Commercial property valuation under Wealth-tax Rules must follow capitalisation principles, not residential Rule 1BB methodology.

A wholly tenanted commercial building was held outside Rule 1BB of the Wealth-tax Rules, 1957, because that rule applies only to a house used wholly or mainly for residential purposes. The valuation therefore had to be made on commercial capitalisation principles, not residential valuation methodology. On the stated facts, net annual letting value was taken at Rs. 28,200 after collection charges, and capitalisation at 10% was treated as appropriate. The resulting valuation was Rs. 2,82,000, replacing the higher figure adopted by the appellate authority.

---

---

Issues: Whether the valuation of a wholly tenanted commercial building was governed by Rule 1BB of the Wealth-tax Rules, 1957, and whether the multiplier adopted for capitalisation of net annual letting value required modification.

Analysis: The building was purely commercial and not used wholly or mainly for residential purposes. Rule 1BB, by its own language, applies to a house used for residential purposes and therefore could not control the valuation of the commercial property in question. On the facts, the net annual letting value was taken at Rs. 28,200 after allowing collection charges, and capitalisation at 10% was found appropriate. The valuation determined on that basis was Rs. 2,82,000, replacing the figure adopted by the appellate authority.

Conclusion: Rule 1BB was inapplicable, and the assessee succeeded to the extent that the building was directed to be valued at Rs. 2,82,000 instead of Rs. 3,24,000.

---