1. These cross-appeals, one by the assessee and other by the Revenue are directed against the order dt. 30th March, 1992, passed by the CWT(A) for asst. yr. 1987-88.
"(1) The learned CIT(A), Faridabad erred in holding that the land leased out to R. Narayan Dying & Printing Mills Ltd., was not land appurtenant to the factory building and hence, exempt in terms of cl. (VI) to sub-s. (3) of s. 40 of the Finance Act, 1983.
(2) The learned CIT(A), Faridabad, erred in holding that the building, valued at Rs. 3,50,000 was not factory building exempt under cl. (VI) of sub-s. (3) of s. 40 of the Finance Act, 1983.
(3) The learned CIT(A) erred in valuing the land at Rs. 9,00,000.
Its value should have been taken at the book value as per r.
14(2)(ii) of Sch. III to the WT Act, 1957.
(4) The learned CIT(A), Faridabad erred in valuing the building at Rs. 3,50,000. It should have been valued at its written down value in terms of r. 14(2)(i) of Sch. III to the WT Act, 1957." "(1) On the facts and in the circumstances of the case, the learned CWT(A) has erred in law and facts in holding that valuation report in wealth-tax case received after the completion of assessment could not be considered and the value taken could not be substituted by resorting to s. 35.
(2) On the facts and in the circumstances of the case, the learned CWT(A) has erred in law and facts in directing AO to take their market value of land appurtenant to the factory building as on 31st March, 1987, at Rs. 9,00,000 as against Rs. 27,00,000 on the basis of rent capitalisation method.
(3) On the facts and in the circumstances of the case, the learned CWT(A) has erred in law and facts in directing AO to take the value of building at Rs. 3,50,000 as against Rs. 10,00,000 on the basis of value taken for the said building in income-tax case for the asst.
yr. 1987-88." 4. We will first deal with ground No. 1 raised by the Revenue in their appeal.
4.1. The learned Departmental Representative submitted that the CWT(A) has erred in holding that the AO cannot substitute the value of land taken in the assessment order by the value determined by the Valuation Officer in his report received subsequent to the completion of assessment. He contended that once a reference under s. 16A of WT Act was made by the AO, he is bound to adopt the value as may be determined by the Valuation Officer. Since the report of the Valuation Officer could not be obtained before completion of the assessment, the AO has rightly observed that the value of the land in question will be rectified under s. 35 of WT Act on receipt of the report of the Valuation Officer under s. 16A(5). He also placed reliance on the judgment of the Hon'ble Allahabad High Court in the case of CWT vs. Dr.
H.Rehman (1996) 217 ITR 107 (All) to support this contention.
4.2. The learned counsel for the assessee supported the order of the CWT(A). He submitted that there is no provision in the WT Act which empowers the AO to adopt the valuation of an asset on the basis of report of the Valuation Officer received after the completion of the assessment. The CWT(A) has rightly cancelled such findings given by the AO. The view taken by the CWT(A) is supported by decision of the Tribunal, Chandigarh in the case of IAC vs. Amrinder Singh & Ors.
(1988) Taxation 91 (4) 43.
4.3. We have carefully considered the submissions made by the learned representatives of the parties. The valuation of an asset is a matter of estimate and guesswork. The AO cannot validly pass an order holding that the value of an asset is assessed subject to rectification under s. 35 on the basis of the report of the Valuation Officer which will be received on a future date after completion of the assessment. Reliance placed by the learned Departmental Representative on the judgment in the case of Dr. H. Rehman is not valid. In that case the report of the Valuation Officer had been received prior to the completion of the assessment and it was, therefore, held that the assessment has to be made in conformity with the valuation made by Valuation Officer in view of the mandatory provisions contained in s. 16A(5). That was not the case where the valuation report was received by the AO subsequent to the completion of the assessment. In any case, the matter relating to valuation of an asset is a debatable issue which clearly falls outside the ambit of s. 35 of the WT Act. The CWT(A) has placed reliance on the decision of the Tribunal (Chandigarh) in the case of Amrinder Singh & Ors. (supra) in which it was held that there was no provision in the WT Act for making an assessment subject to rectification under s. 35 in relation to substitution of the value of the asset on receipt of the valuation receipt on a subsequent date. In our view, the CWT(A) has rightly arrived at the aforesaid conclusion. We do not find any justification to interfere with the view taken by the CWT(A) in relation to ground No. 1 raised by the Revenue.
