Vacant property valuation under rule 1BB may use later actual rent as evidence of reasonable expected rent.

For valuing a vacant house property under rule 1BB of the Wealth-tax Rules, the reasonable expected rent may be assessed by reference to the actual rent obtained immediately after the valuation date where comparable local rent evidence is absent. The Kerala HC analysis applied the presumption of continuity under section 114 of the Evidence Act to treat the later letting as reliable evidence of the property's rental value around the gift date. On that basis, the gross maintainable rent was taken at the subsequent rent of Rs. 7,000 per month, and the valuation was upheld in favour of the Revenue.

---

---

Issues: Whether, for valuing a house property lying vacant on the date of gift under rule 1BB of the Wealth-tax Rules, the gross maintainable rent should be based on the earlier rent fetched by the property or on the rent obtained immediately after the gift.

Analysis: Rule 1BB requires the gross maintainable rent to be the sum for which the house might reasonably be expected to let from year to year, and where the property is let, the actual rent received or receivable may be relevant. The property had been vacant on the date of gift, but was let out immediately thereafter to a Government department at a much higher rent. In the absence of evidence of comparable local rents, the later actual rent was treated as reliable evidence of the reasonable letting value. The presumption of continuity backwards under section 114 of the Indian Evidence Act, 1872 was applied to infer that the rent prevalent immediately after the gift could fairly indicate the rental value around the valuation date.

Conclusion: The maintainable rent was rightly taken on the basis of the rent of Rs. 7,000 per month, and the valuation under rule 1BB was upheld in favour of the Revenue.

Ratio Decidendi: Where a house was vacant on the valuation date and is let out immediately thereafter, the subsequent actual rent may be used as evidence of its reasonable expected rent for valuation under rule 1BB, in the absence of contrary material.

---