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1993 (6) TMI 39 - HC - Income Tax
Issues:
Valuation of property based on rental method for assessment years 1964-65 to 1967-68.
Analysis:
The judgment pertains to the valuation of a property for four assessment years, 1964-65 to 1967-68. The main issue revolves around whether the property should be valued based on the rental method or on the compensation received by the assessee due to the property being acquired by the government. The Tribunal consolidated the references for these assessment years into one and heard them together.
The assessee, who owned a property acquired by the government under the Land Acquisition Act, valued the property at Rs. 1,28,836 based on a valuation done by an approved valuer. However, the Wealth-tax Officer valued the property at Rs. 6,50,000 considering the compensation received by the assessee. The Appellate Assistant Commissioner determined the market value at Rs. 4,70,940, applying the ratio laid down by the Supreme Court in a previous case.
The Tribunal, after considering the sequence of events, including possession dates and compensation amounts, held that the property should be valued based on the rental method. It emphasized that the compensation received by the assessee did not necessarily reflect the market value of the property. The Tribunal directed the Wealth-tax Officer to value the property at Rs. 1,28,836, with the option to value it higher if justified by the rental method.
The Revenue contended that the property should be valued based on the compensation received post-acquisition. However, the court agreed with the Tribunal's reasoning that, in the absence of clear evidence on the valuation process during acquisition, the rental method was the appropriate approach for valuing the tenanted property. Citing a previous decision, the court affirmed that capitalizing the annual rent was suitable for such properties under rent control regulations.
In conclusion, the court upheld the Tribunal's decision to value the property based on the rental method for the assessment years in question. It allowed the Wealth-tax Officer to value the property higher if supported by the rental method. Both questions posed were answered affirmatively, and the references were disposed of without costs.