Judgment :- THANIKKACHALAM J. Pursuant to the direction given by this court in T. C. P. Nos. 314 to 321 of 1979, 322 to 324 of 1979, 409 to 411 of 1979, 412 to 415 of 1975, 388 to 391 of 1979, 45 to 48 of 1980, 163 to 165 of 1980 and 206 to 208 of 1980 dated July 7, 1980, the Tribunal referred the following question for the opinion of this court in the assessment years 1972-73 to 1975-76 in the case of five assessees "Whether, on the facts and in the circumstances of the case and having regard to the location and user of the properties the method adopted by the Appellate Tribunal is sustainable or is based on any correct principle of valuation ?" These references relate to wealth-tax assessments made in the assessment years 1972-73 to 1975-76. The relevant valuation dates are March 31, 1972, March 31, 1973, March 31, 1974, and March 31, 1975. The issue involved in these references is the valuation of the properties situated at No. 150-A and 123-A, Mount Road, Madras, in which the assessees had shares as under Property Name of the assessee Share/half 150-A Navratanmull Chordia 1/2 Prafulchand Chordia 1/4th Shrenikraj Chordia 1/4th 123-A Navratanmull Chordia 1/3rd Khivara Chordia 1/3rd Dhevaraj Chordia 1/3rd The assessees returned the value in respect of the property at 150 A. Mount Road, Madras ; the value adopted by the Wealth-tax Officer and the value taken by the Appellate Assistant Commissioner were as under Assessment Value returned Value adopted Value taken by year by the assessee by the Wealth- the Appellate tax Officer Assistant Commissioner Rs. Rs. Rs. Rs 1972-73 12, 04, 000 18, 53, 000 14, 60, 690 1973-74 12, 04, 000 19, 62, 850 14, 69, 660 1974-75 12, 04, 000 20, 72, 800 14, 78, 620 1975-76 12, 04, 000 20, 72, 800 14, 78, 620The value returned by the assessee, adopted by the Wealth-tax Officer, and taken by the Appellate Assistant Commissioner in respect of the property at 123A, Mount Road, Madras, were as under 1972-73 24, 01, 710 30, 07, 800 25, 87, 890 1973-74 24, 01, 710 32, 41, 500 21, 17, 520 1974-75 24, 01, 710 34, 21, 500 28, 47, 180 1975-76 24, 01, 710 34, 20, 900 28, 47, 180 Against the order passed by the Appellate Assistant Commissioner both the Department as well as the assessee filed appeals. The Department was aggrieved by the deduction granted by the Appellate Assistant Commissioner while the assessees were aggrieved since the value returned by them had not been accepted On hearing learned counsel for the assessee as well as the Department's representative, the Tribunal's conclusion as regards portion A of the property at 123, Mount Road, for the assessment year 1972-73 was as under 1. Percentage for capitalisation of rental to be adopted at ten per cent 2. Percentage of return for computing the deferred value to be taken at eight per cent 3. Land value adopted at Rs. 90, 000 per ground confirmed Regarding the other three assessment years, the Tribunal held that the aforesaid rates could be uniformly applied for all the assessment years The Tribunal's conclusion regarding portion B of the property, at 123, Mount Road, was as under (i) The land value taken at Rs. 60, 000 per ground for 1972-73 is confirmed and the same rate should be adopted for the other assessment years also (ii) Rate of capitalisation should be ten per cent. for all the assessment years (iii) Redemption of capital at six per cent. for 31 years as adopted by the Appellate Assistant Commissioner is confirmed (iv) Rate of return for purposes of deferred value should be set at eight per cent. for all the assessment yearsFor the portion C, the finding of the Tribunal is as under 1. The rate of capitalisation should be ten per cent. for all the assessment years ; 2. Rate of redemption of capital at six per cent. for all the assessment yearsFor the portion C, the finding of the Tribunal is as under 1. The rate of capitalisation should be ten per cent. for all the assessment years ; 2. Rate of redemption of capital at six per cent. adopted by the Appellate Assistant Commissioner is confirmed ; 3. Rate of return for purposes of deferred Value should be at eight per cent. for all the assessment years ; 4. Vacancy allowance at five per cent. is confirmed ; 5. Value of land at Rs. 60, 000 per ground is confirmed for 1972-73 but held that this rate should be taken for all the other assessment years also The Tribunal further agreed with the Departmental valuer that in computing