GURBUX SINGH BRIG Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) At the instance of the assessee, pursuant to the direction under Section 27 (3) of the Wealth Tax Act, 1957, (for short the Act) the Income Tax Appellate Tribunal has referred the following common question relating to the assessment year 1974- 75 to 1976-77:-

(2.) The assessee before us is an individual having 1/4th interest in immovpble property known as 'Scindia House', New Delhi, wholly let out to 127 tenants. ln'his returns, under the Act, for the relevant years, the assessee declared the value of his share in the property at Rs. 7 lacs 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 16 A of the Act, who valued the assessee's share at Rs. 46.18.250.00. The Wealth Tax Officer adopted the said valuation. The assessee appealed against the order of the Wealth Tax Officer to Appellate Assistant Commissioner and challenged the annual aggregate rent receivable as determined by the Valuation Officer. It was argued before the Appellate Assistant Commissioner that the Valuation Officer had wrongly allowed 1/12th of the gross rent for repairs instead of 1/6th. The Appellate Assistant Commissioner, however, did not consider it necessary to value the property by capitalizing the net annual value as was done by Valuation Officer, but relying on the Bank Nationalisation case he held that the best method to value the property was to take the comparative sale instances in the vicinity and find out the relationship between the sale value realised vis-a-vis the rentals being obtained by the assessee. Applying this method of valuation the Appellate Assistant Commissioner determined the value of the assessee's share at Rs.22,19,350.00 Still aggrieved, the assessee preferred appeal to the Tribunal and pleaded that the Appellant Assistant Commissioner was wrong in adopting the comparative sale method for determining the fair market value of a fully tenanted property. The plea of the assessee was accepted by the Tribunal, which held that valuation should be done by capitalising the net annual value. The Tribunal further held that since in the assess's own case, in respect of the earlier years, a multiplier of 16.5 had been applied to the net annual value, the same multiplier should be applied for the years in question. The Tribunal, however did not, accept the plea of 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 aforesaid question for the opinion of this court.

(3.) Although it is quite apparent from the frame of the question itself but still learned counsel for the assessee has also stated before us that the assessee has no grievance in so far as the multiplier factor of 16.5 is concerned. The only issue which requires our consideration is whether actual expenses incurred by the assessee on repairs and collection or the statutory deductions as permissible under Section 24 of the Income Tax Act, 1961, for determining annual value of the property for the purpose of computing income from house property under Section 22 of the said Act, should be deducted while determining the annual letting value of the property.