The valuation of a property for wealth-tax assessment should consider the price it would fetch if sold in the open market on the valuation date, and different methods, including capitalizing rent and expert estimation, can be used to determine market value.

Srinivasa Iyengar, J.—Pursuant to an order made by this court under s. 27(2) of the W. T. Act, the Income Tax Appellate Tribunal, Bangalore bench, has referred the following question for the decision of this court:

" (1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the valuation by the Wealth-tax Officer of the residential house at Rs. 1,70,000 and rejecting the valuation report by the approved valuer ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the rental method had no validity in determining the value of the residential house ?"

2. The question relates to the assessment to wealth-tax for the assessment year 1971-72, the relevant valuation date being March 31, 1971. The assessee, among other properties, owned a residential house situate at Annaswamy Mudaliar Road, near Ulsoor Tank. She also owned another house in Rathna Vilas Road near Basavanagudi. So far as the Rathna Vilas road property was concerned, the WTO initiated proceedings for reassessment. Such a proceedings was also taken in regard to another property situate at Madras. The assessee had furnished a valuer's report in regard to the Annaswamy Mudaliar Road house which was self-occupied and the Rathna Vilas Road property which was in the occupation of certain students on a charitable basis under her permission without payment of any rent. The valuer had furnished an estimated value of the property adopting the land and building method as well as the value computed by capitalisation of the probable rental. So far as the self-occupied property was concerned, the value according to the land and building method was given as Rs. 1,40,790 and on the basis of the rental it was worked out at Rs. 75,640. The valuer stated that the building was an old one which would come under the purview of the House Rent Control Act and the more reasonable and fair value to be adopted was on the rental method and the value could be fixed at Rs. 75,000. Similar valuation had been given for the Rathna Vilas road building which was at Rs. 1,35,000 on the land and building method and Rs. 47,000 on the rental method.

3. The WTO however, determined the value of the self-occupied property at Rs. 1,70,000 observing that the valuer had allowed larger depreciation than was permissible. He did not take into consideration the valuation arrived at on the rental basis. On an appeal to the AAC, he was of the opinion that the fair basis to fix the market value of both these properties was to take the average of the value as had been furnished by the valuer on the land and building method and on the rental basis. He, accordingly, reduced the valuation of both these properties. The department being aggrieved by this preferred an appeal to the Tribunal. The Tribunal accepted the conclusion reached by the AAC so far as the Rathna Vilas Road property was concerned but disagree with it in regard to the valuation of the other property and restored the value as had been determined by the WTO. It is in these circumstances that the question has arisen in regard to the valuation of the self-occupied property.

4. The second question has been formulated as the Appellate Tribunal in its order made a categorical observation that "we do not agree with the AAC that the rental method has any validity in this case, since the property is self-occupied and is not let out. The valuation has, therefore, to be made only on the land and building method". Section 7 of the W. T. Act specifies that subject to the rules made in that behalf, the value of any asset, other than cash, shall be estimated to be the price which in the opinion of the WTO would fetch if sold in the open market on the valuation date. So what is relevant is the price that a property would fetch if sold in the open market on the valuation date. This assumes a notional sale and a prospective willing buyer and a willing seller. There are