Law:

Section:

â- Section 7, read with rule 5 of Schedule III, of the Wealth-tax Act, 1957 - Valuation of assets - Immovable property - Assessment years 1983-84 to 1986-87 - Whether assessing authority has jurisdiction to assess rent receivable by owner as annual rent in case it finds building let out on lower rent so as to escape from provisions of Act and for determining such gross maintainable rent assessing authority has jurisdiction to compare rent in respect of similar buildings - Held, yes FACTS The assessee had construed a building on a plot of land. In the ground floor an area of 58.5 sq. metres was occupied by 'S', a partnership firm of which the assessee was a partner and two other portions on the first floor were occupied by two shops. The assessee filed his return of wealth showing value for the entire property including the value of land. The WTO did not accept the value as returned by the assessee and referred the matter to the DVO under section 16A for fixing the market value for the relevant assessment years. The Valuation Officer estimated the net annual income from the property and on that basis determined the market value by rent capitalisation method. On appeal, the Commissioner (Appeals) as well as the Tribunal confirmed the assessment order. On reference, the assessee contended that the assessee was receiving only Rs. 1,500 for 59.5 sq. metres per month as per lease agreement and that was the rent receivable from 'S' and, therefore, the assessing authority was not justified in holding that rent at the rate of Rs. 70sq. ft. and further submitted that the Valuation Officer should have considered the annual value assessed by the local authority and not the rent received for the adjacent building. HELD Rule 5(1) of Schedule III states that where the property is let, the amount received or receivable or the annual value assessed by the local authority is the gross maintainable rent, but the assessing authority has to adopt the rent, whichever is higher. In a case where property is not let, the amount of annual rent assessed by the local authority for the purpose of levy of property tax would be the gross maintainable rent. For the building let out there…

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