Sabyasachi Mukharji, J. - (1.) In this reference we are concerned with the question of valuation of immovable property. In order to appreciate the question referred we will briefly state the facts. This reference is in respect of assessment to wealth-tax for the assessment years 1957-58 to 1962-63. The assessee purchased the house property (godowns) at Nos. 196, 197 and 198, Maharshi Devendra Road, Calcutta, in 1946 for a sum of Rs. 3,20,000. The said property bears three municipal numbers but the property is really one. It consists of very old godowns standing on an area of about 42 cottahs of land on the said Maharshi Devendra Road, opposite Mayo Hospital in Calcutta. It was let out to three different tenants. The net annual rents received from these godowns were) Rs. 10, 359 in the assessment years 1957-58 to 1960-61, Rs. 11,490 in the assessment year 1961-62 and Rs. 8,971 in the assessment year 1962-63. We are not quite aware as to the reasons for the variation of rents for the different years mentioned above. Counsel for the assessee suggested that perhaps it was due to the agreement or contract between the tenants and the landlord in question. The question arose about the valuation of these properties on the relevant valuation dates for different years with which we are concerned in this reference varying some time in the end of March, 1957, or beginning of April of the subsequent years. The assessee valued this property for all these six assessment years at Rs. 2,07,180 at the rate of 20 times of annual rental income. The Wealth-tax Officer did not accept the valuation shown by the assessee. He valued the land separately at the rate of Rs. 15,000 per cottah and, accordingly, valued the land at Rs. 6,30,000. He valued the structures and godowns on the said land at Rs. 90,000 taking the gross value at Rs. 1,50,000 and allowed depreciation on this value for Rs. 60,000 and computed the net value of the buildings at Rs. 90,000. Thus, the total value of the property was computed by the Wealth-tax Officer at Rs. 7,20,000 for all these years. It would be appropriate in this connection to set out the reasons of the Wealth-tax Officer for this conclusion with reference to the order passed in respect of one of these years. He stated : "The assessee has house property in Calcutta at 196, 197 and 198, Maharshi Debendra Road, Calcutta. The property consists of about 42 cottahs of land on which single storeyed structure exists. The structure is about 100 years old. The property was acquired in 1946 for Rs. 3,20,000. It is fully let out. Municipal value is Rs. 13,470. The assessee has valued the property at Rs. 2,07,180. In my opinion the valuation is not correct. The assessee purchased the property in 1946 for Rs. 3,20,000. The valuation after 11 years must have very much increased. I value the properties according to the land and building valuation methods. I estimate the value of land at Rs. 15,000 per cottah. Therefore, for 42 cottahs the valuation comes to Rs. 6,30,000. As mentioned hereinbefore the cost of construction was taken at Rs. 1,50,000 and depreciation was allowed at 50 per cent. and the total net cost of construction was computed at Rs. 90,000 making the valuation of the property at Rs. 7,20,000."
(2.) The assessge went up in appeal before the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner it was contended that the Wealth-tax Officer was in error in valuing the land and building separately. According to the assessee the same should have been valued at 20 times the net rent income. The Appellate Assistant Commissioner, however, did not accept the said contention. The Appellate Assistant Commissioner was of the view that the property was situated in the heart of the commercial centre of the city. According to him there was a great demand for land and building in that area amongst the business community. However, considering the fact that the godowns were in possession of the tenants who could not be evicted easily and there could not be many willing buyers for the same, the Appellate Assistant Commissioner took the valuation of the property at Rs. 4 lakhs in the assessment year 1957-58 and increased the same progressively to Rs. 4,25,000 for 1958-59, Rs. 4,50,000 for 1959-60. Rs. 4,75,000, for 1960-61, Rs. 5 lakhs for 1961-62 and Rs. 5,25,000 for 1962-63. The Appellate Assistant Commissioner observed in his order: " The property in question is situated in the very heart of the commercial centres of the city. There is great demand for land and building in that area among the business community. It is at the same time to be considered that the godowns were in the possession of tenants as a result of which no willing buyer for it would be readily available,"
(3.) The assessee thereafter preferred appeals to the Tribunal. The revenue also preferred appeals to the Tribunal against the said orders of the Appellate Assistant Commissioner. On behalf of the revenue it was contended that the Appellate Assistant Commissioner was in error in reducing the valuation from Rs. 7,20,000 as adopted by the Wealth-tax Officer, while on behalf of the assessee it was contended that the valuation fixed by the Appellate Assistant Commissioner was excessive. The assessee submitted that when the property was purchased in 1946, the assessee had expected to build a multi-storeyed house by demolishing the godown. With this end in view the assessee filed suits against all the three tenants mentioned above but they could not be evicted up to the date of hearing before the Tribunal which was some time in the middle of 1970. It was submitted -that the suits were still then pending before the High Court and the Supreme Court. According to the assessee the market value of the said property had fallen below the cost which the assessee had paid in 1946 in the expectation of having vacant possession and of building a multi-storeyed house thereon. It was submitted on behalf of the assessee that the valuation as shown by the assessee in the returns was fair and reasonable and had its proper basis--20 times of the net rental--and should, therefore, be accepted. On behalf of the revenue, on the other hand, it was urged that even though the land and building could not be valued separately, and the valuation of the structure which was said to be 100 years' old was taken at nil, the valuation of the land in the heart of the commercial area of the city would be over Rs. 6 lakhs and, therefore, there was no justification for the Appellate Assistant Commissioner to reduce the valuation. The Tribunal, after considering the respective view-points, observed in its order, inter alia, as follows: " We are of the opinion that as the assessee is yet unable to evict the old tenants and the litigations are still pending, this will be a great drawback on getting current price even for the land because the prospective buyer will not be able to utilise the land in building a now house. Having regard to the net annual rental income and after taking into consideration the fact that the area is near Burrabazar which is the centre of trade and commerce, it would be fair, in our opinion, to take the valuation of this property at Rs. 4 lakhs for the first three years, namely, 1957-58 to 1959-60 assessment years, and at Rs. 4,50,000 in the subsequent three years.";