9911796707
TMI Blog1990 (1) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... and was acquired by the Special Land Acquisition Officer, Bombay and BSD Municipal Corporation for a consideration of Rs. 26,35,390 and a solatium of Rs. 13,49,871 as evidenced by the Award dated 14-7-1983. He, therefore, considered the fair market value of the property at Rs. 39,85,561 in both the years under consideration. 3. The CWT(A) on going through the Award found that the possession of the property was taken from the assessee on 30th July, 1982 and that on the valuation dates, she was in possession and since the property was fully tenanted premises and the tenants were protected under the Bombay Rent Control Act, the proper method was rent capitalisation. A reference to the decision of the Supreme Court in the case of State of Kerala v. P.P. Hassan Koya AIR 1968 SC 1201, Calcutta High Court decision in the case of CED v. Radha Devi Jalan [1968] 67 ITR 761 (Cal.) and that of the Punjab & Haryana High Court in the case of Jaswant Rai v. CWT [1977] 107 ITR 477 at 481 was made. 4. The learned Departmental Representative, Sri Ashok Mansukhani, submitted that what one has to determine is the market value of the property on a particular valuation date. Though there are various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aser uninfluenced by the special needs of either. Problem of valuation of immovable property has been dealt with under the Land Acquisition Act, Wealth-tax Act and in computing capital gains under the Income-tax Act in various judicial decisions and we find very precise discussion on the point in the decision of the Calcutta High Court in the case of Debi Prosad Poddar v. CWT [1977] 109 ITR 760, at page 773, as under : " (1) Attempt must be made to find out the price which the immovable property would fetch on the valuation date imagining a willing buyer to purchase the property from a willing seller in respect of the property. (2) In respect of the immovable property, there is no fixed market such as market for shares or for other commidities, like sugar, cloth, etc. In order to arrive at a valuation in respect of the property, there must necessarily be element of guess. But the guess must be based on certain facts and according to certain principles which would be, in the facts and circumstances of each case, as fair as possible to the Revenue as well as to the assessee in trying to imagine reasonably and intelligently the price which was expected to be fetched if it was possib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnish a rough and ready method of computing the market value. This, however, is not the only method. The rent which an owner was actually receiving at the relevant point of time or the rent which the neighbouring lands of similar nature are fetching can be taken into account by capitalising the rent which according to the present prevailing rate of interest is 20 times the annual rent. But this also is not a conclusive method. This court had in Special Land Acquisition Officer v. T. Adinarayana Setty (1959) Suppl. 1 SCR 404, AIR 1959 SC 429 indicated at page 412 the methods of valuation to be adopted in ascertaining the market value of the land on the date of the notification under section 4(1) which are: (i) opinion of experts; (ii) the price paid within a reasonable time in bona fide transactions of purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages; and (iii) a number of years' purchase of the actual or immediately prospective profits of the lands acquired. These methods, however, do not preclude the court from taking any other special circumstances into consideration, the requirement being always to arrive as near as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 4(1) or otherwise, the court has no other alternative but to fall back on the method of valuation by capitalisation. " (Italicised by us.) Their Lordships in this case noticed the Privy Council decision in the case of Vyricherla Narayana Gajapati Raju [1939] LR 66 IA 104, wherein it was held that it was not only the realised possibility but also the future possibilities that must be taken into consideration. A passage from "Law of Eminent Domain" (1953 edn.) by Alfred D. Jahr was quoted by the Supreme Court thus : " It is far sounder practice to avoid the use of rental value capitalisation, if better evidence of market value is available. In any event, the courts are inclined to give a greater weight to sales of similar properties in the market than to evidence of leasehold rentals. " 10. The Delhi High Court in the case of Wenger & Co. v. DVO [1978] 115 ITR 648 states in connection with valuation that--- " It is one of settled principles of valuation that market value has to be ascertained by considering sales of similar properties in the same neighbourhood or similar environment. If there are no such instances of sales available then capitalisation of rent or making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the valuation date, similar situate and possessing the same or similar advantages and subject to same or similar disadvantages. When the property itself was subject to purchase/sale near about the valuation date, that would necessarily be given a preference over the sale of comparable properties and, in such circumstances, as held by the Karnataka High Court in the case of Smt. S. Neelaveni, this would be the best evidence in regard to the market value of the property. When the best evidence, namely, the sale of the property itself is available, the value on the two valuation dates should have been based on such sale price, of course, after giving due discount for the intervening period. The CWT(A) was not justified in ignoring the price realised by the assessee on acquisition of the property on the ground that the same was after the valuation date. We may also usefully refer to the decision of the Bombay High Court on this point in the case of Dr. Keki Hormusji Gharda v. B.H. Raisinghani, WTO [1982] 135 ITR 386, wherein the issuance of reopening notice under section 17 of the Wealth-tax Act based on the sale price of the property soon after the next valuation date was held v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also an Australian decision in the case of CSD v. Executor Trustee & Agency Co. of South Australia Ltd. 74 Commonwealth Law Reports 358 wherein Dixon J. observed at page 373 as under : " I should like, however, to add for myself that there is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second, the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. While this difference cannot change the test of value, it is not without effect upon a court's attitude in the application of the test. In a case of compensation, doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate. " 15. In these circumstances, we agree with the learned counsel that the amount of solatium received by the assessee would not represent the market value of the asset. It was an amount paid for the deprivation of the right of the assessee to hold the property. It was paid to compensate her not for the transfer of the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X
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