AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
1967 (5) TMI 70
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.... This was apparently done on the basis of the annual value of the premises, under the Calcutta Municipal Act, which was Rs. 13,608. The Assistant Controller of Estate Duty was of the opinion that the annual value was too low and should not be utilised for the purpose of valuing the premises. He formed this opinion on the basis of local inspection of the premises from outside. In the report of local inspection, he expressed the following view: "...It appeared to be a first class building in an aristocratic locality and in a very good state. It is a two-storeyed house of first-class materials with an attractive lawn in its front." It is not disputed that the premises is in the occupation of an old tenant of the name of M.L. Khaitan, paying a monthly rent of Rs. 1,600 therefor. It is also not disputed that the premises is covered by a mortgage to Messrs. Bata Shoe Company Ltd. The Assistant Controller of Estate Duty at first adopted the "land and building method" of valuation for the purpose of evaluating the property. The calculation made by the Assistant Controller, on that basis, is hereinbelow set out: Rs. Rs. 'Land: 32 cottahs at the rate of ....
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....this rent of Rs. 1,600 would be maintained in future having regard to the condition of the property, the locality and facilities available at present. I am of the opinion that the actual rent is indeed a privileged rent, because the tenant has been occupying the house for a number of years. Moreover, the house is mortgaged to Messrs. Bata Shoe Company Limited, of which the tenant is a director. In this locality properties of the same type would fetch Rs. 3,000 per month. I would, however, estimate the fair maintainable rental income of the property at Rs. 30,000 per year. Deducting therefrom Rs. 7,500 as outgoings, the net rental income would come to Rs. 22,500. Multiplying this by 20 times, the value of the property would come to Rs. 4,50,000. But I would determine the value of the property at Rs. 4,00,000 having regard to the fact that the house is tenanted and is also mortgaged. If, alternatively, we proceed on the cost and building method, the same value would come." In the view taken, the Appellate Controller allowed the appeal to this extent that he reduced the principal value of the property by Rs. 1,00,000. Dissatisfied with the order of the Appellate Controller, the ....
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....ntention was that it was the duty of the Controller to find out the price obtainable in the open market and an opinion thus formed must bind the assessee. In order to appreciate the scope of this argument, it is necessary for us to refer to the language of section 36(1) which reads as follows: "The principal value of any property shall be estimated to be the price which, in the opinion of the Controller, it would fetch if sold in the open market at the time of the deceased's death." According to Mr. Pal, the duty of the Controller was to determine the price that a willing purchaser would pay to a willing seller for the property, having due regard to its existing condition and its potential possibilities, laid out in its most advantageous manner. In making this submission, he drew considerable inspiration from certain observations by Shelat J., in Raghubans Narain Singh v. Uttar Pradesh Government A.I.R. 1967 S.C. 465, made in the context of determination of compensation under the Land Acquisition Act, 1894. He next contended that the expression "open market" meant a hypothetical market in which everybody had a right to make an offer for purchase of the property, as ....
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....based on the said annual valuation, was served on the respondents. Respondent No. 1 filed an objection to the said assessment, under section 139 of the Act. Meanwhile, under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950, the standard rent of the said premises was fixed by the Rent Controller at Rs. 350 per month, with effect from April, 1951, and at Rs. 632-8-0 per month with effect from August, 1951. One of the objections raised by respondent No. 1 was that the Corporation had no power to fix the annual valuation at a figure higher than the standard rent. This objection was disallowed by the Corporation. Being aggrieved by the said order, respondent No. 1 filed an appeal before the Court of Small Causes, Calcutta, which allowed the appeal and fixed the annual valuation, for the purpose of assessment at Rs. 6,831. This was on the basis of the standard rent of Rs. 632-8-0 per month. The Corporation of Calcutta questioned the correctness of the said judgment by preferring an appeal to the High Court at Calcutta. The High Court, by a majority, agreed with the Small Causes Judge dismissing the appeal. Thus, the matter went before the Supreme Court. In dismissin....
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.... the rate of rent for which a building can reasonably be expected to let. It is said that section 127(a) does not contemplate the actual rent received by a landlord but a hypothetical rent which he can reasonably be expected to receive if the building is let. So stated the proposition is unexceptionable. Hypothetical rent may be described as a rent which a landlord may reasonably be expected to get in the open market. But an open market cannot include a 'black market', a term euphemistically used to commercial transactions entered into between parties in defiance of law. In that situation, a statutory limitation of rent circumscribes the scope of the bargain in the market. In no circumstances the hypothetical rent can exceed that limit." The same view appears to have been expressed by the English High Court in Priestman Collieries Ltd. v. Northern District Valuation Board [1950] 2 K.B. 398. In that case, their Lordships had to interpret section 10 of the Coal Industry (Nationalisation) Act, 1946, by which provision was made for the payment of compensation in respect of coal mining undertakings ("transferred interests") transferred to the National Coal Board. Sec....
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....greed upon years ago and the Tribunal should have taken that fact into consideration. Now section 8 of the West Bengal Premises Tenancy Act, 1956, defines fair rent. Mr. Pal submitted that clause (e) of section 8(1) applied to the instant case. That clause reads as follows: "Where the provisions of clause (a) or clause (b) or clause (c) or clause (d) do not apply, such rent as would be reasonable having regard to the situation, locality and condition of the premises and the amenities provided therein and where there are similar or nearly similar premises in the locality having regard also to the rent payable in respect of such premises: Provided that in fixing such rent the Controller shall in no case allow an increase of more than 10 per cent. over the existing rent, if any, of such premises." Mr. Pal submitted that the Controller should have taken the fair rent of the premises at Rs. 1,600 plus Rs. 160 per month, namely, Rs. 1,760, and then capitalised the same in order to arrive at the estimated value of the property. This argument, in our opinion, is unworthy of being upheld. The Tribunal found that there was nothing to show that the rent was not a fair ....