9911796707
TMI Blog1996 (12) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 per month for remaining 4 months. When asked the reasons for variation in the lease rent, the assessee explained that a portion of property leased out to M/s Unique Estates Development Co. Ltd. was sold by the assessee after construction of the property. The reversionary interest was assigned to the buyer of the building in consideration of which the assessee received a sum of Rs. 10 lakhs. In other words, for all practical purposes, the assessee had sold a portion of the land in consideration of Rs. 10 lakhs (the mode of transfer is immaterial). It was stated by the assessee that for the portion of land sold by the assessee the rent payable by M/s Unique Estate Development Co. Ltd. was reduced to Rs. 11,054 from Rs. 12,500 per month. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under rule 20 to Schedule III. Making a reference to section 40(3)(v) of the Finance Act, 1983 and rule 20 of Schedule III, the CWT(A) held that the method adopted by the Assessing Officer for determination of the market value of the land was reasonable and accordingly, he refused to interfere. 4. Being aggrieved, the assessee is in appeal before us. The learned counsel for the assessee contended that the revenue was not justified in taking into account the deposit of Rs. 72 lakhs in working out the net maintainable rent. According to the learned counsel, when rule 5 of Schedule III is inapplicable, method provided thereunder should not have been adopted for determination of the market value. According to the learned counsel, the actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the CWT(A), the Assessing Officer has got to adopt the value of the property, not specifically covered under relevant rules of Schedule III, on the basis of an estimate which the Assessing Officer considers it would fetch if sold in the open market on the valuation date. Under section 40 of the Finance Act, 1983 also, the Assessing Officer has to adopt the value of property which, in his opinion, it would fetch if sold in the open market on the valuation date. So, there is no conflict in principles to be adopted for determination of the value of property under section 40 of the Finance Act, 1983 and rule 20 of Schedule III to Wealth-tax Act, 1957. Thus, the question for our consideration remains as to whether the Assessing Officer has ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. Then the question arises as to how the benefit of Rs. 72 lakhs deposit can be calculated. It would be sound to say that finance is available from financial institutions at rates between 18% to 24%, and therefore, the benefit should be calculated at that rate. However, when we go through Schedule III to the Wealth-tax Act, 1957, we find that in rule 5 in the case of buildings and land appurtenant thereto, the Legislature in its wisdom has provided a rate of 15% in respect of such deposits to be adopted for calculation of the benefit. We cannot find fault with the Assessing Officer if he has adopted same principle in evaluating the benefit derived by the assessee as provided in the case of buildings. The question is not as to whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a consideration of Rs. 10 lakhs for transfer of reversionary rights as a result of which rent per month has also been reduced. The market value of the property has got to be determined as on the valuation date which in this case is 31st March, 1991. In the facts and circumstances of this case, it would be reasonable if the rental value is adopted at the rate of Rs. 11,054 for the whole year. The rent of Rs. 1,446 in respect of the land sold by the assessee has got to be ignored for the purposes of determination of the value of the land owned by the assessee as on the valuation date. 8. The gross maintainable rent is thus worked out as under : Rs. 11,054 X 12 = Rs. 1,32,648 Add : Benefit of Rs. 72 lakhs at the rate of 15% p.m. Rs. 10,80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed that in the event of sale of land the lessor would be entitled to recover unearned increase at the rate of 50% which was considered by their Lordships on the basis of which deduction to that extent was directed to be allowed out of the market value determined in respect of lease hold rights. This decision of the Hon'ble Supreme Court is irrelevant and inapplicable to the facts of this case. 12. We would also like to mention that the contention of the assessee that the value of the property ought to have been adopted as per the valuation report is also not acceptable as the value adopted by the valuer is not the market value as is evident from the fact that the assessee sold portion of the land for Rs. 10 lakhs. The rent for the whole ..... X X X X Extracts X X X X X X X X Extracts X X X X
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