribunal was a permissible method of arriving at market value. The Court further held that the precedent relied upon by the Revenue did not compel a contrary result.

Conclusion: The rent capitalisation method was upheld, and the property was held not to be acquirable.

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