GOVINDA BHAT, CJ. ( 1 ) THE appeal is by the Special Land Acquisition Officer, Port, Mamgalore, against the award and decree dl. 30-1-1969 in O. P. 525 of 1965 on the file of the Court of the Civil Judge, Mangajore. ( 2 ) PURSUANT to the notification under S. 4 (1) of the Land Acquisition Act published in the Gazette on 27-7-1963, lands situate in Mudushedde village of Mangalore Taluk were acquired. The lands acquired were: 2 acres 72 cents of wet-I land in S. No. 25|4a; 1 acre 70 cents of wet-I land in S. No. 25|5a; 36 cents of wet-III land in S. No. 25'3a and 7 acres 19 cents of dry land in S. No. 30|1a. It may be mentioned here that out of 7 acres and 19 cents of dry land, there is a quarry over an exent ot 4 acres and 29 cents, and the remaining extent of 2 acres and 90 cents is only a dry land. ( 3 ) THE claimants claimed compensation at Rs. 10,000 an acre for wet-I land, at Rs. 4,000 an acre for wet-III land and at Rs. 10,000 an acre for dry land in addition to the value of granite rock at Rs. 1-50 P. per lorry load. The LAO determined the market value of wet-I land at Rs. 5,000 an acre, that of wet-III land at Rs. 2,000 and that of dry land at Rs. 2,000 an acre. He did not award any compensation in respect of the granite rock as such. Feeling aggrieved by the award made by the LAO, the claimants sought reference to the Court. ( 4 ) THE learned Civil Judge determined the market value of wet-I land at Rs. 7,500 an acre and that of the wet-III land at Rs. 3,000 an acre. So far as the dry land was concerned, he determined the market value of the entire extent of 7 acres and 19 cents at Rs. 8,000 an acre. In addition, he made an award of Rs. 94,000 in respect oi the granite rock comprised in the land. The enhancement made by the learned Civil Judge is challenged in this appeal. So far as the dry land was concerned, he determined the market value of the entire extent of 7 acres and 19 cents at Rs. 8,000 an acre. In addition, he made an award of Rs. 94,000 in respect oi the granite rock comprised in the land. The enhancement made by the learned Civil Judge is challenged in this appeal. ( 5 ) SO far as the determination of the market value of wet-1 and wet-III lands is concerned, the learned Civil Judge has adopted the rental yield from these twc categories of lands as had been found by the LAO. Fifteen muras of rice and six muras of rice were the annual rental from these lands according to the LAO. The learned Civil Judge took the market value of rice at Rs. 25 per mura, in accordance with the rates published in the Govt notifications, and adopted the multiple of 20 to arrive at the market value. We do not see anything wrong in the basis adopted by the learned Civil judge in determining the market value of these two categories of lands, the LAO, though he found the rental values at 15 muras and 6 muras of rice, proceeded to determine the market value of the land on the basis that the market value of one acre of land whose rental value was 3 muras per annum, would be Rs. 1,000. As the learned Civil Judge has observed, there is no basis or evidence in support of such proposition. Therefore, the determination of the market value of wet-I and wet-III lands as made by the learned Civil Judge, does not call for interference in appeal and the award made, in this behalf, is confirmed. ( 6 ) THE learned Civil Judge fixed the market value of the dry land at rs. 3,000 an acre on the basis of two awards, certified copies of which had been produced before him and marked as Exts. C4 and C5. We have gone through those awards. No witness has spoken in regard to those awards or about the location of the lands concerned therein and their relative position in regard to the land acquired. The awards, Exts. C4 and C5, show that the lands dealt with therein were in a residential area and surrounded by factories and had a potentiality for building purposes and therefore they had been valued as such. The awards, Exts. C4 and C5, show that the lands dealt with therein were in a residential area and surrounded by factories and had a potentiality for building purposes and therefore they had been valued as such. There is absolutely no evidence in the instant case that the dry land acquired was similar to the lands concerned in exts. C4 and C5. Therefore, the basis adopted by the learned Civil Judge for determining the market value of the dry land, is not correct and cannot be supported. ( 7 ) THE learned Civil Judge has made an award in respect of the entire area of 7 acres and 19 cents of dry land, although 4 acres and 29 cents were covered by granite rock and the claimants were claiming compensation in respect of the granite content of that area. The area covered by granite lock has to be valued as one unit and not separately as land and granite rock. This was the view that this Court held in A. K, Ahnmd v. Special land Acquisition Officer, CITB, 1974. (2 ). Karlj. 