the value of the land reduction of 3.61 grounds for common private roads given by him was sufficient as against the assessee's claim of seven grounds Regarding the property at 150-A, Mount Road, Madras, the Tribunal held as under (a) The rate of capitalisation should be ten per cent. for all the assessment years (the Appellate Assistant Commissioner has adopted this rate only for 1973-74) (b) Rate of redemption of capital at six per cent. as adopted by the Appellate Assistant Commissioner is correct (c) Rate of return for purposes of deferred value should be eight per cent. for all the assessment years (d) Vacancy allowance given at five per cent. by the Appellate Assistant Commissioner is quite reasonable and does not require any modification by us (e) Value of land at Rs. 1, 00, 000 per ground is confirmed for 1972 73, but held that this rate should be taken for all the other assessment years also (f) In view of the enhancement given by the Tribunal in the rate of return for capitalisation and deferred value the ad hoc deduction from the total value of ten per cent. as given by the Appellate Assistant Commissioner is not warrantedThe Tribunal directed the Income-tax Officer to recompute the value of these two properties on the basis of the above findings and reassess the share of each of the assessees. The Tribunal dismissed the Departmental appeals, while partly allowing the assessee's appeals The property situated at 150-A, Mount Road, and the property situated at 123, Mount Road, belonged to five sharers. The Tribunal dismissed the Departmental appeals, while partly allowing the assessee's appeals The property situated at 150-A, Mount Road, and the property situated at 123, Mount Road, belonged to five sharers. In the property situated at 150-A, Mount Road, Madras, Navratanmull Chordia had a half share, Prafulchand Chordia had a 1/4th share and Shrenikraj Chordia had a 1/4th share. In the property situated at 123, Mount Road, Madras, Navratanmull Chordia had a 1/3rd share, Khivraj Chordia had a 1/3rd share and Dhevaraj Chordia had a 1/3rd share. For the purpose of making assessment of the wealth-tax all the assessees filed their returns for the assessment years 1972-73 to 1975-76. The relevant valuation dates are March 31, 1972, March 31, 1973, March 31, 1974, and March 31, 1975, The values returned by the assessee, determined by the Wealth-tax Officer, the Appellate Assistant Commissioner and the Tribunal were already given in the foregoing paragraphs. Learned standing counsel for the Government submitted that even though the method of valuation adopted by the Tribunal was correct, the Tribunal was not correct in adopting the profit rates for valuing each item of the properties. Learned standing counsel for the Department further submitted that while valuing the land, proper weight was not given for future commercial exploitation of the lands in question. According to the learned standing counsel, while valuing the lands in question comparable sale instances were not taken into consideration. It was, therefore, submitted that, while the materials are available on record, the Tribunal was not reasonable in accepting the valuation determined by the Appellate Assistant Commissioner in respect of the properties in question. The Valuation Officer was not correct in adopting the average of the two methodsOn the other hand, learned counsel for the assessee, while supporting the order passed by the Tribunal, submitted that the method of valuation adopted by the Tribunal is in accordance with the nature of the property. In so far as the value of the land is concerned, the Tribunal took into account the lands useful for residential purpose and for commercial exploitation. The Tribunal also took into consideration the potentiality of the future value on the basis of deferred interest. Therefore, it was submitted that the valuation adopted by the Tribunal is on scientific basis which requires no interference. The Tribunal also took into consideration the potentiality of the future value on the basis of deferred interest. Therefore, it was submitted that the valuation adopted by the Tribunal is on scientific basis which requires no interference. We have heard learned counsel for the Department as well as for the assessees So far as the property at 123, Mount Road, is concerned, the valuation was done by an approved valuer. The valuation of this property had been