1. In compliance with the directions of this court, the Appellate Tribunal has referred under Section 27(3) of the Wealth-tax Act, -1957, the following question for our opinion:
'Whether, on the facts and in the circumstances of the case, there was any material before the Tribunal to determine the valuation of 19, Barakhamba Road, New Delhi, at Rs. 10 lakhs as on the valuation date, i.e., 23rd June, 1963?'
2. Sri Dwarka Dass, the assessed, holds on lease from the Government, the property known as 19, Barakhamba Road, New Delhi, standing on a plot of land measuring 1.327 acres or 6,453 sq. yards. 30% of the area is constructed upon. While 35% of the covered area is self-occupied the remaining 65% of the covered area has been let out and is in occupation of tenants. For the assessment year 1964-65, the relevant valuation date being June 23, 1963, the petitioner returned the value of the said property at Rs. 5 lakhs, which was the accepted value for the assessment years 1961-62 to 1963-64. The Wealth-tax Officer enhanced the value to Rs. 11 lakhs. In appeal, the Appellate Assistant Commissioner confirmed the said valuation. The Tribunal, in second appeal, however, reduced the value of the property to Rs. 10 lakhs. Reference application filed by the assessed was dismissed. But, on his application, this court directed the Tribunal to refer to it the aforementioned question.
3. The only material on which reliance was placed by the Tribunal for enhancing the value of the property from Rs. 5 lakhs to Rs. 10 lakhs, was the following : (1) the fact that the area, wherein the property in dispute is situated, has been declared since September 1, 1962, as commercial area; (2) sale transactions of two adjoining properties, viz., 16, Barakhamba Road and 19, Curzon Road; (3) a portion of the property in dispute is self-occupied ; (4) absence of any condition for payment of 50% of increase in the value of land to the Lesser; and (5) failure to prove the charges for converting the property from residential to commercial. The last two factors were relied upon to justify the Tribunal's inability to reduce the valuation. But we have to first examine the justification for the enhancement of the value to Rs. 10 lakhs. We, thereforee, need discuss only the first three factors, on which strong reliance has been placed by the revenue.
4. It was contended by Mr. R. H. Dhebar, the learned counsel for the revenue, that with effect from September 1, 1962, the area in which the property is situated has been declared 'commercial area' under the Master Plan, which enabled the owners to convert the user of the property from residential to commercial, resulting in an increase in its rental yield. This has made it profitable to construct multi-storeyed buildings for letting out portions thereof to big commercial houses. This has brought about a steady rise in the value of property in this area. This contention of Mr. Dhebar, however, cannot be accepted. The argument proceeds on the footing that the property at present is required to be used as residential property only. This must be on account of some condition to this effect in the lease deed. But it was not explained as to how a mere declaration in the Master Plan would change the terms and conditions of the deed of lease. There is nothing to indicate, if the assessed is required to apply to some authority for converting the user to which the property can be put; and if so, which is that authority and how does it act. Whether the change of user, will be allowed on some conditions or without any condition No relevant lease deed or other evidence has been brought on record to show the manner in which the user of the property can be changed from residential to commercial. Mere declaration in the master plan to the effect that the area shall now be commercial, thereforee, is extremely vague and provides no basis for assessing the value of the property. Even the details of that declaration are not available. The reliance by the revenue on some alleged declaration, thereforee, is of no avail to it.
