Rule 1bb of the Wealth-tax Rules, 1957, is mandatory and binding on the Valuation Officer, and the Valuation Officer cannot depart from the principle of yield method for valuation of tenanted properties.

AJIT K. SENGUPTA, J.

( 1 ) THIS consolidated reference under Section 27 (1) of the Wealth-tax Act, 1957, at the instance of the legal representative of the deceased assessee relates to four assessment years 1972-73 to 1975-76. The question concerns valuation of the house properties of the assessee, since deceased, owned on the respective valuation dates. The original assessment was completed on the value as returned for the respective assessment years. The properties and their values returned were as follows :

Name of the property Value returned for the assessment years (Rs.) 86/1, Suren Sarkar Road 56,400 4, Ram Mohan Roy Road 38,500 34 and 34a, Motilal Basak Lane 1,15,000

 

( 2 ) THE Wealth-tax Officer later noticed that the Valuation Officer had determined the value of those properties differently as mentioned below:

 

1975-76

(Rs.)

(i) 86/1, Suren Sarkar Road 1,16,500 1,16,500 1,16,500 1,16,500 (ii) 4, Ram Mohan Roy Road -- 53,500 60,500 58,000 (iii) 34 and 34a, Motilal Basak Lane -- 1,44,000 1,49,000 1,41,000

Name of the property Assessment years 1972-73

(Rs.)

1973-74

(Rs.)

1974-75

(Rs.)

 

( 3 ) OUT of the said properties, the property at 86/1, Suren Sarkar Road, was leased out for non residential purposes and the other two properties were leased out for residential purposes.

( 4 ) ACCORDING to the Wealth-tax Officer, there was a glaring mistake in the original assessments for those four years in accepting the value of those properties as shown by the assessee and not completing the assessments in conformity with the estimate of the Valuation Officer, He, therefore, rectified the mistake under Section 35 of the Act and modified the assessment orders by adopting the value of all the three properties for all the four assessment years as determined by the Valuation Officer as was required by Section 16a (6) of the Act.

( 5 ) THE legal representatives of the assessee went in appeal before the Commissioner of Wealth-tax (Appeals ). Their contention before the Commissioner of Wealth-tax (Appeals) was that the value of the said proper ties should have been determined in accordance with Rule 1bb of the Wealth-tax Rules, 1957, This was not accepted by the Commissioner of Wealth-tax (Appeals) and he dismissed the appeals for all the four years by a consolidated order dated October 25, 1984.

( 6 ) THEY came in appeal before the Tribunal with the same objection, namely, that all the properties should have been valued in accordance with Rule 1bb. According to them even in respect of the properties at Suren Sarkar Road, leased out for non-residential purposes, the rental method should have been adopted for the purposes of determining its value. The Tribunal construed Sub-Sections (1) and (3) of Section 7 placing reliance upon the judgment of the Delhi High Court in the case of Sharbati Devijhalani v. CWT[1986] 159 ITR 549 and reached the conclusion that Rule 1bb of the Wealth-tax Rules, though mandatory, is not binding upon the Valuation Officer and, therefore, there was no error in the valuation made by the Valuation Officer though not in accordance with Rule 1bb.

( 7 ) ON these facts, the Tribunal has referred the following question :" Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Valuation Officer was not bound by Rule 1bb of the Wealth-tax Rules, 1957, and thereby to follow the rental method of valuation of the tenanted properties?"at the hearing before us, the contentions raised before the Tribunal have been reiterated.

( 8 ) AT the very outset, we must point out that the reliance placed by the Tribunal on the decision in Sharbati Devi Jhalani v. CWT [1986] 159 ITR 549 (Delhi) is misconceived. The said decision of the Delhi High Court was in connection with Rule 1d. There, the Delhi High Court laid down that, where the valuation date of the company whose shares the assessee holds is the same as the valuation date of the assess

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