1. . The learned Civil Judge was in error in valuing the land and the granite quarry separately. ( 8 ) THE land in Sy. 30|1a was acquired for the purpose of quarrying granite. for the construction of the Mangalore Port. This is clear from the notification issued under S. 4 (1), as also the award made by the LAO under S. 11 of the Land Acquisition Act. It is clear that beiore the land was decided to be acquired, the authority for whom the acquisition was being made, had inspected the place and satisfied himself that granite was available it abundant quantities so as to be made use of for the construction of the mangalqre Port. It is not as if the land acquired was containing some small stones and a claim was being made in respect of such stones. As a unit it was fit for quarrying and therefore the property had this potentiality, and its value has to be determined having regard to this potentiality. ( 9 ) BEFORE the Court below a Commissioner was appointed to hold a local inspection and make a report in regard to the value of the granite rock. He estimated the cubical content of the granite rock at 93,51,300 cublic feet. ( 9 ) BEFORE the Court below a Commissioner was appointed to hold a local inspection and make a report in regard to the value of the granite rock. He estimated the cubical content of the granite rock at 93,51,300 cublic feet. He took into consideration that the price at which the stones quarried would be delivered at Mangalore from the quarry site. He also made allowance for the expenditure for conveyance, breaking charges of the stones, loading and unloading charges, contractors' profits, seignorage and other charges. Making allowance for wastage, breakages etc. , he reported that the total quantity of stones that could be quarried from the land would be 118, 67, 813. On the basis that the owner's income would be one rupee per 100 stones the profit of income of the owner was computed at Rs. 1,18,678. The commissioner observed tha,t this should be the value that the owner would get if the entire quarry was sold and disposed of immediately. Having regard to the time that would be taken for exploiting this quarry and on the basis that the amount would be distributed over a period of 20 years, the Commissioner stated that the annual income would be about Rs. 5,934. Capitalising this by adopting the multiple of 16, the Commissioner fixed the total value of the granite hillock at Rs. 94,944. Some of the claimants filed objections to this report of the Commissoiner contending that the valuation made by him was low and inadequate. The LAO, however, did not file any objection statement in this behalf. He was examined as a witness; but even during his evidence, he did not contend that the report was unacceptable or should be rejected. He admitted in his evidence that he had ignored the granite content hi the property altogether. It is, clear that the award made by the LAO, in this behalf, was wholly arbitrary. Therefore, the burden was on the Land Acquisition Officer to support his award. He has not placed any material in that behalf. The only material available before the Court below was the report of the Commissioner. ( 10 ) THE learned Govt Advocate contended before us that a granite quarry is a wasting asset, and in the matter of valuation of such a wasting asset, different principles are applicable. He cited a number of authorities on valuation. The only material available before the Court below was the report of the Commissioner. ( 10 ) THE learned Govt Advocate contended before us that a granite quarry is a wasting asset, and in the matter of valuation of such a wasting asset, different principles are applicable. He cited a number of authorities on valuation. It is sufficient if we refer to C. A. Gulanikar's book, 'two Acts gift and Wealth Tax'. At page 584 (Part II) the learned author has summarised the principles governing the valuation of wasting assets. This is what he has stated : " The problem of valuation of wasting assets is studded with hazardous estimates. Much would, therefore, depend on the estimates of reserve, its qualities depth, operating conditions etc " generally speaking, the valuation proceeds on the following lines by estimating : (a) Number of saleable or recoverable units; (b) Unit price to be received over life of property; (c) Cost of production over life of property; (d) Rate of production; (e) Rate of interest for return on capital and investment thes setimates have to be framedon the basis of the availablea