TaxTMI 
TaxTMI 
1996 (8) TMI 64
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....tal value of the property at Rs. 5,94,296. Claiming a 1/3rd share in the property, each one of them returned the value of the 1/3rd share at Rs. 1,98,099 in their respective wealth-tax returns. Since the value of the property appeared to the Wealth-tax Officer to be on the lower side, he referred the valuation of the property to the Valuation Officer. The total property comprised 788 marlas, out of which on 578 marlas buildings were constructed over a period of a number of years by the assessees and their predecessors. 171 marlas of land was found to be under roads, lanes and paths, etc. All the buildings had been let out to various tenants. One of the buildings had been let out to a firm, of which the assessees were partners, at a monthly rent of Rs. 100. According to the valuation report, the total area of the property is 788 marlas, which could be divided into two sectors, 578 marlas of land over which buildings were constructed by the assessees from time to time, which is now a commercial complex. The commercial complex is scattered over 578 marlas, which has one entrance from the railway road. The area under the roads, lanes and paths, etc., is 171 marlas. The position rega....
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....urther additions could be made to the valuation arrived at under the capitalisation of rent on account of reversionary value. Their second objection was in respect of the valuation of 1/3rd property comprising 67 marlas of land and building thereon let out to the Lashkarimal Kishori Lal, Jullundur, at a rent of Rs. 100 per month. The Valuation Officer considered this to be a self-occupied property because three out of the four partners of the firm were the three assessees. The Valuation Officer had valued it on the basis of the land and building method at Rs. 2,15,440. According to the assessees, the Valuation Officer had proceeded in error in considering this to be a self-occupied property when it was let out to a firm at a monthly rent of Rs. 100. According to them, its valuation should have been on the basis of capitalisation of rent only. The Appellate Assistant Commissioner looked into the facts but was not persuaded on the facts and the circumstances of the case to agree with the submissions of the assessees in the matter regarding addition on account of reversionary value of the land. He, therefore, upheld the valuation made by the Wealth-tax Officer in this respect. As f....
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....g three questions of law, which according to them, arose from the order of the Tribunal for the opinion of this court. The Tribunal found that only one question arose from the order of the Tribunal which has been referred to this court for its opinion. The other two questions claimed by the assessees were declined. The assessees did not file any further petition for issuance of a mandamus seeking reference of the questions which had been declined by the Tribunal. The only question which remains for consideration is "whether the reversionary value of the land could be added to the valuation of the let out property which had been arrived at by way of the rent capitalisation method ?". Shri N. K. Sud, counsel appearing for the assessees, relying upon the two decisions of the Calcutta High Court in Smt. Ashima Sinha's case [1970] 116 ITR 29 and Anup Kumar Kapoor's case [1980] 125 ITR 684, a decision of the Allahabad High Court in CWT v. Ram Saran Kajriwal [1987] 168 ITR 485, and a decision of the Bombay High Court in CW v. Smt. Urmila L. Pittie [1995] 215 ITR 356, contended that the reversionary value of the land could not be added to the valuation of the let out property which had ....
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....et. These properties get much lesser value because of the restrictions put by the State protecting the tenants against eviction and increase of rent by the landlords. Because of the restrictions put by the State laws, such properties would have a value which is controlled. While determining the value by the rent capitalisation method, in such cases, the price of the land as well as the structures appurtenant to the land are taken into consideration, the reversionary value of the land could not be added thereafter to the valuation determined by the rent capitalisation method as it would amount to adding the value of the land twice. The reversionary value of the land cannot be added on the ground that the building being old, the land may become available to the landlord in the indeterminate years to come. Thus, when the value of the property has been determined on rental basis, the value of both the land and building is determined and after that the value of the land cannot again be added by adding its reversionary value. In Smt. Ashima Sinha's case [1979] 116 ITR 26 (Cal), this point was examined in detail. We entirely agree with the view taken in this case and the reasoning adop....