TMI Blog1997 (7) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... account the actual expenses of repairs and collections or the statutory expenses under this head according to section 24 of the Income-tax Act, 1961 ? " The assessee before us is an individual having a 1/4th interest in an immovable property known as "Scindia House", New Delhi, wholly let out to 127 tenants. In his returns, under the Act, for the relevant years, the assessee declared the value of his share in the property at Rs. 7 lakhs for each of the years. During the course of the assessment proceedings, the Wealth-tax Officer referred the matter of valuation to the Valuation Officer under section 16A of the Act, who valued the assessee's share at Rs. 46,18,250. The Wealth-tax Officer adopted the said valuation. The assessee appealed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars in question. The Tribunal, however, did not accept the plea of the assessee that for determining the annual letting value, 1/6th of the rent should be deducted towards repairs instead of 1/12th as deducted by the Valuation Officer, for the reason that the assessee had been keeping regular accounts for repairs and the actual amounts spent on account of repairs were less than one month's rent permitted under the Delhi Rent Control Act and, therefore, there was no justification in allowing deduction towards repairs for more than one month's rent. It is against this order that the assessee has obtained reference on the aforenoted question for the opinion of this court. Although it is quite apparent from the frame of the question itself bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be found out by taking into account a hypothetical sale. Section 7 merely provides the machinery for the determination of value of assets but as such does not lay down any method or formula for valuation of the asset. There are several methods of valuation of a house property. One of the well recognised and generally accepted methods of valuation is the rent or yield capitalisation method, adopted by the Tribunal in the instant case, which contemplates first finding out the net annual yield from the house property and then multiplying it with the appropriate multiplier, depending on the average yield on securities, etc., with which we are not presently concerned. The net yield is to be arrived at by deducting from the gross annual rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below : "46. Powder to make rules.--(1) The Board may, by notification in the Official Gazette, make rules for carrying out the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, rules made under this section may provide for (a) the manner in which the market value of any asset may be determined." In exercise of its power under section 46 of the Act, which as per section 46(2)(a) of the Act, extracted above, includes the power to frame rules to provide for "the manner in which the market value of any asset may be determined", the Board framed rule 1BB, now omitted by the Wealth-tax (Second Amendment) Rules, 1989, with effect from April 1, 1989, to make room for insertion of Schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other let out properties as well, which has now been done in the newly inserted Schedule III to the Act. Since section 7(1) itself opens with the words "subject to any rules made in this behalf" and rule 1BB having been framed though subsequently, (on lines similar to section 24 of the Income-tax Act), to provide for the "manner" used in clause (a) of sub-section (2) of section 46 of the Act, in which the market value of a house property could be determined, it seems to us almost axiomatic that the same procedure should be applied to determine the value of the property in question, even though it is not self-occupied. As noticed above once a well-recognised method of valuation, namely, the rent capitalisation method, incorporated initial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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