done by him in three parts 1. Valuation of the land of the building known as "Khivraj Motors"; 2. Valuation of the land and building known as "Sire Mansion"; and 3. Valuation of land occupied by ESSO The valuations have been made as on March 31, 1968. According to the above valuations, the first part, i.e., Khivraj Motors has been valued at Rs. 7, 36, 000. The second part "Sire Mansion" has been valued at Rs. 11, 33, 000 and the third part land occupied by ESSO at Rs. 32, 50, 000 In regard to the first part, Khivraj Motors, the valuation has been done by the approved valuer in two parts (1) for the building consisting of workshops, stores, bedford section, reception clearing and servicing, scooter section, etc., the value adopted was Rs. 3, 35, 835 and for the second part, i.e., part (b) consisting of the land measuring 25 grounds the valuer adopted the value of Rs. 4, 00, 000 at Rs. 16, 000 per ground Regarding the second part, Sire Mansion, the building has been valued at Rs. 7, 50, 522 on replacement basis and the land measuring 15 grounds had been valued at Rs. 3, 45, 000 at Rs. 23, 000 per ground. On the basis of replacement method, the valuer valued this part of the property at 123, Mount Road, at Rs. 10, 95, 527. He adopted the rent capitalisation method. He took the monthly rent of Rs. 1, 46, 260 for eight months, i.e., Rs. 1, 16, 960 and capitalised it for ten years. Thus, he arrived at the figure at Rs. 11, 69, 000. Taking the average of these two methods, he arrived at the value of this part of property at Rs. 11, 33, 000With regard to the third part, viz., the land occupied by ESSO measuring six grounds and 1, 200 sq. ft. the valuer took Rs. Thus, he arrived at the figure at Rs. 11, 69, 000. Taking the average of these two methods, he arrived at the value of this part of property at Rs. 11, 33, 000With regard to the third part, viz., the land occupied by ESSO measuring six grounds and 1, 200 sq. ft. the valuer took Rs. 50, 000 per ground and fixed the value at Rs. 3, 25, 000. Thus, the total fixed by the approved valuer for the property at 123, Mount Road, was Rs. 21, 94, 000 as on March 31, 1968. So far as the property at 123, Mount Road, is concerned, the Departmental valuer in his valuation report divided this into three parts : (1) Vacant land leased out to ESSO ; (2) Office block known as Sire Mansion ; and (3) A. C. sheet roofed structures let out to various tenants for workshops and godown purposes. Page 19 of the Departmental valuer's report would go to show that he has taken the gross annual lease rent for portion No. 1 at Rs. 22, 071 after deducting corporation tax of Rs. 1, 929 and by capitalising the rent for seven years at six per cent. for the year's purchase of Rs. 5, 582 he arrived at the capitalised value of Rs. 1, 23, 200. Along with that he added the deferred value for seven years at five per cent. return on Rs. 5, 62, 500 being the present value of the land and computed the value of this portion of the property roundly at Rs. 5, 23, 000 as on March 31, 1972 Learned standing counsel for the Department justified the Depart mental valuer's valuation contending that regarding the third portion, viz., the land leased out to ESSO, since the unexpired period of lease was only seven years, the assessee would take back the land, the potential value of which then would be very high and, therefore, the deferred value became important. It is the case of the assessee that the only basis would be the value per ground as adopted by the assessee's valuer. We consider that the Departmental valuer's method of valuation was not a realistic one. It is the case of the assessee that the only basis would be the value per ground as adopted by the assessee's valuer. We consider that the Departmental valuer's method of valuation was not a realistic one. This method was on a two-tier basis, i.e., one on the existing rental basis and the other by forecasting the deferred value as vacant land, considering the life of tenancy in the case of leased lands and the estimated life of the structure in the case of buildings. We are also of the opinion that in respect of the properties situated in the commercial area where the properties were purchased only with a commercial motive, the yield percentage for capitalisation should be taken at ten per cent. as the assessee's valuer himself had adopted the value at ten years' purchase for portion B, viz., Sire Mansion. This