data. ( 11 ) A short out method would be to take into consideration the following essential factors: (a) Total operating profits: (b) The rate at which this profit would be obtained; (c) The rate of interest commensurate with the risk of the particular deposits"the poerating profits would be balance of revenue after deducting all coste of production other than depletion The period of extraction would depend on the apnual avverage production and the estimated quantitv of reserves. The rate of return would first depend on the rate of interest on investment plus rate for risk of business and trade such rate of return would vary between 8 percent to 15 per cent the essence of this method lies in discounting income expectancies hased on operating profits which are Durchased at the rate of interest for the period for which reserves would last. " ( 12 ) THE above, in our oninion, renresents the correct principle to be followed in valuing wasting assets. such as granite quarries . For the claimants reliance has been placed on an unreoorted judgment of this Court in MFA 320 of 1973 wherein the valuation of a similar auarrr in a land acquired for the same purpose. " ( 12 ) THE above, in our oninion, renresents the correct principle to be followed in valuing wasting assets. such as granite quarries . For the claimants reliance has been placed on an unreoorted judgment of this Court in MFA 320 of 1973 wherein the valuation of a similar auarrr in a land acquired for the same purpose. was considered The land concerned in the said case was Sy NO 73/7a of Kuduou village which is a neighbouring village to the village in the instant case In the said case, there was evidence that the granite quarrv which existed in the acquired land had been leased nut for a sum of Rs 100 per month Thprefore, the annual rental from that ouarry was Rs. 1,200 The land in the said case, with the ouarry. was valued at B- 24 000 We placed reliance upon the decision of the Privy Council in Sceretary of State v Shanmugaraya, ILR. 16 Mad. 369. and confirmed the award made by the learned Civil Judge. In that case also, the LAO hod ignored the existence of pranite rock in the land acquired and had valued the land merely as a dry land as in the instant case The notification undpr S 4 (1) of the Land Acquisition Act in the said case had been published on 27-7-1963 and the notification in the instant case has also been published or the seme date It is contended that the market value as determined in that case affords a valuable basis for detremining the market value of the quarry in the instant case and that the same valuation should be adopted. ( 13 ) THE judgment of this Court in MFA. 320|73 has become final and th state has not filed any further appeal against that decision. The market value of dry land containing granite, on the basis of that judgment, works out to R9. 21,200 an acre. Adopting the same basis, the market value of 4 acres and 29 cents of dry land containing granite works out to about Rs. 90,000. The Commissioner estimated the market value at Rs. 94,000. The determination of the market value in MFA. 320|73 was based on definite evidence about the actual lease of the quarry, which affords a better basis to fix the market value of similar lands and can be adopted in the instant case. 90,000. The Commissioner estimated the market value at Rs. 94,000. The determination of the market value in MFA. 320|73 was based on definite evidence about the actual lease of the quarry, which affords a better basis to fix the market value of similar lands and can be adopted in the instant case. Accordingly, we fix the market value of 4 acres and 29 cents of land in S. No. 30|la containing granite rock at Rs. 90,000. As we stated earlier, the determination of the market value of the rest of the land, viz. , 2 acres and 90 cents out of S. No. 30|la, by the learned Civil Judge on the basis of exts. C4 and C5, cannot be supported. In MFA. 320 of 1973 above referred to, this Court determined the market value of a similar dry land at Rs. 4,000 an acre. The learned Counsel on both sides submitted that the said market value may be adopted in fixing the market value of 2 acres and 90 cents out of Survey No. 30|la. ( 14 ) IN the result, the award and decree of the Co,urt below are modified as follows : the market value of 4 acres and 29 cents out of S. No. 30/1a is fixed at rs. 90,000. This includes the value of the land and the granite rock. For the remaining 2 acres and 90 cents in S. No. 30|la, the market value is fixed at Rs. 4,000 an acre. The market value as determined by the Court below in regard to wet-I and wet-Ill lands is confirmed. The parties shall bear their own costs in this appeel. --- *** ---