5. Coming to the two instances of sale transactions relied upon by the revenue, the first relates to 16, Barakhamba Road, which was sold on May 3, 1961, by one Gurbux Singh to Messrs. Escorts Ltd. for a sum of Rs. 8 lakhs. The area under this property is 0.956 acres, i.e., 4,598 sq. yards. This property is said to have various electrical, sanitary and other luxury fittings. Two air-conditioning G.E.C. make plants are installed in the building, fixed with duct work, etc., and one cooling tower on the roof. Apart from all this, the most distinguishing feature of this transaction was that the vendor handed over complete vacant possession of the premises to the vendee. The vendee in this case was thus free, if he so desired, to demolish the existing structure and construct on the land a multi-storeyed building, which could be used for commercial purposes, the area having been declared commercial, as contended by the revenue. If, on the other hand, the property had been occupied by tenants, as is the case of the property which we are considering, the vacant possession would not be obtainable. The eviction of the tenants is regulated by Section 14 of the Delhi Rent Control Act, 1958, according to which, notwithstanding anything to the contrary contained in any other law or contract, no order or decree for recovery of any premises can be made in favor of the landlord against the tenant. The proviso to the section enumerates certain exceptions, But none of those exceptions is shown to be applicable to the present case. The property in dispute has tenants in occupation of 65% of its covered area. This area, under these circumstances, will remain occupied and cannot be vacated. The existing structure cannot be demolished and a new building cannot be raised on the land. This property, thereforee, provides no comparison with the property in dispute.
6. The other sale transaction relied upon by the revenue relates to No. 19, Curzon Road, New Delhi, situated on a plot of land, measuring 1.10 acres or 5,352 sq. yards. This property was agreed to be sold on December 7, 1964, for a sum of Rs. 20,50,000 by Messrs. Khandelwal Ferro Alloys Ltd. to Messrs. Anand Finance Private Ltd. A sum of Rs. 3 lakhs as earnest money was paid to the vendor and it was agreed that the sale deed would be executed within six months from the date of the agreement to sell. On the vendee failing to pay the balance amount and getting the sale deed executed within the stipulated time, the said earnest money was forfeited. This, according to the revenue, happened because of the financial difficulties of the vendee. The assessed, on the other hand, contended that this was due to the fact that the vendee realised that the price was unreasonably high. It is significant to note that, as contended by Mr. P.N. Monga, the learned counsel for the assessed, the default of the vendee should not have prevented it from procuring some other buyer to come forward to buy the property at that price, if it was reasonable. This is especially so as one of the conditions of the agreement to sell gave a right to the vendee to have the sale completed in favor of its nominee. In any case, nothing concrete has been brought on record to impart sufficient authenticity to this agreement, which could make it of some assistance to us in this case. It would, thereforee, not be safe to rely on this agreement of sale, which, in fact, never matured into a sale to determine the value of the property in question. We also notice that the vendor in this transaction had agreed to give vacant physical possession of the property at the time of registration of the sale deed, showing that this property was lying vacant (see Clause 13 of the agreement of sale, which forms part of the statement of case). This again is a feature which renders futile a comparison of this property with the property in dispute.
7. It was then contended by Mr. Dhebar that the whole of the property in question was not let out. Only 65% of its total covered area was under the occupation of tenants. The rest was self-occupied, which, according to him, could easily be converted to commercial purposes. But, as discussed already, the details of the scheme for converting residential property into commercial are not available. A bare declaration that the property can be used as commercial is vague and does not assist us to form a correct opinion about the valuation of the property. In any case, it is clear that with 65% of the covered area being in possession of the tenants, the existing structures cannot be demolished. Nor can the existing rents be increased in view of the restrictions enacted by the Delhi Rent Control Act, 1958. The property, thereforee, has little attraction for a vendee, who may otherwise have plans to buy some property, in order to raise a multi-storeyed building on the site. Self-occupation of 35% of the covered area, thereforee, cannot be made use of by the revenue to enhance the value of the property from Rs. 5 lakhs to Rs. 10 lakhs. It is significant to note that there is complete absence of any instance of sale transaction after the area is alleged to have been declared commercial. We also notice that the Tribunal failed to give due weight to the inability of the landlord to 'get vacant possession of 65% of the covered area of the property in question.
8. We, in these circumstances, are satisfied that there was no material before the Tribunal to determine the valuation of this property, i.e., 19, Barakhamba Road, New Delhi, at Rs. 10 lakhs on the valuation date, i.e., June 23, 1973. The question referred to us, thereforee, has to be and is answered in the negative, that is, in favor of the assessed and against the revenue.
9. In the peculiar circumstances of the case, however, we leave the parties to bear their own costs.