COMMISSIONER OF WEALTH TAX Vs. MANORANJAN BANIK

JUDGEMENT

(1.) THE following question has been referred by the Income-tax Appellate Tribunal, Guwahati Bench, at the instance of the Revenue under Section 27(1) of the Wealth-tax Act, 1957 (for short, "the Act"):

(2.) THE reference arises in regard to wealth-tax assessments in relation to three brothers who own undivided l/3rd share in certain common assets. THE assets include a building in property No. 250-B, Lake Town, within the limits of the Calcutta Corporation, THE assessee valued it at Rs. 1,79,224 as suggested by an approved valuer. This valuation was made by the multiplier method on the basis of the contract rent. THE Wealth-tax Officer referred the matter to the Departmental Valuation Officer who fixed the value at Rs. 5,05,838 by adding the value of the "reversionary right of the landlord" to the value arrived at on the basis of the rent. THE Wealth-tax Officer accepted the same and passed the assessment order on that basis. THE appellate authority held that there was no justification to include the value of the reversionary right in the market value of the building and this has been affirmed by the Tribunal in further appeal at the instance of the Revenue. THE Revenue sought a reference, being dissatisfied with the findings of the two appellate authorities.

(3.) NEITHER the Act nor the Rules framed thereunder lay down any guidelines for determining the market value of land or house property. The question of valuation has arisen under the Land Acquisition Act, 1894. There is not in general any market for land in the sense in which one speaks of a market for shares or commodities. The value at any particular time of shares or commodities can easily be ascertained by the prices ruling in the market. Therefore, valuation is based on the price paid within a reasonable time in bona fide transactions of purchase of comparable land in the vicinity or on a number of years' purchase of actually or immediately prospective profits of the land acquired or on the opinion of experts. These methods do not preclude the court from taking any other special circumstances into consideration, the requirement being always to arrive as near as possible at an estimate of the market value. In arriving at a reasonably correct market value, it may be necessary to take even two or all of those methods into account inasmuch as the exact valuation is not always possible. See Special Land Acquisition Officer v. T. Adinarayan Setty, AIR 1959 SC 429 Tribeni Devi v. Collector, Ranchi, 1972 3 SCR 208, CED v. Bijoy Kumar Khandelwal, 1977 108 ITR 864.