is also the view taken by the Tribunal in its order on this aspectIn the matter of percentage of return for the purpose of deferred value the Departmental valuer had taken it at five per cent. The Appellate Assistant Commissioner modified it to six per cent. The Tribunal held that the return should be taken at eight per cent. as against the above rates. Considering the reasons offered by the Tribunal we hold that the Tribunal was correct in adopting eight per cent. for deferred value In the matter of valuation of the land, learned standing counsel contended that the adoption of Rs. 90, 000 per ground for the land by the Departmental valuer was not excessive in view of the high value prevailing for sites with frontage on Mount Road ; on the other hand, learned counsel for the assessee contended that the value of Rs. 50, 000 adopted by the assessee's valuer was not low. The Tribunal was of the view that the Departmental valuer's valuation which was based on comparable cases of vacant land purchased by India Cements, Imperial Tobacco Company Limited, etc., in 1966 at Rs. 69, 100, taking the appreciation thereafter at ten per cent. per year and allowing 20 per cent. rebate on the total value of the property the rate adopted by the Departmental valuer appears to be reasonable. Therefore, we hold that the Tribunal was correct in adopting ten per cent. for capitalisation of the rental value. So also the Tribunal was correct in adopting eight per cent. per year and allowing 20 per cent. rebate on the total value of the property the rate adopted by the Departmental valuer appears to be reasonable. Therefore, we hold that the Tribunal was correct in adopting ten per cent. for capitalisation of the rental value. So also the Tribunal was correct in adopting eight per cent. for computing the deferred value. Accordingly, we uphold the value fixed by the Tribunal for the land at Rs. 90, 000 per ground. The Tribunal also pointed out that the value fixed should b adopted in the three assessment years uniformly which is in accordance with the relevant provision of the Wealth-tax Act So far, as the portion of the property at 123, Mount Road, Madras, is concerned, the Department has followed the rent capitalisation method and the gross annual income was taken at Rs. 1, 97, 390, For the owners' occupied portion a sum of Rs. 15, 820 was added as rent. Thus, the gross annual value was taken at Rs. 21, 320. Deductions were given for corporation tax, urban land tax, probable vacancies at five per cent. and outgoings, 1/6th for repairs and six per cent. for collection charges, etc. Thereafter, the net income was thus computed at Rs. 1, 13, 796. This was capitalised at eight per cent. return and reduction of capital at 4 1/2 per cent. for 31 years. Thus, the capitalised value was computed at Rs. 60, 000 per ground. Thus, the total value of portion B was determined at Rs. 13, 90, 500 as on March 31, 1972The assessee's valuer, on the other hand, valued this portion (Sire Mansion) at Rs. 11, 33, 000 by taking the average of valuation on replacement basis and valuation on rental capitalisation method. On replacement basis, the value of the building was fixed at Rs. 7, 50, 527 and in doing so, the valuer has allowed depreciation at 1 1/2 per cent. of the value of the building at the commencement of the year, i.e., on March 31, 1975. At the commencement of the year, the value was taken at Rs. 10, 95, 660. The value was arrived at with regard to the building at Rs. 7, 50, 527. For the land, the valuer adopted the rate of Rs. 23, 000 per ground and deter mined the value at Rs. At the commencement of the year, the value was taken at Rs. 10, 95, 660. The value was arrived at with regard to the building at Rs. 7, 50, 527. For the land, the valuer adopted the rate of Rs. 23, 000 per ground and deter mined the value at Rs. 3, 45, 000 and the total value for the land and the building at Rs. 10, 95, 527. Thus, on the rent capitalisation method, the value of the portion of the property was fixed by the valuer at Rs. 11, 65, 000 by taking the net income per annum at Rs. 1, 15, 960 On appeal, the Appellate Assistant Commissioner adopted nine per cent. for capitalising the net income as on March 31, 1972, and ten per cent. as on March 31, 1973. With regard to the rate of reduction of capital, he adopted six per cent. per annum instead of 4 1/2 per cent. adopted by the Departmental valuer. Similarly, the