- (1.) ON June 12, 1957, Jaswanti Devi died leaving her only son, Dina Nath, as her heir and assets, both movable and immovable, the last mentioned including what has been described as Shri Karam Chand Jain Market in the heart of Jullundur City. In the years 1950-51 the old construction having been demolished, the deceased constructed a new building in the shape of a market over an area of 3 Kanals, 5 Marias, and 20 square-feet as stated, in the heart of Jullundur City, with covered built area on the ground floor 7,627 square-feet and on the first floor 5,363 square-feet. The property comprised of among other parts of the building 41 shops. On the first floor 16 rooms have been with Jain Brotherhood for religious purposes. The Assistant Controller of Estate Duty, Amritsar, in his order of December 30, 1958, gives detailed description of the property and the quality of the material used and the quality of the construction of the building. So this building was constructed by the deceased in the year 1950-51.
(2.) AFTER the death of Jaswanti Devi, deceased, proceedings were started by the Assistant Controller of Estate Duty for payment of estate duty on the estate left by the deceased in the hands of her son. He filed a statement of account in regard to the estate of his deceased mother, and the only item which is a matter of controversy here in this reference is the valuation of the property named and styled as Shri Karam Chand Jain Market in Jullundur City, Dina Nath in his statement of account valued that property at Rs. 78,000, showing its annual rental at Rs. 18,000. At that annual rental the value of this building would be recovered in 4 1/2 years. He produced two letters from property dealers one fixing the value of this property at Rs. 1,00,000 and the other fixing it at Rs. 1,10,000 but this material was not accepted by the Assistant Controller of Estate Duty and was not even subsequently relied upon before the Central Board of Revenue in appeal. The Assistant Controller of Estate Duty not having accepted those two letters as satisfactory and reliable evidence in the case in regard to the market value of this particular property on the date of the death of the deceased, the accountable person, Dina Nath, produced a certificate from a chartered engineer, Mr. Hari Chand, in regard to the market value of the property on the crucial date. With regard to this certificate the Assistant Controller of Estate Duty proceeded to say that : "shri Hari Chand in the certificate admits that the detailed measurements of every item involved in the construction were given and estimated by one Shri Ram Singh, District Engineer, and the value was based on cost method which in the present case has no reliance. Moreover, the cost was calculated at pre-war P. W. D. scheduled rates and then stepped up by 175% over and above the pre-war rates. The certificate given by Shri Hari Chand is apparently biassed in favour of the person accountable and he has taken into account the Maria tax which was not there at the time of the death. He has also taken into consideration that this is a big building which is no consideration at all in view of Section 36 (2), He has also taken into account the political unrest prevailing in this frontier province which has made the investors shy. The statement is of no value at all and is self-contradictory. Had there been any political unrest, the deceased would not have constructed this property so recently, and this new market of wholesale cloth could not have made rapid strides as it has done to-day. It is unthinkable that a property worth Rs. 89,000 would yield a gross rental income of Rs. 20,000 annually. "
(3.) SO the Assistant Controller of Estate Duty rejected the certificate of the chartered engineer as to the market value of this property on the date of the death of the deceased, because it has proceeded to valuation on considerations either non-existent or not germane such as : (a) the Maria tax which has never been imposed, (b) the prevailing political unrest in this frontier province for which there has neither been any material nor it has affected the value of the property in Jullundur City, and (c) that the building in question is a big building, which is hardly any consideration because even a big building, if it comes to the question of its disposal, may be available for disposal in parts. The Assistant Controller of Estate Duty also found the method of assessing the actual cost of the building not satisfactory in relation to a given increase over the pre-war schedule of rates of the Public Works Department. These are apparently sound reasons on the basis of which it was open to the Assistant Controller of Estate Duty not to accept the valuation certificate of this chartered engineer. This officer then proceeded to value this property on the basis of rental method. He took the gross letting value of the property on the date of the death of the deceased at Rs. 18,836 and adding to it Rs. 160 per mensem as the gross letting value for the portion of the building in the occupation of the religious brotherhood, he arrived at its gross annual letting value as a whole at Rs. 20,756. Making allowances for repairs, municipal taxes, property tax, and collection charges, he arrived at the net annual letting value of this property at Rs. 13,349, which he capitalised twenty times, thus arriving at the figure of Rs. 2,66,980 as the market value of this property on the date of the death of the deceased for the matter of accountability for estate duty. The person accountable filed an appeal against the order of the Assistant Controller of Estate Duty which appeal was heard and disposed of by the Central Board of Revenue on October 28, 1960. The only matter that was urged on the side of the person accountable on this aspect of the matter was the report of the chartered engineer as to valuation of this property. In the appellate order of the Central Board of Revenue the chartered engineer has been described as "the approved valuer", and obviously that means that he was a valuer approved under Section 4 (1) (c) and (3) of the Estate Duty Act, 1953 (Act No. 34 of 1953 ). It was urged that the report of the approved valuer in this case being that of an expert was conclusive having regard to Sections 45 and 114 of the Evidence Act unless it was shown that it was not correct, and it was said that that was not shown. The Central Board of Revenue found that the report of the approved valuer was neither correct nor reliable and proceeded to observe that: "he (approved valuer) has arrived at the valuation of Rs. 89/144 on the basis of the cost of construction of the building and also on the basis of the rental income. The cost of construction was arrived at by taking the value of the land at Rs. 24,000 and the construction at Rs. 5-8-0 per square-feet for ground floor and Rs. 4-13-0 for the first floor. The total cost of construction on the above basis was estimated at Rs. 69,740 from which depreciation of Rs. 3,896 was deducted. In regard to the rental method, the net income from the property was taken at Rs. 11,469 and it was capitalised to give an yield of 12. 7 per cent. This yield was considered by him as reasonable keeping in view the rental received for properties in Jor-Bagh and other newly developed localities in New Delhi. The value taken by the valuer for the cost of construction is absurdly low and the yield expected on properties at Jullundur at 12. 7 per cent. is very high. It is an open fact that the rent received in some of the newly developed localities in New Delhi is very high on account of special circumstances. These considerations were not applicable to Jullundur, and the yield there would be very much lower. The report of the valuer has, therefore, been rejected. " ';