A.M. Sapre, J.
1. This is a reference made at the instance of the Revenue under Section 27(3) of the Wealth-tax Act, 1957, 'for answering the following question of law :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in confirming the order of the Commissioner of Wealth-tax (Appeals) holding that the value of the land should not be added while valuing the property on the rent capitalisation method ?'
2. The question arises out of the assessment year 1986-87. In short and in substance, the question arose before the assessing authority (wealth-tax) as to what should be the mode of valuation for determining the immovable properties of the assessee. This question arose while valuing the property which was in possession of the tenants of the assessee. The Valuation Officer, while making the valuation, applied the method of rent capitalisation and further proceeded to add the value of the land on which the property was constructed. It is against this method of valuation, or one may say the manner of doing the valuation, the assessee carried the matter to the Commissioner of Income-tax (Appeals) and then to the Tribunal. In the opinion of the Tribunal, while placing reliance on the decision reported in CIT v. Smt. Ashima Sinha : [1979]116ITR26(Cal) and CWT v. Ram Saran Kajriwal [1987] 168 ITR 485 the valuation of land cannot be taken into account when the method of rent capitalisation is adopted. If is against this view of the Tribunal, the Revenue has felt aggrieved and prayed the reference on the question referred to this court for answer.
3. Heard Shri R.L. fain, learned counsel for the appellant, and Shri S.R. Kochatta, learned counsel for the respondent.
4. Having heard learned counsel for the parties and having perused the record of the case, we are of the view that the question referred to this court has to be answered against the Revenue and in favour of the assessee.
5. In our opinion, the issue in question was examined in great detail by two High Courts, namely, Calcutta and later by Allahabad. These decisions are reported in CIT v. Smt. Ashima Sinha : [1979]116ITR26(Cal) and followed by the Allahabad High Court in CWT v. Ram Saran Kajriwal [1987] 168 ITR 485.
6. In both these decisions the question was the same which has been referred to this court, namely--whether value of the land should be added while valuing the property standing on the land on the basis of rent capitalisation method It was held in clear terms that it cannot be so added. This is what the Calcutta High Court held and the same was followed by the Allahabad High Court : [1987]168ITR493(Cal) :
'In the method adopted by the Valuation Officer, the value of the land is taken twice, once being included in the amount arrived at by the'yield or rental' method and again under the 'reversionary' method. This is an entirely novel approach but in our view erroneous.
We respectfully agree with the aforesaid view expressed by the Calcutta High Court.
In the result, we answer the question referred to us in the affirmative, in favour of the assessee and against the Department.'
7. In our considered opinion, the view taken by the Calcutta and Allahabad High Courts referred to supra, is in accord with the law and we find no ground to take any other view than the one taken by the two High Courts. In other words, we respectfully agree with the view expressed by the two High Courts. Learned counsel for the Revenue could not bring to our notice any authority taking a contrary view.
8. The effect of the aforesaid discussion is that when the method of rent capitalisation is applied for making valuation of the properties in the hands of the assessee then in that event the valuation of the land on which the property is standing cannot be added in the total valuation.
9. As a result of the foregoing discussion, we answer the question referred to us in the affirmative, in favour of the assessee and against the Revenue.
No costs.