Estate duty valuation may use the rental method where rent control makes land-and-building valuation unrealistic.

For estate duty valuation, the principal value of house property under section 36 of the Estate Duty Act, 1953 must be estimated at the price it would fetch in the open market at the date of death. The court recognised that this market value may be assessed by one or more accepted valuation methods, including methods used for market valuation under the Land Acquisition Act, and that the appropriate method depends on the facts. On the facts, rent control made the gross rental method the proper basis, so the Tribunal was correct in rejecting valuation by the land-and-building method.

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Issues: Whether the house property, for estate duty valuation, was required to be valued by the rental method rather than by the land and building method.

Analysis: Section 36 of the Estate Duty Act, 1953 requires the principal value of property to be estimated at the price it would fetch in the open market at the date of death. The Court held that the market value under this provision may be determined by adopting one or more recognised valuation methods, including those accepted for market valuation under the Land Acquisition Act, and that the choice of method depends on the facts and circumstances of the case. On the facts, the Tribunal found the gross rental method to be the proper method because the property was affected by rent control and a realistic market valuation would not be achieved by merely aggregating land and building values.

Conclusion: The Tribunal was right in directing valuation on the rental basis, and no error of law was shown. The answer to the referred question was in the affirmative and against the department.

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