5. Ground No. 2 of assessee's appeal relates to inclusion of 3,50,000 being the value of factory building in the hands of the assessee. The Revenue has also raised a ground in relation to valuation of this building in ground No. 3. The Revenue has contended that the CWT(A) has erred in directing the AO to take the value of this building at Rs. 3,50,000 as against Rs. 10 lakhs adopted by the AO.6. The learned counsel for the assessee submitted that the value of factory building cannot be assessed in the hands of the assessee as the said building was transferred to the subsidiary company, R. Narayan Dying & Printing Mills Ltd. The AO observed that immovable property cannot be transferred without a registered document. Since no evidence was produced to prove that the said property had been registered in the name of the transferee by a registered deed, the AO held that the value of building would be taxable in the hands of the assessee.
6.1. The CWT(A) relying upon the judgment of the Hon'ble Supreme Court in the case of Late Nawab Sir Mir Osman Ali Khan vs. CWT (1987) 162 ITR 888 (SC) held that the value of the said building is assessable in the hands of the appellant company as no registered sale deed was executed and registered in favour of the vendees.
6.2. The CWT(A) then considered the question relating to reasonableness of the estimated value of the building adopted by the AO at Rs. 10 lakhs. He observed that in the income-tax assessment for asst. yr.
1987-88, the fair market value of the said building has been taken at Rs. 3,50,000. In case the AO wanted to determine the value of the said factory building at figure higher than Rs. 3,50,000, the AO could either ask the assessee to file report of the registered valuer and in case he was not satisfied with the same he could also make a reference to the Valuation Officer under s. 16A of WT Act. The AO has not resorted to all these things and straightaway estimated the value of the factory building at Rs. 10 lakhs. The CWT(A), therefore, held that it would be reasonable to direct the AO to determine the fair market value of the said factory building at Rs. 3,50,000.
6.3. The learned counsel for the assessee contended that the aforesaid factory building was transferred to R. Narayan Dying & Printing Mills Ltd. along with other assets such as air-conditioners, electric installation, electric fans, electric appliances, factory building, furniture and fixtures, plant and machinery, etc., for a total consideration of Rs. 15 lakhs. In consideration of the aforesaid sale price, the appellant company acquired shares worth Rs. 15 lakhs of R.Narayan Dying & Printing Mills Ltd. A certificate dt. 18th Dec., 1989, confirming these facts was also submitted before the AO. The AO allowed depreciation on the cost of factory building and other assets so transferred by the assessee in their favour. He submitted that the Department for income-tax purposes has accepted the vendees as the real owner of the factory building but for wealth-tax purposes, the Department wants to levy tax on the appellant who has already transferred the factory building to the aforesaid company before the relevant valuation date.
6.4. The learned counsel further submitted that the judgment of the Hon'ble Supreme Court in the case of Late Nawab Sir Meer Osman Ali Khan vs. CWT (supra) does not now hold the field in view of the fact that the Hon'ble Supreme Court in a recent judgment in the case of CIT vs.
Podar Cement (P) Ltd. & Ors. (1997) 226 ITR 625 (SC), have held that "owner" is a person who is entitled to receive income from the property in his own right". The beneficial owner of the property has been held to be assessable in respect of income from property regardless of the fact that the property has not been registered in favour of such a beneficial owner. He, therefore, strongly urged that the value of factory building assessed in the hands of the assessee should be deleted.
6.5. In the alternative, the learned counsel for the assessee submitted that if the assessee is regarded as owner of the factory building, it would be treated as having been used as a factory building, which is not liable to wealth-tax in view of the exceptions carved out in s.
