Commissioner of Wealth Tax vs Pradeep D. Kothari

R. Jayasimha Babu, J.—The building owned by the assessee had been let out during the assessment year 1972-73. However, all that was

necessary for the letting out was not owned by the assessee, inasmuch as the lifts and the electrical installations without which the building could not

be put to commercial use were not owned by the assessee. The Tribunal, therefore, accepted the plea of the assessee that the rental method by

itself would not be the appropriate method to be adopted for valuing the building for purpose of wealth-tax, but that method was required to be

used along with the cost of construction and the value of the land. The cost of construction and the value of the land together was taken at Rs.

25,82,540 and the amount if the rental method is adopted was arrived at Rs. 45,65,088. The average of the two being Rs. 35,70,814 was held to

be the value of the building by the Tribunal.

The method so adopted by the Tribunal to assess the value of the building known as Kothari Building at Nungambakkam High Road, owned by

Kothari and Sons for the assessment year 1972-73 under the Wealth-tax Act cannot be said to be arbitrary or as being contrary to law as the

rental value of the building represents the aggregate rental value of office space therein, which is subject to that space being conveniently accessible

and the space being usable with the aid of power. Part of the rental value being attributable to the availability of the lifts and the electrical

installations, the same has to be excluded while determining the assessable value of the building by the rental method, as the lifts and electrical

installations are not owned by the assessee. Adopting the average of the values determined by the rental method and the aggregate of the cost of

construction and the value of land though a rough method, is in the circumstances an acceptable way of determining the assessable value, as such

average value is less by about twenty per cent, when compared to the value determined by the rental method. The contribution of the lifts and the

electrical installations to the rental value can be taken roughly at twenty per cent, of the rental value.

The question as to whether the method adopted by the Tribunal was in the circumstances, the proper method, is answered in favour of the

assessee and against the Revenue.