TMI Blog1991 (3) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... wn as Bikaner Building and 38, Shakespeare Sarani. The Wealth-tax Officer valued the aforesaid properties by adopting the yield method. While working out the valuation of the aforesaid properties, he deducted municipal taxes as levied by the Corporation of Calcutta on the aforesaid properties. The gross rental incomes from the two properties as adopted by the Wealth-tax Officer were much higher than the valuations adopted by the Corporation of Calcutta for the purpose of imposition of corporation taxes. The assessee did not object to the adoption of the gross rental value by the Wealth-tax Officer at the figures adopted by him, but pleaded that municipal taxes should also be worked out by him presuming the said gross rental income to be the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of tax levied in the previous year by any local authority in respect of the house. It is his contention that the annual rent as used in rule 1BB is the actual rent received or receivable by the owner; accordingly, the Assessing Officer was entitled to take into account the actual rent received for the purpose of determining the gross maintainable rent and the municipal tax actually levied. Dr. Pal, learned counsel for the assessee, has, however, contended that a prospective buyer would compute the net annual rent after deducting the tax from the annual rent that has actually been received. If the Department takes the actual amount of rent received by the assessee, it must allow also the deduction for the taxes leviable on the rent rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable. Section 7 merely provides the machinery for the purpose of ascertaining the net wealth by valuing the assets composing the wealth. As section 7(1) uses the expression "if sold in the open market", it does not contemplate any actual sale or the actual state of the market, but only enjoins that in it would be assumed that there is an open market and the property can be sold in such a market, and, on that basis the value has to be found out. It is a hypothetical case and the Wealth-tax Officer must assume that there is an open market in which the asset can be sold. There are several methods of valuation for valuing a house property. Admittedly, the rental basis or yield basis was adopted in finding out the value of the property. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the statutory rules may not be taken into account at all in a hypothetical sale in the open market if a property is valued on the basis of a recognised method of valuation. The sale contemplated is not an actual sale but only hypothetical sale and, accordingly, one cannot assume the taxes which may be leviable if the rent agreed to be adopted is the proper rent. An assessee who suppresses the rent and ultimately comes and accepts the rent received from such property cannot contend that the corporation may levy tax by revising the assessment on the basis of the rent disclosed. In the case of a tenanted property, one has to take the actual rent received or receivable or the annual value determined by the local authority, whichever is high ..... X X X X Extracts X X X X X X X X Extracts X X X X
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