The market value of assets should be estimated based on a judicial manner, and the method adopted by the Tribunal in valuing the properties was justified.

Hegde, J.

1. This is a reference under section 27(3) of the Wealth-tax Act, 1957, to be hereinafter referred to as the "Act". Two questions referred to this court for its opinion are : (1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in ignoring the value of the land surrounding the buildings in valuing the properties Nos. 1 and 2 ?; l and (2) Whether an asset such as land acquires value only when there is an intention to sell ? The facts of the case are fully set out in the statement of the case submitted. Hence, we shall quote the same.

[The learned judge set out the statement of case which ran as follows :

The High Court of Mysore at Bangalore by their order dated 1st October, 1963, in Civil Petition No. 87 of 1963 have directed the Tribunal to submit the following two questions of law along with a statement of the case to the High Court. In compliance with the said order of the High Court, we submit the following two questions of law under section 27(3) of the Wealth-tax Act along with the agreed statement of the case :

"(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in ignoring the value of the land surrounding the buildings in valuing the properties Nos. 1 and 2 ?; and

(ii) Whether an asset such as land acquires value only when there is an intention to sell ?"

2. For the assessment year 1959-60, the assessee, V. C. Ramachandran, sent his wealth-tax return on March 31, 1959, showing a total wealth of Rs. 3,41,106 comprised of immovable property of the value of Rs. 2,57,777 and movable property worth Rs. 83,329. The immovable properties consisted of four items, viz., :

(i) the house bearing door No. 6, Richmond Road, Bangalore;

(ii) house bearing door No. 3, Cunningham Road, Bangalore;

(iii) house bearing door No. 31, Chinnaswamy Mudaliar Road, Bangalore; and

(iv) house bearing door No. 33, Chinnaswamy Mudaliar Road, Bangalore.

The annual letting value of the first item was shown as Rs. 3,840, of the second item as Rs. 6,900, of the third item, as Rs. 1,080 and of the fourth item as Rs. 960. FOR the preceding year, i.e., 1958-59, item No. (i) had been valued at Rs. 1,50,000 and the other three properties had been valued at twenty times their annual letting value. FOR the year in question, the Wealth-tax Officer obtained details regarding the site area, the plinth area, etc., in respect of the properties and from an examination of these particulars, the walth-tax Officer was of the opinion that items Nos. (i) and (ii) had not been properly valued and that their value had to be considerably enhanced. With regard to item No. (i), viz., house bearing door No. 6, Richmond Road, the Wealth-tax Officer found that the area of the existing site was 65,615 sq. ft. and calculating the value of this site at Rs. 2.25 nP. Per sq. ft., he valued the site at Rs. 1,48,500. He valued the building at Rs. 50,000 and valued the total property at Rs. 1,98,000. With regard to item No. (ii), house bearing door No. 3, Cunningham Road, he found that the area of the site was 1,56,565 sq. ft., and that this property consisted of a large number of stables and other buildings apart from the main building. In the circumstances, he adopted a reduced rate of Rs. 1.50 per sq. ft. and valued the site of Rs. 2,34,500. He put the value of the building at Rs. 65,000. He, therefore, valued the entire property comprising this item at Rs. 3,00,000. With regard to items Nos. (iii) and (iv), he valued them together at Rs. 38,350. The value of the total immovable properties of the assessee was thus fixed at Rs. 5,36,850, and tax was levied on that basis. Copy of the Wealth-tax Officer's order is annexure "A" and forms part of the case.

The assessee went up on appeal before the Appellate Assistant Commissioner of Wealth-tax, B-Range, Bangalore. The following contentions on behalf of the assessee were urged before the Appellate Assistant Commissioner; viz. :

(i) there were no justifica