CIT Vs. P. I. GEORGE

JUDGEMENT

(1.) These are 12 connected cases. All these references are at the instance of the Revenue. The matter arise under the Wealth Tax Act for the year 1973-74, 1974-75 and 1975-76. The 4 brothers, M/s P. I. George, P. I. Mathew P. I. Issac, and P. I. Itoop, are the assessees. The matter concerns the assessments of these 4 brothers for Wealth Tax for the above three years. That is how 12 references have come up for the three years.

(2.) In I. T. R. Nos. 282 to 285 of 1980, relating to the assessment year 1973-74, at the instance of the Revenue, the following 4 common questions of law have been referred for the opinion of this Court:

(3.) In the appeals, for the years 1974-75 and 1975-76, the Appellate Tribunal by its order dated 21-11-1981, followed its earlier decision rendered for the year 1973-74. (order dated 30-6-1979). The controversy is regarding the valuation of a building for the purpose of Wealth Tax Act. All the relevant facts and materials are contained in the appellate order dated 30-6-1979. This is the subject matter of I. T. R. Nos. 282 to 285 of 1980. The four brothers, M/s. P. I. George, P.I. Mathew, P. I. Issac and P. I. Itoop, jointly owned the property bearing old Door No,XXX/597 B to F, M. G. Road, Cochin Corporation. Each of the assessees had an undivided 1/4th interest in the said property. The common issue, for all these 12 cases, is regarding the valuation of 1/4th interest of each assessee for Wealth - tax purposes in the aforesaid property as on the valuation date. The earliest valuation date relevant for the year 1973-74 is 31-3-1973. The assessees purchased the land in 1969 for a sum of Rs. l, 76, 884/-. A building was put up in 1972 at a cost of Rs. 2,07,388/-. The entire value of the property was returned as Rs. 3,84,272 and eventually each brother returned the 1/4th share at Rs 96, 068/-. It does not appear that the purchase value as also the cost of constructions of the building was ever questioned. The Wealth tax Officer was not satisfied with the value of the property as returned. He referred the matter to the Valuation Officer, who passed an order under S.16\ (5) of the Act dated 3-10-1974. The entire property was valued at Rs. 10,23,140/- and the share of each brother was worked out of Rs. 2.55, 775/-. The annual rental value of the property was Rs. 1,51,080/-and after deductions for property tax. ground rent, repairs etc , the net rent was fixed at Rs. 1,02,314 and by capitalising the same by 10 times, the value was arrived at Rs. 10,23,140/-. The assessees objected to this valuation. Even so, the Wealth Tax Officer adopted the valuation made by the Valuation Officer and passed an order of assessment dated 1-12-1975. This was affirmed in the appeals, by the Appellate Assistant Commissioner, by orders dated 11-8-1976. The assessees appealed to the Appellate Tribunal. It was contended that the valuation based solely on the probable yield would not reflect the real value of the property. It was contended that the value reflected by the rental capitalisation method should be checked up by other appropriate methods such as the land and building method etc. The multiplier of 10 adopted was also challenged. On behalf of the Revenue, it was submitted that since the instant property was a tenanted one. the capitalisation of rental method adopted is the only appropriate method to arrive at the value of the asset as on the valuation date. There was no question of adopting any other method of valuation. The Appellate Tribunal considered it necessary to arrive at a proper conclusion in the case to have the value of the building determined by the land and building method also. The Valuation Officer, who was present at the hearing before the Tribunal on 30-4-1979, was requested to make such a valuation. He did so. The report so submitted by the Valuation Officer is dated 8-5-1979. He took the value of the land at Rs. 15,000/-per cent. So valued, the value of 17. 85 cents will come to Rs. 2,67,750/-. The rate of construction of Rs, 265 per Sq. m. was taken and additions were made for extra items of work. Besides the above, the Valuation Officer made an addition of Rs. 1,18,980/- towards the concept of value of land at second - floor level. Finally, the Valuation Officer fixed the value, on the basis of land and building method, at Rs. 7,32.000/-. The Tribunal heard the Valuation Officer as also the assessees' counsel. It held that the addition of Rs. l,18,980/- for the vacant land available for future construction at second floor level is a new concept and there is no scope for making an addition of Rs. 1,18,980 aforesaid. So deducting the above figure from Rs. 7,32,000/- the Appellate Tribunal found that on the basis of land and building method, as per the Valuation Report, the valuation will be at Rs. 6,12,847/- which was rounded to Rs. 6 lakhs.