Appellate Assistant Commissioner adopted the deferred value at six per cent. instead of three per cent. adopted by the Departmental valuer, Thus, the Appellate Assistant Commissioner fixed the value for this portion of property at Rs. 12, 65, 747 The Departmental valuer has taken the net income from the property at Rs. 1, 13, 796 as against Rs. 1, 16, 960 taken by the assessee's valuer. Since the net income taken by the former was less than that fixed by the assessee's valuer and considering the location of the property, the Tribunal found no reason to interfere with the fixation of the net income. The Tribunal took the view that for the portion marked A the rate of rental for capitalisation should be taken at ten per cent. instead of six per cent. adopted by the Departmental valuer and nine per cent. adopted by the Appellate Assistant Commissioner. Regarding the rate for reduction of capital, the Tribunal accepted the Appellate Assistant Commissioner's view in enhancing it to six per cent. as against 4 1/2 per cent. taken by the Departmental valuer. Regarding the deferred value, the Tribunal held that eight per cent. return should be adopted as against five per cent. taken by the Departmental valuer and six per cent. by the Appellate Assistant CommissionerIn respect of the value adopted for the land measuring 15 grounds at Rs. as against 4 1/2 per cent. taken by the Departmental valuer. Regarding the deferred value, the Tribunal held that eight per cent. return should be adopted as against five per cent. taken by the Departmental valuer and six per cent. by the Appellate Assistant CommissionerIn respect of the value adopted for the land measuring 15 grounds at Rs. 60, 000, the Tribunal found that this rate could be applied for all the assessment years in view of the location of the property as there was not much variation in the net income during these years. Thus, the Tribunal came to the following conclusion with regard to the portion marked as B in the property at 123, Mount Road, Madras The land value should be taken at Rs. 60, 000 per ground in 1972-73. This rate should be adopted for the other assessment years also. The rate of capitalisation should be taken at ten per cent. for all the assessment years. The redemption of capital should be taken at six per cent. for 31 years. The rate of return for the purpose of deferred value should be set at eight per cent. The vacancy allowance should be taken at five per cent. This conclusion arrived at by the Tribunal is well founded. Therefore, we are not inclined to interfere with the same In so far as the portion marked as C in the property at 123, Mount Road, is concerned, the Departmental valuer adopted the rent capitalisation method. He added the deferred value for 33 years at five per cent. The actual rent received was taken at Rs. 1, 52, 251. From the said rent, five per cent. for probable vacancies, corporation tax and urban land tax and outgoings, 1/6th for repairs and six per cent. for collection charges were deducted, The net income arrived at was Rs. 77, 849. Capitalising this at eight per cent. return and the redemption of capital at 4 1/2 per cent. for 33 years, he worked out the capitalised value at Rs. 8, 30, 415. He took the value of 31.39 grounds after deducting 3.61 grounds for common private roads at Rs. 20, 000 per ground and took the deferred value of 33 years at five per, cent. at Rs. 26, 65, 652. With that he added 1/3rd share of the road portion at Rs. 8, 30, 415. He took the value of 31.39 grounds after deducting 3.61 grounds for common private roads at Rs. 20, 000 per ground and took the deferred value of 33 years at five per, cent. at Rs. 26, 65, 652. With that he added 1/3rd share of the road portion at Rs. 7, 216 and computed the total value of portion C at Rs. 10, 94, 200 as against Rs. 7, 36, 000 adopted by the assessee's valuer on the land and building method. On appeal, the Appellate Assistant Commissioner adopted the same rates for capitalisation, redemption of capital and deferred value as in the case of portions A and B and computed the value of this portion at Rs. 9, 69, 285. Thus, with regard to C portion of the property at 123, Mount Road, the Tribunal came to the following conclusion" The rate of capitalisation should be adopted at ten per cent. for all the assessment years. The rate of redemption of capital should be adopted at six per cent. The rate of return