The rate of capitalisation should be the rate at which scheduled banks or public or private industries allow interest. No addition can be made to the value of such property in any such assumed value of hypothetical reversionary interest. The value of such a right cannot, by any stretch of imagination, be included in the valuation.

AJIT K. SENGUPTA, J.

( 1 ) IN this application under Article 226 of the Constitution, the petitioners have challenged the valuation of the Valuation Officer, Unit III, made under Section 16a (5) of the Wealth-tax Act, 1957, in respect of the immovable property being premises No. 129, Park Street, Calcutta, for the assessment years 1977-78 to 1984-85.

( 2 ) SHORTLY stated, the facts are that, in the year 1955, the premises at No. 129, Park Street, Calcutta (hereinafter referred to as the "said premises"), was let out on lease for a period of 25 years to one Mr. P. A. Basil, since deceased, at a rent of Rs. 100 per month. The said Mr. Basil, since deceased, and/or his legal heirs did not vacate the said premises on the expiry of the lease. The petitioners filed a suit in the year 1980 in the City Civil Court at Calcutta for recovery of possession of the said premises. During the pendency of the said suit, Messrs. Susam Properties Pvt. Ltd. agreed to take the said premises on lease for a period of 75 years. By a deed of lease dated August 31, 1981, the petitioners granted lease of the said premises to Messrs. Susam Properties Pvt. Ltd. for a period of 75 years with an option for the lessee to renew the said lease for a period of another 20 years. The said deed of lease provides for rent of Rs. 2,000 per month during the period from May 1, 1981, to April 30, 1984, and Rs. 6,000 per month from May 1, 1984, to April 30, 2056. The said lease deed further provides that the lessee shall construct a building on the premises and thereafter allot vacant possession of a flat to the petitioners on the first floor of the said premises proposed to be constructed covering an area of 2,000 square feet.

( 3 ) IN accordance with the terms and conditions of the said deed of lease, the said Susam Properties Pvt. Ltd. demolished the existing structure and has started construction of a new building thereat. According to the petitioner, superstructure of the said building has not been completed even in 1987 when the application was made or thereafter.

( 4 ) THE petitioners disclosed the value of the said premises in its return of wealth. The Wealth-tax Officer made the assessment of the said premises up to the assessment year 1984-85. The Commissioner of Wealth-tax issued a notice under Section 25 (2) of the Wealth-tax Act, 1957, directing the petitioners to show cause as to why the assessment made by the Wealth-tax Officer for the assessment year 1984-85 should not be set aside. The petitioners duly filed their reply to the said purported notice. By an order dated February 17, 1989, the Commissioner set aside the said assessment made by the Wealth-tax Officer for the assessment year 1984-85 and directed him to make a fresh assessment in accordance with law. The Wealth-tax Officer referred the matter to the Valuation Officer for determining the fair market value of the said premises. By an order dated September 3, 1987, the Valuation Officer determined the market value of the said premises as on March 31, 1977, to March 31, 1984. The Valuation of the said premises was determined by the Valuation Officer at Rs. 17,81,700 as on March 31, 1984.

( 5 ) IN this application, the petitioner has challenged the method of valuation adopted by the Valuation Officer in determining the fair market value of the said premises for the assessment years 1977-78 to 1984-85.

( 6 ) BEFORE dealing with the contentions of learned counsel, it is necessary to set out the valuation made, the details of the method of valuation adopted and the reasoning of the Valuation Officer in respect of the estimate of the fair market value of the said premises. The final valuation made by the Valuation Officer from March 31, 1977, to March 31, 1984, is set out herein below : Final value in Rs. Valuation date

31-3-1977 9,46,400

31-3-1978 11,33,500

31-3-1979 14,87,500

31-3-1980 18,71,500

31-3-1981 19,35,900

31-3-1982 14,20,100

31-3-1983 15,58,000

31-3-1984 17,04,400

 

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