40(3)(vi) of the Finance Act, 1983. The said provisions clearly provide that a building or part thereof used by the assessee as a factory will not be liable to be included in the taxable wealth of the company.
Since the factory building is being used by the sister-company to whom the said building has been transferred, the same should be treated as having been used by the assessee as a factory building for his business purposes. He placed reliance on judgment of Hon'ble Punjab & Haryana High Court in Dalchand & Sons vs. CIT (1968) 69 ITR 247 (P&H) in which it was held that lease of the factory was as much as business of the assessee as the running of it by itself and hence, the income derived from such leasing out was rightly assessed as income from business. The learned counsel submitted that in any case, the value of the factory building is not liable to wealth-tax in the hands of the assessee.
6.6. In relation to ground raised by the Revenue relating to valuation of the building, the learned counsel for the assessee supported the value of Rs. 3,50,000 adopted by the CWT(A).
6.7. The learned senior Departmental Representative submitted that the value of factory building is assessable in the hands of the assessee in view of the judgment of the Hon'ble Supreme Court in the case of Nawab Osman Ali Khan (supra). The judgment in the case of Podar Cement (P) Ltd. (supra) relates to ss. 22 to 27 of the IT Act, 1961. The provisions of IT Act and WT Act are different. The judgment of the Hon'ble Supreme Court is, therefore, binding in relation to a wealth-tax case.
6.8. We have carefully considered the submissions made by the learned representatives of the parties and have gone through the orders of the learned departmental authorities. We have also gone through all the judgments cited by the learned representatives of both sides.
6.9. The Hon'ble Supreme Court in the case of Nawab Sir Mir Osman Ali Khan vs. CWT (supra) has held that the assessee who had received full consideration for certain immovable properties from the purchasers but has not executed any registered sale deeds in favour of the vendees will be liable to wealth-tax in relation to such properties. The Hon'ble Supreme Court also pointed out the necessity for the legislatures to remove hardship and injustice because legal owners who had parted with possession after receiving full consideration but had not executed the sale deeds were being made to bear the tax burden without having the enjoyment of the property in question. It will be imperative to reproduce the relevant extracts from the said judgment as appearing at pp. 900 and 901 hereunder : At page 900 : "The concept of reality in implementing a fiscal provision is relevant and the legislature in the case has not significantly used the expression "owner" but used the expression "belonging to". The property in question legally, however, cannot be said to belong to the vendee. The vendee is in rightful possession only against the vendor. Speaking for myself, I have deliberated long on the question whether in interpreting the expression "belonging to" in the Act, we should not import the maxim that "equity looks upon a thing as done which ought to have been done" and though the conveyance had not been executed in favour of the vendee, and the legal title vested with the vendor, the property should be treated as belonging to the vendee and not to the assessee. I had occasion to discuss thoroughly this aspect of the matter with my learned brother and since in view of the position that legal title still vests with the assessee and the authorities, we have noted, are preponderantly in the favour of the view that the property should be treated as belonging to the assessee in such circumstances, I shall not permit my doubts to prevail upon me to take the view that the property belongs to the vendee and not to the assessee. I am conscious that it will work some amount of injustice in such a situation because the assessees would be made liable to bear the tax burden in such situations without having the enjoyment of the property in question. But times perhaps are yet not ripe to transmute equity on the aspect in the interpretation of law-much as I would have personally liked to do that. As Benjamin Cardozo has said "The Judge, even when he be free, is not wholly free". The Judge cannot innovate at pleasure.