for the purpose of deferred value should be taken at eight per cent., vacancy allowance, should be taken at five per cent., the value of the land should be taken at Rs. 60, 000 per ground for 1972-73 and thus the rates should be taken for the other assessment years also The Tribunal further agreed with the Departmental valuer that in computing the value of the land deduction of 3.61 grounds for common private roads given by him was sufficient as against the assessee's claim of seven grounds. We have seen the reasons given by the Tribunal for arriving at the above conclusions. No fresh reason was adduced before us to vary the conclusion arrived at by the Tribunal on this aspect So far as the property at 150-A Mount Road, is concerned, the assessee did not file any valuation report. The Departmental valuer, on the other hand, adopted the rent capitalisation method and computed the capitalised value at Rs. 18, 27, 863. He took the gross amount of rental income at Rs. 2, 83, 887. From the said amount, he deducted the corporation tax, urban land tax, probable vacancy allowance at three per cent. and outgoings, and the net income was fixed at Rs. 1, 52, 538. 18, 27, 863. He took the gross amount of rental income at Rs. 2, 83, 887. From the said amount, he deducted the corporation tax, urban land tax, probable vacancy allowance at three per cent. and outgoings, and the net income was fixed at Rs. 1, 52, 538. This was the capitalised value at eight per cent return and redemption of capital at 4 1/2 per cent. for 60 years. Thus, the aforesaid capital value of Rs. 18, 27, 863 was arrived at. Along with that he added the deferred value of the land measuring four grounds and 1, 690 sq. ft. at Rs. 1, 00, 000 per ground deferred for 60 years at five per cent. and computed the total value of the property at Rs. 18, 53, 630 as on March 31, 1972, and Rs. 20, 72, 700 as on March 31, 1974. The Appellate Assistant Commissioner enhanced the vacancy allowance from three per cent. to five per cent. The Appellate Assistant Commissioner also enhanced the rate of return from eight per cent. to nine per cent. and the redemption of capital from 4 1/2 per cent. to six per cent. He also increased the deferred value from five per cent. to six per cent. Thus, the Appellate Assistant Commissioner computed the total value of the property at Rs. 16, 22, 989 and gave a reduction of ten per cent. considering the high value of the property and the fact that there will be few potential purchasers in the market. Thus, the Appellate Assistant Commissioner fixed the value of the property at Rs. 14, 60, 690 as on March 31, 1972, Rs. 14, 78, 620 as on March 31, 1974, and Rs. 14, 69, 770 as on March 31, 1973However, the Tribunal held that its finding and reasonings in respect of the property at 123, Mount Road, would apply equally to this property also. Accordingly, the Tribunal held that the rate of capitalisation should be at ten per cent. in all the assessment years under consideration. The rate of redemption of capital should be at six per cent. The rate of return for the purpose of deferred value should be at eight per cent. The vacancy allowance should be at five per cent. The value of the land should be taken at Rs. 1, 00, 000 per ground. in all the assessment years under consideration. The rate of redemption of capital should be at six per cent. The rate of return for the purpose of deferred value should be at eight per cent. The vacancy allowance should be at five per cent. The value of the land should be taken at Rs. 1, 00, 000 per ground. Thus, the Tribunal directed the Income-tax Officer, to recompute the value of those two properties on the basis of the above findings and reassess the shares of each of the assessees. The reasons given by the Tribunal for arriving at the abovesaid conclusions are cogent and convincing. No contra materials were produced before us to vary the conclusions arrived at by the Tribunal as stated above. Therefore, we are unable to interfere with the valuation fixed by the Tribunal in respect of the abovesaid properties in the case of all the assessees in the assessment years under consideration. In that view of the matter : we answer the question referred to us in the case of all the assessees in all the assessment years under consideration in the affirmative and against the Department. However, there will be no order as to costs. Counsel's fee is fixed at Rs. 1,000.