TaxTMI 
TaxTMI 
1969 (12) TMI 18
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....lity of the material used and the quality of the construction of the building. So this building was constructed by the deceased in the year 1950-51. After the death of Jaswanti Devi, deceased, proceedings were started by the Assistant Controller of Estate Duty for payment of estate duty on the estate left by the deceased in the hands of her son. He filed a statement of account in regard to the estate of his deceased mother, and the only item which is a matter of controversy here in this reference is the valuation of the property named and styled as Shri Karam Chand Jain Market in Jullundur City Dina Nath in his statement of account value that property at Rs. 78,000, showing its annual rental at Rs. 18,000. At that annual rental the value of this building would be recovered in 4 1/2 years. He produced two letters from property dealers one fixing the value of this property at Rs. 1,00,000 and the other fixing it at Rs. 1,10,000 but this meterial was not accepted by the Assisstant Controller of Estate Duty and was not even subsequently relied upon before the Central Board of Revenue in appeal. The Assistant Controller of Estate Duty not having accepted those two letters as satisfac....
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....tual cost of the building not satisfactory in relation to a given increase over the pre-war schedule of rates of the Public Works Department. These are apparently sound reasons on the basis of which it was open to the Assistant Controller of Estate Duty not to accept the valuation certificate of this chartered engineer. This officer then proceeded to value this property on the basis of rental method. He took the gross letting value of the property on the date of the death of the deceased at Rs. 18,836 and adding to it Rs. 160 per mensem as the gross letting value for the portion of the building in the occupation of the religious brotherhood, he arrived at its gross annual letting value as a whole at Rs. 20,756. Making allowances for repairs, municipal taxes, property tax, and collection charges, he arrived at the net annual letting value of this property at Rs. 13,349, which he capitalised twenty times, thus arriving at the figure of Rs. 2,66,980 as the market value of this property on the date of the death of the deceased for the matter of accountability for estate duty. The person accountable filed an appeal against the order of the Assistant Controller of Estate Duty which appea....
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....nd the appellate authority thus found the report of the approved valuer, after due consideration and on sound grounds, as not reliable and not acceptable as giving the correct market value of the property in question on the crucial date. This concurrent conclusion of the two authorities is based on due and proper consideration of the report of the approved valuer and going to the appraisal of this piece of evidence is not open to reconsideration in a reference of this type and it is not open to this court to reappraise evidence and to form its own opinion with regard to the same finding of fact by discarding the appraisal of the evidence by the authorities under Act 34 of 1953. The Central Board of Revenue then started with the gross rent of the property in question at Rs. 18,834 per annum and deducting " outgoings for municipal taxes, collection charges and repairs at the rate of one month's rent in the amount of Rs. 5,421 ", they arrived at the net annual rental of this property at Rs. 13,413. In the Principles and Practice of Valuations by John A. Parks, 1965 edition, valuation table is given at page 420 under the caption " Present Value of Re. 1 per annum allowing for redemp....
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....to refer the question of law arising in the case according to him. His application was allowed and this court required the Central Board of Revenue to refer this question by its order of September 3, 1964. " Whether, on the facts and circumstances of the case, the Central Board of Direct Taxes was justified in law in fixing the valuation of the property at Rs. 2,25,000 ? " The Central Board of Direct Taxes (Central Board of Revenue) has accordingly made a reference of this question by its order of April 1, 1965. This is how this reference has come before this Bench. The facts have been stated in detail above and there is no controversy over them, as much appears also from the statement of case by the Board in its order of April 1, 1965. The controversy is with regard to the market value of Shri Karam Chand Jain Market in Jullundur City on the date of the death of the deceased. Leaving out the proviso, sub-sections (1) and (2) of section 36 of the Act 34 of 1953 read : " 36. (1) 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. (....
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....ations of the net annual rental value and its capitalisation for 17 years on the formula to which reference has already been made to reach the market value after allowing the deductions referred to in their orders. The criticism of the learned counsel for the person accountable is that there was no evidence before the authorities that the cost of construction as worked out by the approved valuer was wrong and it was only his report which gave the cost of construction. So there was no basis for rejection of the same. As that report or certificate could not be rejected, so the authorities were in law not at all justified in proceeding, in the face of that evidence, to arrive at the market value of the property according to the formula of capitalising the net rental value over a certain number of years. In this respect the learned counsel has relied upon Kanagasabapathi Pillai v. Commissioner of Wealth-tax, which case supports the arguments of the learned counsel to this extent that where evidence for the market value of property is otherwise available there is no justification in proceeding on the formula of multiplying the annual letting value by a certain number of years to arrive ....