It may be said that the legislature having designedly used the expression "belonging to" and not the expression "owned by" had perhaps expected judicial statesmanship in the interpretation of this expression as leading to an interpretation that in a situation like this, it should not be treated as belonging to the assessee but, as said before, times are not yet ripe and in spite of some hesitation, I have persuaded myself to come to the conclusion that for all legal purposes, the property must be treated as belonging to the assessee and perhaps the legislature would remedy the hardship of the assessee in such cases if it wants. Even though the assessee had a mere husk of title and as against the vendee no reality of title, as against the world he was still the legal owner and the real owner." "Under s. 53A of the Transfer of Property Act, 1882, where possession has been handed over to the purchasers and the purchasers are in rightful possession of the same as against the assessee and in occupation of the property in question and, secondly, the entire consideration has been paid and, thirdly, the purchasers were entitled to resist eviction from the property by the assessee in whose favour the legal title vested because conveyance has not yet been executed by him and when the purchasers in possession had a right to call upon the assessee to execute the conveyance, it cannot (sic) be said that the property legally belonged to the assessee in terms of s. 2(m) of the Act on the facts and circumstances of the case, even though the statute must be read justly and equitably and with the object of the section in view. We are conscious that if a person has the user and is in the enjoyment of the property, it is he who should be made liable for the property in question under the Act; yet the legal title is important and the legislature might consider the suitability of an amendment if it is so inclined.
This question, therefore, must be answered in favour of the Revenue and in the affirmative. The appeal on this aspect, must, therefore, fail." 6.10. The Hon'ble Supreme Court in the case of CIT vs. Podar Cement (P) Ltd., (supra) while referring the aforesaid judgment in the case of Nawab Sir Mir Osman Ali Khan vs. CWT (supra) at p. 646 has observed as under : "...So far as the view taken by the apex Court in the case of Nawab Sir Mir Osman Ali Khan vs. CWT (1987) 162 ITR 888 (SC) is concerned that was in the context of the WT Act where the language of the section was different. Sec. 53A debars a transferor from exercising the rights of an owner after he has received full consideration and handed over possession under the contract. The transferor in a case where he has executed the document and received consideration and even handed over possession of the property, cannot exercise any right of an owner. This Court in the case of Rajputana Hotels (P) Ltd. vs. State of Rajasthan (DB Civil Writ Petition No. 511 of 1989-decided on 27th May, 1992), while interpreting the provisions of Rajasthan Land and Building Tax Act, 1964, has held that the person who is entitled to receive the rent is assessable in respect of a property even if it is not registered in his name." "Thus the juristic principle from the viewpoint of each one is to determine the true connotation of the term 'owner' within the meaning of s. 22 of the Act in its practical sense, leaving the husk of the legal title beyond the domain of ownership for the purpose of this statutory provision. The reason is obvious. After all, who is to be taxed or assessed to be taxed more accurately-a person in receipt of money having actual control over the property with no person having better right to defeat his claim of possession or a person in legal parlance who may remain a remainder man, say, at the end or extinction of the period of occupation after, again say, a thousand years The answer to this question in favour of the assessee would not merely be doing palpable injustice but would cause absurd inconvenience and would make the legislature to be dubbed as being a party to a nonsensical legislation. One cannot reasonably and logically visualise as to when a person in actual physical control of the property realising the entire income and usufructs of the property for his own use and not for the use of any other person, having the absolute power of disposal of the income so received, should be held not liable to tax merely because a vestige of legal ownership or a husk of title in the long run may yet clothe another person with the power of a residual ownership when such contingency arises which is not a case even here." 6.11. Thereafter the Hon'ble Supreme Court considered the amendment introduced to s. 27 of the IT Act, 1961, by the Finance Act, 1987, by substituting cls. (iii), (iiia) and (iiib) w.e.f. 1st April, 1988, and held as under : "From the circumstances narrated above and from the memorandum explaining the Finance Bill, 1987, it is crystal clear that the amendment was intended to supply an obvious omission or to clear up doubts as to the meaning of the word "owner" in s. 22 of the Act. We do not think that in the light of the clear exposition of the position of a declaratory/clarificatory Act, it is necessary to multiply the authorities on this point. We have, therefore, no hesitation to hold that the amendment introduced by the Finance Bill, 1987, was declaratory/clarificatory in nature so far as it relates to s. 27(iii), (iiia) and (iiib). Consequently, these provisions are retrospective in operation. If so, the view taken by the High Courts of Patna, Rajasthan and Calcutta as noticed above, gets added support and consequently the contrary view taken by the Delhi, Bombay and Andhra Pradesh High Courts is not good law.
