1997 (6) TMI 7

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....unal was correct in their finding that the switching over to valuation of the property to rental capitalisation method from land and building method followed in the assessment in 1974 is correct and justified?" The relevant facts are as follows. The assessee constructed a godown on a leasehold land of 24 cents in Palluruthy, Cochin. The land belongs to John and Sons Pvt. Ltd. The managing director of the company was the father of the assessee and the other two shareholders were the assessee's close relatives. The lease was originally granted in the year 1968 for a period of 10 years which was thereafter extended up to 1988. The rental payment under the lease was Rs. 3,840 per annum as per the agreement. The lessee was free to construct a....

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....stant Commissioner. It is contended by learned counsel for the assessee that the valuation method adopted by the authorities is wrong. According to him, the basis of the annual rental method is not applicable in this case. He would contend that before the Direct Tax Laws (Amendment) Act, 1989, there was no specific provision under the Act or the Rules for the purpose of valuing a commercial building. Rule 1BB took in only residential buildings. The amendment, which was brought in by the Direct Tax Laws (Amendment) Act, 1989, introducing Schedule III which contains specific provision for valuation of buildings constructed on leasehold property, viz., rule 8(c) read with rule 20, should be taken as clarificatory in nature and it should app....

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.... On going through the order passed by the first appellate authority as well as the Tribunal, we do not find that any specific contention had been taken by the assessee on the ground that valuation has to be made by applying rule 8(c) read with rule 20 of Schedule Ill. In any view of the matter we are inclined to consider the above contention raised by the assessee on the merits. As mentioned earlier, section 7(1) of the Wealth-tax Act, 1957, as it stood in the relevant period provided that the value of the asset other than cash shall be estimated on the basis of the open market value. Rule 1BB referred only to valuation of residential buildings. If that be so, we do not find any illegality in valuing a commercial building which is rented....