1. For house property acquired under the Land Acquisition Act, the compensation payable by the Government should be mainly assessed with reference to the net annual income of the property. For arriving at the annual income, where such house property is actually leased to a tenant who is regularly paying the rent stipulated, the rent furnishes adequate evidence. It is wrong in such a case to attempt to value the site, independently of the superstructure and then value the superstructure as a separate unit and add the one value to the other with a view to arrive at the compensation payable to the owner of the property. The site and the structure cease to be capable of yielding separate items of income. The house property is enjoyed as a unit by the owner or by the lessee. The method adopted by the Land Acquisition Officer in valuing the site and the superstructure separately and then adding the values for the purpose of arriving at the compensation payable was wrong. The learned Subordinate Judge was right in holding that the house property, inclusive of the site and the superstructure should be valued as a single unit.
2. The house property had been leased to a tenant. HF was regularly paying the rent stipulated, namely, Rs. 32 a month. The gross annual income of the property was Rs. 384. From the gross annual income, the tax payable has to be deducted. In deducting the tax payable, the learned Subordinate Judge considered that Rs. 50-9-3 was the half-yearly tax. That was the half-yearly tax until the end of September, 1952. The notification under the Land Acquisition Act relating to this property was issued in October, 1952. The tax payable for the half-year 1952-53 was not, Rs. 50-9-3, but Rs. 41-7-0. The Subordinate Judge should have deducted from the gross value not twice Rs. 50-9-3, but twice Rs. 41-7-0, namely, Rs. 82-14-0, on account of tax. The Subordinate Judge deducted Rs. 32 on account of expenses of minor repairs. That is correct. The net annual income is thus Rs. 384 minus Rs. 82-14-0 minus Rs. 32.
3. In regard to house-property in a municipal area, the market value is arrived at by multiplying the net annual income by the number yielded by dividing 100 by the rate of interest current at the time of the notification on gilt-edged securities : Vide Collector of Kistna v. Sivarama Prasad : AIR1938Mad33 . That principle was approved in Radhakrishna v. Province of Madras : (1948)2MLJ159 . In Collector of Kistna v. Sivarama Prasad : AIR1938Mad33 ., the actual return on gilt-edged securities at the time of the notification was 3 per cent. The District Judge had capitalised the rental at 30 years' purchase. 100 divided by 3 per cent., is 287. This Court considered it unnecessary to interfere with the District Judge's order adopting '30 years' purchase'. In the case now under appeal, the Subordinate Judge has multiplied the net annual income by the precise figure of 28 4/7 which is the result of dividing 100 by 3. There is, therefore, no reason to alter the number of years' purchase adopted by the Subordinate Judge. Instead of multiplying Rs. 250-13-6 by 28 4/7, Rs. 384 minus Rs. 114-14-0 will be multiplied by 28 4/7. To that figure, 15 per cent, will be added as solatium. In the place of the sum awarded by the learned Subordinate Judge, the sum arrived at on the basis stated above will be substituted. To that extent, the memorandum of cross-objections is allowed.
4. As regards the appeal, the interest which the Subordinate Judge should have allowed was 4 per cent., per annum, from 12th January, 1954, and not 6 per cent. (see Madras Act XII of 1953). To that extent, the appeal is allowed. The parties will bear their own costs in the appeal and the memorandum of objections.