Property valuation on rental capitalisation basis: Tribunal preferred a multiple of 12 over 17 for a town commercial property.

The valuation of a house property in a commercial complex was examined on a capitalisation basis, with the revenue applying a multiple of 17 to net rental income. The Tribunal held that valuation must reflect relevant factors such as the property's nature and location, construction type, prevailing interest rates and market availability, and noted its consistent use of a multiple of 12 for similar town properties and the assessee's own later year. The higher multiple was not sustained, and valuation was directed to be computed by applying a multiple of 12.

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Issues: Whether the valuation of the house property at Bhadaur House, Ludhiana, should be computed by applying a multiple of 17 or 12 to the net rental income.

Analysis: The property was situated in a commercial complex and had been valued by the revenue authorities by capitalising the net rental income at a multiple of 17. The Tribunal noted that in the assessee's own subsequent year the same property had been valued by applying a multiple of 12, and that valuation of such properties depends on relevant factors such as the nature and location of the property, type of construction, prevailing interest rates, and market availability. The Tribunal also observed its consistent adoption of a multiple of 12 for similar town properties.

Conclusion: The application of a multiple of 17 was not sustained, and the valuation was directed to be computed by applying a multiple of 12. The assessee succeeded on this issue.

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