We are conscious of the settled position that under the common law, 'owner' means a person who has got valid title legally conveyed to him after complying with the requirements of law such as the Transfer of Property Act, Registration Act, etc. But, in the context of s. 22 of the IT Act, having regard to the ground realities and further having regard to the object of the IT Act, namely, to tax the income", we are of the view, 'owner' is a person who is entitled to receive income from the property in his own right." 6.12. It may also be relevant here to mention that s. 4(8) was introduced in WT Act by the Finance (No. 2) Act, 1996, which reads as under : (a) who is allowed to take or retain possession of any building or part thereof in part-performance of a contract of the nature referred to in s. 53A of the Transfer of Property Act, 1882 (4 of 1882); (b) who acquires any rights (excluding any rights by way of a lease from month to month or for a period not exceeding one year) in or with respect to any building or part thereof by virtue of any such transaction as is referred to in cl. (f) of s. 269UA of the IT Act, 1961 (43 of 1961), shall be deemed to be the owner of that building or part thereof and the value of such building or part shall be included in computing the net wealth of such persons." 6.13. The memorandum explaining the aforesaid provision introduced by the said Finance Bill (No. 2) explained its scope vide cl. 55 of the said memorandum, as published in (1996) 220 ITR 283 (St) which is reproduced hereunder : "Under the WT Act, specified assets are includible in the wealth of a legal owner. An exception to this general rule is in cases where a building or a part thereof is allotted or leased to a member of a co-operative housing society under a house building scheme of the society. The member is deemed to be the owner of such building or part thereof. The corresponding provisions, dealing with similar situations, in the IT Act, are found in cl. (iii), cl. (iiia) and cl. (iiib) of s. 27 of that Act. These clauses deem the beneficial owner to be the owner for the purpose of taxation in the following situations : (i) a member of co-operative society or a company or any AOPs to whom a building or part-thereof is allotted or leased under a house building scheme of the society or the company or the association, as the case may be.
(ii) a person who is allowed to take or retain possession of any building or part thereof in part-performance of a contract of the nature referred to in s. 53A of the Transfer of Property Act, 1882.
(iii) a person who acquires any rights, excluding any rights by way of a lease from month to month or for a period not exceeding one year, in or with respect to any building or part thereof, by virtue of any such transaction as is referred to in cl. (f) of s. 269UA of the IT Act.
In order to bring harmony in the provisions under the IT Act and WT Act, any building or part thereof should be taxed in the hands of the beneficial owner of such building, as understood under cl. (iii) or cl. (iiia) or cl. (iiib) of s. 27 of the IT Act. This amendment, therefore, seeks to amend s. 4 so as to tax the aforesaid assets in the hands of beneficial owners, in the same manner in which they are taxed under the IT Act. The amount payable to the co-operative society or company by the assessee in relation to such property shall be allowed as a debt.
This provision shall come into force w.e.f. 1st April, 1997, and will, accordingly, apply in relation to asst. yr. 1997-98 an subsequent years." 6.14. It would be imperative to repeat here that the Hon'ble Supreme Court in the case of Nawab Sir Mir Osman Ali Khan vs. CWT (supra) had pointed out that the legislature would remedy the hardship of the assessee in such cases if it wants to obviate the taxability of such assets in the hands of the assessee who had a mere husk of title and as against the vendee had no reality of title. The legislature has now remedied such a situation. The Hon'ble Supreme Court in the case of Podar Cement (supra) has clearly held that similar and corresponding provisions made in s. 27 of IT Act, 1961, were declaratory and clarificatory in nature. Consequently these provisions were held to be retrospective in operation. The purpose and nature of amendment and also the language of the amended provision of s. 4(8) of WT Act are similar to the corresponding amendments made in s. 27 of IT Act. We, therefore, respectfully following the judgments of the Hon'ble Supreme Court in the case of Podar Cement (P) Ltd. (supra) held that the aforesaid provision introduced in the WT Act should be treated as declaratory and clarificatory in nature so far as it relates to the point in issue and, therefore, the amended provision will have retrospective operation.
