Law: Wealth Tax Act, 1957

Section: 27(3),16A,7,46(2)(a),23

Law: Wealth Tax Rules, 1957

Section: 1BB

Law: Income Tax Act, 1961

Section: 24,

Wealth tax--- ---- Valuation of assets---Property which had been let out---Valuation for assessment years 1974-75 to 1976-77---Rent capitalisation method adopted--: Rule 1-BB though inserted 'subsequently could be applied---Deduction for repairs and collection of rent as laid down in S.24 of Income Tax Act could be allowed---Indian Wealth Tax Act, 1957, S.7, Sched. III---Indian Income Tax Act, 1961. S.24. In exercise of the powers under section 46(2)(x) of the Wealth Tax Act, 1957, which includes the power to frame rules to provide for the manner in which the market value of any asset may be determined the Board framed rule 1-BB of the Wealth Tax Rules, 1957, now omitted by the Wealth Tax Second Amendment) Rules, 1989, with effect. from April 1, 1989, to make room for insertion of Schedule III, to the Act itself. The said rule as also the newly inserted Schedule III, give statutory recognition to the rent capitalisation method of valuation for house properties wholly or mainly used for residential purposes. Besides prescribing the multiplying factor, the rule sets out the procedure for determining the net maintainable rent for that purpose. Schedule III to the Act is on lines similar to Rule 1-BB, except that Schedule III is meant to be applied for valuation of residential as well as commercial properties. Under Rule I-BB(2)(c), "net maintainable rent" for the purpose of multiplying the same with a fixed fraction to arrive at the value of the house, means the amount of "gross maintainable rent", minus certain deductions like a sum equal to 1/6th in respect of repairs and an amount spent during the previous year for collection of the rent not exceeding 6 per cent., etc. Rule 1-BB only sets out the method or formula for determining the market value of a particular asset and it is now settled that it is procedural and not substantive in nature. It is intended to carry out the purpose and object of section 7(1) of the Wealth Tax Act, 1957, namely, to estimate the price of the asset "if sold in the open market". Rule 1-BB was applicable for determining the value of a house which was wholly or mainly used for residential purposes, but being procedural in nature, it…

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