V C RAMACHANDRAN Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) WHETHER the market value of a residential building under self-occupation of the owner-assessee for purposes of levying wealth-tax under the W.T. Act should have been ascertained under capitalisation of annual rental value method, and not by adopting the land and building method, is the precise question of law arising for consideration in these two references made by the Income-tax Appellate Tribunal, in respect of the assessment years 1970-71 and 1971-72, pertaining to the same assessee under s. 26(1) of the W.T. Act hereinafter referred to as "the Act").

(2.) THE assessee owns several house properties in the City of Bangalore. One of them is occupied by the assessee. It is No.5, Richmond Road, Bangalore. THE area of the site is 23,280 square feet. THE built area is 3,845 square feet. For the five assessment years, 1965-66 to 1969-70, the assessee had furnished a report from a registered valuer as to the valuation of that property. THE value of the building was given at Rs. 83,907. THE valuer valued the site at qf Rs. 5.25 per square feet. But he had taken into account only the actual built area. THE WTO accepted the valuation of the building and also the rate per square feet for the site. He, however found no justification to exclude the unbuilt area of the site. Taking the valuation of unbuilt area also he assessed the market value of the building at Rs. 2,06,127. THE assessment for the five years was finalised together. On appeal by the assessee, this valuation was confirmed by the AAC. This order was not challenged further by the assessee. For the assessment year 1970-71 the assessee furnished the value of the building at Rs. 1,00,000 and submitted that capitalisation of annual rental value method was applicable even to the self-occupied house in view of the decision of this court in CWT v. V. C. Ramachandran [1966] 60 ITR 103, in which case, the assessee himself was the party. Similarly, for the assessment year 1971-72 also, the assessee furnished valuation of the building at Rs. 1,00,000 but furnished the annual rental value at Rs. 2,500. For both the assessment years, the WTO held that the value of the building as fixed by the AAC for the previous five assessment years should be adopted and assessed the tax accordingly. THE assessee preferred appeals before the AAC. On the wrong assumption that capitalisation of annual rental value method had been adopted for the earlier five assessment years, he directed that the same method should be adopted for the assessment years 1970-71 and 1971-72 also. THE WTO preferred appeals against these orders to the Income-tax Appellate Tribunal. THE Tribunal, by a common order, allowed the appeals holding that the adoption of the land and building method was justified on the facts and in the circumstances of the case and rejected the plea of the assessee that the market value should have been ascertained only by capitalisation of the rental value method. THEreafter, at the instance of the assessee, the following question of law is referred for our opinion

(3.) SRI S. R. Rajasekharamurthy, learned counsel for the revenue, submitted that self-occupied building stands on a different footing as the owner can sell the building to any willing purchaser and give vacant possession whereas it may not be possible to give vacant possession of a tenant occupied building in view of the restrictions on eviction of tenants by the Karnataka Rent Control Act, 1961. He also submitted that in the present case, there was only one method of valuation furnished by the assessee which was accepted by the revenue for the five assessment years 1965-66 to 1969-70, i.e., land and building method and, therefore, the adoption of the same value for the assessment years 1970-71 and 1971-72 was justified and cannot be questioned by the assessee.