6.15. It may also be worthwhile to make a useful reference to a decision of Tribunal, Mumbai 'A' Bench in the case of Tulsidas V. Patel (P) Ltd. vs. WTO, WTA No. 1063/Bom/94 dt. 17th June, 1997. The Tribunal in the said decision has observed as under : "Under sub-s. (2) of s. 40 of the Finance Act, 1983, the crucial words which require interpretation are 'belonging to the company'.
The legislative mandate is that all the assets enumerated in sub-s.
(3) of s. 40 belonging to the assessee-company should be considered to be assets of that company for the purpose of levy of wealth-tax.
The Calcutta Tribunal unfortunately did not bestow its pointed attention on the crucial words "belonging to the company" and also did not interpret the correct meaning of those words before deciding that leasehold interest of the assessee-company for more than six years is not covered under s. 40 and simply it is covered by s. 2(e) of the WT Act. It would appear that these words 'belonging to the company' are not synonymous to 'to be the owner of the asset'. It is enough in order to bring the asset under Finance Act, 1983, that the asset should be belonging to the company and not necessarily the company should be the owner of it. These crucial words 'belonging to the company' bear specific legal connotation." 6.16. The Tribunal in the aforesaid decision also relied upon the judgment of Hon'ble Supreme Court in the case of Raja Mohammad Amir Ahmad Khan vs. Municipal Board of Sitapur & Anr. AIR 1965 (SC) 1923. In the said judgment, the Hon'ble Supreme Court has held that even possession of an interest less than that of full ownership should be signified by the words "belonging to". After quoting the extracts from the said judgment of the Hon'ble Supreme Court, the Tribunal observed as under : "Therefore, it is clear from the above decision of the Hon'ble Supreme Court that "belonging to" does not denote absolute title.
Even possession of an interest less than that of full ownership could be signified by those words. Therefore, from the above, it is clear that for an asset belonging to the company need not necessarily mean that the assessee should be full owner of that asset. It also includes the possession of an interest less than that of full ownership." 6.17. In view of the aforesaid facts and decisions, we are of the opinion that the value of the factory building which had already been transferred by the appellant company in favour of R. Narayan Co. (P) Ltd. cannot be assessed in the hands of the appellant company. The appellant company had received the full consideration for transfer of the said factory building. It has also handed over the physical possession of the property to the vendee. The vendee is using and enjoying the said property without any hindrance or obstruction on the part of anyone including the vendor, which the vendor could not do in view of s. 53A of the Transfer of Property Act. The asset in question cannot, therefore, be treated as belonging to the appellant company. On the facts and circumstances of the present case, the vendee will be regarded as owner of the said factory building in conformity with the principles of law laid down by the Hon'ble Supreme Court in the case of Podar Cement (P) Ltd. (supra) and in the light of discussion made in the earlier part of this order. The vendee has been accepted as owner of the factory building for purposes of income-tax assessment and depreciation on the cost of factory building has been granted to them.
6.18. In view of the aforesaid facts and discussion, it cannot be said that the factory building belongs to the appellant company as on the relevant valuation date. We, therefore, direct the AO to delete the said addition of Rs. 3,50,000 in the hands of the assessee-company.
7. We will now deal with the ground relating to valuation of land. The Revenue is aggrieved by the order of the CWT(A) of reducing the fair market value of the land at Rs. 9 lakhs as against the value of Rs. 27 lakhs determined by the AO. The assessee is aggrieved with the sustaining of the value at Rs. 9 lakhs and has urged that the multiplier of 12.5 times adopted by the CIT(A) for determining the value of land according to the rent capitalisation method is excessive.
The book value of the land ought to have been accepted by the CWT(A).
