TMI Blog2010 (7) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... ction law in operation, then Revenue could make a fair and an objective estimate of the rent which the property might have fetched, but the operation of the Rent Restriction Act makes all the difference whether the DVO has the right or not to determine the valuation of the property by adopting a rent capitalisation method - In the case of Bharat Hari Singhania reported as (1994 -TMI - 40177 - SUPREME Court) – the Apex Court has commented, while dealing with the issue of the applicability W.T.Rules, that the Rules making authority has since prescribed only one method, then it is not a matter of choice and it is otiose whether it is directory or mandatory. Further commenting on the scope of powers of the DVO it was held that a Valuation Officer as much bound by the said rules of valuation as anybody else is. - Decided in favor of assessee. - WTA Nos. 3 to 6/Ahd/2001 - - - Dated:- 30-7-2010 - SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER J. SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER J. Assessee by: Shri M.K. Patel Revenue by: Shri K.M. Mahesh, Sr.DR ORDER PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER:- All these four appeals have been filed by the Revenue which have eman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenancy was protected by Bombay Rent Hotels and Lodging House Rates Control Act. Therefore, it was explained that the rent of the property could not be increased being governed under the Rent Control Act. Narrating the past records in respect of the rent earned, it was told to the Learned CWT(Appeals) that in the year May-1977 the property was first let out at the rate of Rs.4,000/-, however, it was mutually agreed to increase the rent, therefore, from 01/04/1981 the rent was fixed at Rs.7,500/- per month. The assessee has also explained the provisions of the Rent Control Act according to which Standard Rent is always fixed in respect of a residential accommodation which is with in purview of the said Act. The assessee has also explained that in accordance to Section 12 of Bombay Rent Control Act, a tenancy could also not be terminated under normal conditions. The method adopted by the Valuation Officer has also been challenged that under the heading Rate of Capitalization the Departmental Valuation Officer has adopted an obsolete comparable investment method, i.e. guilt-edged Government Securities and altogether ignored the prevailing comparable investments and the return th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Gujarat High Court in the case of J.B.Kanungo vs. Commissioner of Wealth Tax reported as 204 ITR 10(St.). An important aspect has also been discussed by Learned CWT(Appeals) that the said property in question was assessed in Income-tax proceedings as income from house property and therein the rent at the rate of Rs.7,500/- per month was accepted by the Assessing Officer as per the assessment order(s) passed for the assessment year(s) under consideration. Because of that reason, it was remarked that the DVO was not correct in estimating the market rent and thereupon valuing the property on the basis of said market rent. Rather, it was remarked that while doing so, the DVO has proceeded on certain presumption, such as, the presumption of collusion between the assessee and the tenant, though there was no evidence or material with the DVO for such assumption. He has finally directed the Assessing Officer to substitute the gross rent by Rs.7,500/- per month for the purpose of valuation of the property . 3. From the side of the Revenue, Learned Departmental Representative Shri K.M. Mahesh appeared and supported the action of the DVO on the ground that rent as shown by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income Tax-Delhi reported as 131 ITR 435. Other citations were (i) C.E.D. vs. Radha Devi Jalan reported as 67 ITR 761, (ii) C.W.T. vs. C.Ramchandran reported as (1966) 103 (Mysore) [sic.- V.C. Ramachandra vs. Commissioner of Wealth Tax reported as 126 ITR 157 (Kar.) and (iii) G.N.Bose vs. C.W.T. reported as (1976) 104 ITR 83. 5. We have heard both the sides at some length and also examined the facts of the case in the light of the case laws cited and other material placed before us. We have also perused the DVO s Report which was made the basis of assessment. On examination of the relevant provisions of the Wealth Tax Statute, it was found that Schedule-III of Wealth Tax Act, 1957 has Part-B for the purpose of valuation of immovable property. It says that any immovable property, being a building or land appurtenant thereto, shall be the amount arrived at by multiplying the net maintainable rent by the figure of 12.5. There is a proviso below the main section which is not relevant ,presently ,since it deals with valuation of a lease-hold land. Next follows the provisions for determining the net maintainable rent . For that purpose, Rule-5 Part-B, Schedule-III prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annual value of a house property. While examining the issue from the angle of Delhi Rent Control Act, the Hon'ble Court has said that the amount calculated in accordance with the formula set out in the said Act would ordinarily represent standard rent and the annual value has to be governed by the said Act. We can take guidance from this land-mark decision primarily because of the reason that in the present appeal, as well, the undisputed fact is that the property in question was within the territory of the Rent Control Act as applicable to that area. Once it was so, then if the standard rent was not said to be higher than the actual rent received, then the actual rent received by the assessee ,as assessed in the income tax authorities, is the correct and the only determining figure which can be a good criterion for arriving at the annual value of the property. There is an another land-mark decision of the Hon'ble Supreme Court, viz. Shila Kaushik reported as 131 ITR 435 (SC), wherein the importance of standard rent as determined on the principles laid down under a Land Control Act has likewise been acknowledged. Since the standard rent or the rent received by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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