COMMISSIONER OF INCOME TAX Vs. GEORGE P I

JUDGEMENT

(1.) THESE are 12 connected cases. All these references are at the instance of the Revenue. The matter arises under the Wealth-tax Act for the years 1973-74, 1974-75 and 1975-76. The four brothers, P.I. George, P. I. Mathew, P. I. Issac and P. I. Itoop, are the assessees. The matter concerns the assessments of these four brothers to 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 four common questions of law have been referred for the opinion of this court:

(3.) THE Tribunal opined that under Section 7(1) of the Wealth-tax Act, the value of an asset has to be estimated to be the " price which in the opinion of the Wealth-tax Officer it would fetch if sold in the open market " on the valuation date. After referring to the principles laid down in the judicial decisions in J. N. Bose v. CWT [1976] 104 ITR 83(Cal), Debi Prosad Poddar v. CWT [1977] 109 ITR 760 (Cal) and CIT v. Vimlaben Bhagwandas Patel [1979] 118 ITR 134 (Guj), the Tribunal took the view : (a) that there are three different modes and approaches to find out the market value of a property like (i) comparable sales method, (ii) rental method of valuation, and (iii) land and building method ; and (b) that it is essential, as far as possible, to check the valuation arrived at by one method with that thrown up by another method, provided both methods are based on objective and reliable data and neither method is to be ruled out on the ground of its being inapplicable for any particular reason. THE Tribunal proceeded to state further that while capitalisation of rental is certainly an appropriate method, it cannot be said to be the only method which is to be applied. On the facts of the case, the Tribunal held that a proper method which takes into consideration the inherent value of the property as well as the value with reference to rental would be obtained by averaging the two values, i.e., by the rental method and the land and building method. In this perspective, the Tribunal held that the value by the land and building method comes to Rs. 6 lakhs and the value by the capitalisation method is Rs. 10,23,140. THE aggregate of the two values would work out to Rs. 16,23,140 and the average value works out to about Rs. 8 lakhs. So considered, the value of each undivided share would be Rs. 2 lakhs. It cannot be forgotten that the building is one which is jointly owned and what is transferable in each case is the undivided right of ownership and, therefore, a discount has to be given for that aspect. Though there are cases in which the valuers had given a discount of 20% for an undivided share in a property, the Tribunal, on the facts of this case, held that though the value of each undivided share would be Rs. 2 lakhs, taking into consideration the fact that a discount is called for, the value of each undivided share would be fixed at Rs. 1,75,000. THE value returned by each assessee regarding his l/4th share, was Rs. 96,068, the estimate made by the Wealth-tax Officer was Rs. 2,55,775 and the value fixed for each sharer by the Appellate Tribunal was Rs. 1,75,000. Aggrieved by the aforesaid decision of the Appellate Tribunal, the Revenue filed applications under Section 27 of the Wealth-tax Act, wherein the questions of law extracted herein-above (p. 623) have been referred for the opinion of this court.