7.1. The learned senior Departmental Representative submitted that the AO has determined the value @ Rs. 200 per sq. yd. for the land covering Rs. 13,500 sq. yd. The AO had referred the matter relating to its valuation to the Valuation Officer under s. 16A. Since the report from the Valuation Officer was not received, the AO determined the value at Rs. 27 lakhs subject to rectification on receiving the report from the Valuation Officer. The CIT(A) ought to have confirmed the said valuation.
7.2. The learned counsel for the assessee contended that the land has been given on lease @ Rs. 6,000 per month. Therefore, the valuation has rightly been made by the CWT(A) according to rental method. However, the multiplier of 12.5 times adopted by the CWT(A) is excessive. He invited our attention towards the judgment of Hon'ble Gujarat High Court in CIT vs. (Smt.) Vimlaben Bhagwan Dass Patel & Ors. (1979) 118 ITR 134 (Guj), where multiplier of 8.33 times was applied. He also relied upon the judgment of Hon'ble Supreme Court in the case of Oriental Gas Co. Ltd. vs. State of Bengal AIR 1979 (SC) 243 and judgment in the case of Union of India vs. Smt. Shanti Devi (1984) 1 SCR 217. These judgments were relied upon to show that the number of years purchase has gradually reduced as the prevailing rate of interest realisable from investments has gradually increased. The higher rate of interest, the lower would be the number of years purchase to be applied for determining the fair market value according to rental method. He strongly urged that multiplier of 8.33 times should be applied. The learned counsel also invited our attention towards the report given by the registered valuer who has recommended the value of the said land as on the relevant valuation date at Rs. 8,10,000.
7.3. We have carefully considered the submissions made by the learned representatives of the parties and have gone through all the judgments cited by the learned representatives.
7.4. In our view, the order passed by the CWT(A) directing the AO to adopt the value of land at Rs. 9 lakhs as on 31st March, 1987, appears to be most reasonable and justified. The CWT(A) while determining the fair market value of the land has adopted multiplier of 12.5 times for capitalisation of the value on the basis of annual rent of Rs. 72,000 per annum. Different Courts had been adopting different multipliers for arriving at the fair market value of land or buildings for the purposes of either determining the compensation payable for acquisition of such property or for the purposes of chapters relating to acquisition or purchase of immovable property by the Central Government under the provisions of IT Act. Schedule III introduced w.e.f. 1st April, 1989, in the WT Act, inter alia, provides that value of any immovable property, being a building or land appurtenant thereto shall be the amount arrived at by multiplying the net maintainable rent by the figure 12.5. Strictly speaking Sch. III may not be applicable for valuation of land and that too for asst. yr. 1987-88. However, the legislature in its wisdom has considered the multiplier of 12.5 times to be the reasonable and fair rate of multiplier. The value of open land have increased substantially in the past 15-20 years. The real fair market value of the land will be substantially more than the fair market value of land as may be determined by such rental method of valuation. The registered valuer whose report was submitted by the assessee also shows the value of the said land at Rs. 8,10,000 as on 31st March, 1987. The value determined by the CWT(A) at Rs. 9 lakhs is almost matching with the value determined by the registered valuer. The registered valuer has adopted the rate of Rs. 60 per sq. yd. The AO had adopted the rate of Rs. 200 per sq. yds. Both of them have not given any basis for adopting such rate per sq. yd. The land has been given on rent. The various Courts have held that where a building or land has been given on rent, the value should be determined by the rental method.
7.5. On a careful consideration of the entire relevant facts, we are of the considered opinion that the view taken by the CWT(A) directing the AO to determine the value of the land at Rs. 9 lakhs was reasonable and justified. We do not find any justification to interfere with the view taken by the CWT(A) in relation to this ground.
8. Ground No. 1 raised by the assessee in its appeal was not pressed by the learned counsel. Hence, ground No. 1 is rejected as not pressed.
9. In the result, the Revenue's appeal is dismissed and the assessee's appeal is partly allowed.