Law: Wealth Tax Act, 1957

Section: 7,7(1),25,27(1),16(3)

Law: Income Tax Act, 1961

Section: 253(1)(c),263,147(b)

Wealth tax--- ----Revision---Powers of C.W.T.---Valuation of property---Discretion of W.T.O.---Discretion to be exercised judicially---Property consisting of industrial sheds which had been let out---Valuation of property by adopting land and building method at a lower figure ---WTO's action was erroneous and prejudicial to the Revenue---CWT justified in setting aside order of WTO--­Indian Wealth Tax Act, 1957, Ss.7 & 25. Under section 7(1) of the Wealth Tax Act, 1957, as it stood at the relevant point of time, the value of any asset, other than cash, for the purposes of the Act, shall be estimated to be the price which in the opinion of the Assessing Officer, it would fetch if sold in the open market on the vlauation date. In fact under section 7, the Assessing Officer is required to find out the market value of the property as on the relevant date. While determining the market value, the Assessing Officer is required to follow the well-recognised principles of valuation and he cannot arbitrarily fix the value. Though there are different methods of valuing a property, it cannot be said that the Assessing Officer can arbitrarily 'select one method of valuation ignoring the well-recognised principles of valuation applicable to the facts and circumstances of the case. Whatever discretion he has in adopting the method of valuation, it has to be exercised in a judicious manner and in consonance with accepted principles of valuation. The preponderance of judicial pronouncements show that in the case of a building which has been let out or which can be let out, the appropriate method of valuation is the rent capitalization method and that valuation by land and building method is not the proper method. The assessee-Hindu undivided family owned land. It had put up industrial sheds on it and leased them to tenants. The rent receivable by the assessee in respect of the sheds let out to the tenants was Rs 3,24,454 per year. For the purpose of wealth tax assessment for the year 1984-85, the assessee valued the land at Rs.1,45,000 on the basis of a report of an approved valuer and the value of the constructions was taken at the written down value. The total valuation of…

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