Law: Wealth Tax Act, 1957

Section: 27

Wealth tax--- ----Valuation---Building---Property owned by assessee occupied in part by assessee--Other portions occupied by tenants---Property covered by rent 1992 control, law---Method of valuation ---Reversionary value of land---No scope for inclusion in value. Where the property of an assessee is occupied by tenants, and only a part thereof is in the occupation of the assessee and the property is subject to rent control legislation, in valuing the property, it is incorrect to add the reversionary value of the land. The reversionary value is an imaginary value, which is related to the potential of the land as if it is an open and vacant piece of land. When there is a property standing on the piece of land which has tenants occupying it and which is subject to rent control legislation, there is no scope for including an imaginary reversionary value. By the Court: The existence of tenants in a property and other restrictions or limitations imposed by the local authorities regarding the nature of construction that can be raised in the event of the existing property being pulled down, are all relevant factors to be taken into consideration for purposes of valuation of a property. In such circumstances; it is not possible to add the reversionary value of the land as a factor in determining the fair market value of the property. It is impossible to pull down a building, which is partly occupied by tenants. The applicability of rent control legislation makes it difficult, virtually impossible, to get rid of the tenants in commercial premises. CIT v. Ashima Sinha (1979) 116-I T R 26 (Cal.) C.I.T. v. Anup Kumar Kapoor (1980) 125 I T R 684 (Cal.), CWT v. Ram Saran Kajriwal (1987) 168 ITR 485 (All.) and CWT v. Ram Narain Garg (1988) 68 C T R 75 (All.) fol. H.H. Maharaja Martand Singlr Ju Deo v. CWT.(1987) 1651 T R 745 (MP) distinguished. CIT v. New India Construction Co. (1980)123 I T.R 68 (Delhi) ref. JUDGMENT ARUN KUMAR, J.---The Tribunal has referred' the following question for the opinion of this Court under section 27 of the Wealth Tax Act, 1957 (hereinafter referred to as `the Act'): "Whether, on the facts and in the circumstances of the case, the Tribunal was…

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