TaxTMI 
TaxTMI 
TaxTMI 
2004 (5) TMI 10
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....ing out of a claim made by the respondent-assessees who are co-owners of the same property each having 1/3rd share in the property, for the sake of convenience, both these references are heard together and decided and disposed of by this common judgment. In order to decide the controversy raised in these two references, it is relevant to refer to the facts stated in Ref. No. 57 of 1990. The respondent-assessee is an individual. At the relevant time the wealth of the assessee consisted of movable and immovable properties. The assessee is having immovable property situated at Fatehganj, Baroda, having joint property wherein he has got 1/3rd share which was let out by him. The building in question is let out to three tenants-Bank of India, Indian Airlines and Oriental Insurance Co. The assessee claimed that 1/6th of the rent be allowed to him as repairs. According to the assessee, he had to bear the annual repair expenses. Similarly, he also claimed deduction of collection charges. According to him, 1/6th of the gross rent be allowed to him as repairs and maintenance and after ascertaining the gross rent from the income-tax record, the capitalised value was claimed at 12 per cent. T....
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....vited our attention to rule 1BB of the Wealth-tax Rules, 1957 ("the Rules" for short), which according to learned counsel does not stipulate the provision for valuation of a house which is let out only or mainly for non-residential purposes such as business purposes. We have considered the submissions advanced by Mr. K.M. Parikh, learned counsel for the Revenue. We have also gone through the facts of the case and the orders of the authorities below. We have also carefully considered the statutory provisions contained in rule 1BB of the Rules. Both the assessees are co-owners and each of them is having 1/3rd share in the property which was let out at the relevant time. Both of them, therefore, claimed 1/6th of the rental as repairs and collection charges at the rate of Rs. 10,578. It is true that there is no provision in the rules to claim allowances as repairs in respect of a non-residential property as rule 1BB of the Rules stipulates the provision for allowance with regard to residential property only. Since this rule is traceable to section 7 of the Act, a reference to the same is necessary. Section 7 of the Wealth-tax Act provides how to determine the value of assets. Sub-se....
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....tainable rent', in relation to a house, means the amount of the gross maintainable rent as reduced by-... (ii) a sum equal to one-sixth of the amount by which the gross maintainable rent exceeds the amount referred to in sub-clause (i), in respect of the repairs of the house; (iii) any sum spent during the previous year to collect the rent from the house, not exceeding six per cent, of the amount by which the gross maintainable rent exceeds the amount referred to in sub-clause (i);..." On having a look at the statutory provisions contained in rule 1BB of the Rules, as per sub-clause (ii) of clause (c) of rule 1BB(2) of the Rules, there is a provision to allow a sum equal to one-sixth of the amount by which the gross maintainable rent exceeds the amount referred to in sub-clause (i), in respect of the repairs of the house. It is true that rule 1BB providing for valuation of house on which reliance has been placed by the Appellate Assistant Commissioner as well as the Tribunal, applies to a house which is wholly or mainly used for residential purposes and it also appears that the property in question was being used for non-residential purposes (tenants being Bank of India, Indian ....
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....owever, on reappreciation of evidence, the Appellate Assistant Commissioner took the view that it was the assessees (lessors) who were repairing and maintaining the building. This finding was arrived at after considering the correspondence between the assessees and the lessees. Apart from his finding of fact, the principle of deducting 1/6th as repairs is very much provided in rule 1BB irrespective of the fact whether the assessee has actually incurred any expenditure on repairs. Similar is the provision for assessing income from house property under the provisions of the Income-tax Act and the Rules. There is, therefore, no reason why this principle for valuation of the net maintainable rent should not apply to the house which is used or let out for non-residential purposes. In view of the above discussion, we are of the opinion that the Tribunal is right in law and on facts in allowing 1/6th as repairs irrespective of the fact whether the assessees have incurred any expenditure on repairs and though there is no specific provision for such deduction in the Wealth-tax Act and the Wealth-tax Rules for valuing the house used for non-residential purposes. Our answer to question No. 1....