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Smt. Sushila Devi Tuli Vs. Wealth-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Delhi
Decided On
Judge
Reported in(1986)19ITD855(Delhi)
AppellantSmt. Sushila Devi Tuli
RespondentWealth-tax Officer
Excerpt:
.....flat in excess of the standard rent or that this rent is not maintainable in future. the actual rent received by the assessee, should normally form the basis for computation of the market value of the property on yield method, unless it could be shown by the assessee that the actual rent received by the assessee would not be received by him in future, and the intending buyer would not take note of the actual rent received by the assessee and would not expect the continuation thereof in future. there is no evidence to show that the actual rent being received by the assessee is a fancy rent or an abnormal rent which would not be maintainable in future. the onus to prove the above position lay on the assessee, and he has failed to do so. in the absence of such evidence, the wto was, in.....
Judgment:
1. These are cross-appeals in respect of the assessment year 1977-78.

In the assessee's appeal the question is with regard to the valuation of flat No. 604 in the M.S. Building, known as New Delhi House, 27-Barakhamba Road, New Delhi. The assessee had entered into an agreement with the builder to purchase the said house and to pay Rs. 1,48,460 therefor. The price was accordingly paid and the possession of the said flat was handed over to the assessee by the said builder. The sale deed in respect of the said flat has, however, not been executed yet. The assessee declared the market value of the said flat in his hand at Rs. 1,90,000, vide his first return, as per the valuation report of an approved valuer. Thereafter he revised the return and declared the value at Rs. 1,53,645, which was the cost of the assessee's flat. As per the assessee the revision was done in terms of the decision in the case of Dewan Daulat Rai Kapoor v. NDMC [1980] 122 ITR 700 C) though it was not explained as to how the value would be above as per ratio of the abovementioned decision.

2. The WTO valued the said flat at Rs. 4,29,960 on the basis of yield method, taking the actual yield from the said property as the basis of computation of the aforesaid price and applying thereto the multiple of 12.5. In other words, the computation in question has been done more or less as per rule IBB of the Wealth-tax Rules, 1957 by the WTO. The assessee is dissatisfied with this valuation, hence, the present appeal by him.

3. The assessee claimed exemption under Section 5(1)(iv) of the Wealth-tax Act, 1957 ('the Act') in respect of the aforesaid flat. The WTO rejected the assessee's claim by observing that the assessee did not own the flat, and, therefore, he was not eligible for exemption under Section 5(1)(iv). The matter was carried in appeal on this point also and the learned AAC has accepted the assessee's above plea. The department is aggrieved of the aforesaid finding of the learned AAC.This is how the revenue is also in appeal before us.

4. On behalf of the assessee it was submitted that for the purpose of working out the valuation on the yield basis, the yield should be found out by ascertaining the standard rent of the property and it is this standard rent, which should thereafter be capitalised after allowing suitable deductions from it for repair, etc. For the above proposition the assessee's counsel for the assessee has relied upon the decisions of the Supreme Court in the case of Dr. Balbir Singh v. MCD [1985] 152 ITR 388 and in that of Dewan Daulat Mai Kapoor {supra). He has, however, not indicated as to what this standard rent would be and as to how the actual rent contrasted for is not the standard rent.

5. On behalf of the revenue, it is urged that the valuation worked out by the WTO was justified as it was in accordance with rule IBB.6. We have given careful consideration to the facts of the case and the rival submissions. The assessee has had no evidence whatsoever to show that the contracted rent is not the standard '"rent or that it is not maintainable in the long run and that it has not been contracted for in the normal course between a willing hirer and willing landlord. As such, there is no material before us to hold that the assessee is getting rent from his flat in excess of the standard rent or that this rent is not maintainable in future. The actual rent received by the assessee, should normally form the basis for computation of the market value of the property on yield method, unless it could be shown by the assessee that the actual rent received by the assessee would not be received by him in future, and the intending buyer would not take note of the actual rent received by the assessee and would not expect the continuation thereof in future. There is no evidence to show that the actual rent being received by the assessee is a fancy rent or an abnormal rent which would not be maintainable in future. The onus to prove the above position lay on the assessee, and he has failed to do so. In the absence of such evidence, the WTO was, in our opinion, justified in going by the actual rent being received by the assessee and calculating the market value of the said property on the basis thereof. We find no flaw in his action in this regard.

7. Two cases relied upon by the assessee's counsel dealt with the notion of the rateable value of the building, which according to their Lordships of the Hon'ble Supreme Court, would have to be standard rent or less than that, because the said rateable value has to be worked out on the basis of, 'the annual rent at which such building might reasonably be expected to be let from year to year'. In the present case, we are not dealing with the notion of the rateable value but as to what is the rent being received by the assessee and whether this rent is maintainable in future. If the rent being received by the assessee is maintainable in future the market value by the yield method will have to be worked out in our opinion, on the basis of the actual rent being realized by the assessee unless it can be shown that was not the maintainable rent. The WTO, was, therefore, correct in working out the value of the property on the basis of actual rent received by the assessee, and as we have noted above, in the absence of any material on record, it is not possible for us to hold that such rent is not the maintainable rent or that the rent is abnormal or in excess of the authority of law. The onus to prove this was on the assessee and he has failed to discharge this onus. The actual rent being realised by the assessee is not in dispute and, therefore, the working out of the market value, on the basis of the actual rent realization has to be upheld as correct. We, accordingly, upheld it.

8. The department's grievance against the grant of exemption under Section 5(1)(/v) to the assessee does not appear to us to have any merit. Firstly, the relevant Clause (iv) does not prescribe that a person should be owner of the property, before he can put in the claim for exemption under the said clause. All that a person is required to do to claim exemption under the aforesaid clause is to show that he has same interest in the property, as to that limited extent, the property can be said to belong to him. The word 'belonging to' has been considered the content of Clause (") of Sub-section (1) of Section 33 of the Estate Duty Act, 1953 and it has been held by their Lordships of the Calcutta High Court in the case of CED v. Jyotirmoy Raha [1978] 112 ITR 969 that the above term will take within its sweep even a limited interest in property. For the above view, their Lordships relied on the decision of the Hon'ble Supreme Court in the case of Raja Mohammad Amir Ahmed Khan v. Municipal Board of Sitapur AIR 1965 SC 1923, wherein their Lordships defined the meaning of the term 'belonging to' as follows : 'Though the word belonging to no doubt is capable of denoting an absolute title, it is nevertheless not confined to connoting that sense. Even possession of an interest less than that of full ownership could be signified by that word'.(p. 973) In the present case the assessee is in possession of the flat in question and the legal owner, i.e., the builder is not in a position to dislodge him due to the operation of Section 53A of the Transfer of Property Act, 1908. It can, therefore, be said in his case that the flat belongs to the assessee, and, this being so, the assessee would be eligible for exemption under Section 5(1)(iv). Accordingly, we upheld the decision of the AAC on this account.

9. In the result, we confirm the order of the AAC and dismiss both the appeals.


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