Sabyasachi Mukharji, J.:—In this reference under S. 27(3) of the Wealth-tax Act, 1957 the following questions have been referred to this Court:

“1. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that in the instant case the land-cum-building method was the most appropriate method of valuation?

2. If the answer to the question No. 1 be in the negative, whether the correct method of valuation would be rental method based on actual rent received from the property?”

2. In order to appreciate the questions it would be relevant to refer to certain facts. The assessment years involved are 1964-1965, 1965-1966, 1966-1967, 1967-1968, 1968-1969 and 1969-1970 for which the respective valuation dates were 31.3.64, 31.3.65, 31.3.66, 31.3.67, 31.3.68 and 31.3.69 The question of valuation of the property at premises No. 8, Dover Park, Calcutta on the respective valuation dates was involved in the appeal before the Tribunal leading to the present reference. The said property is a trust property it was purchased on the 30th March, 1964 for Rs. 1,20,000/- by the trustees for the benefit of the minor beneficiary. It may be mentioned that the trustees were the two major sons of the tenant of the premises and one at the relevant time was a solicitor of this Court. The beneficiaries of the trust are the minor children of the settlor. The said property consists of a two-storved building and open land measuring 17 Cottahs and 8 Chattaks. The building consists of 7 rooms with a garage and a servant's quarters attached to it. The assessee's father was living in the said building as a tenant at a monthly rent of Rs. 434/- when it was purchased by the trustees and he continued to live therein at the same monthly rent after it was purchased. Inasmuch as certain controversy has arisen as to whether the rent was fair or not it is appropriate, in our opinion, to refer to the order of the Appellate Assistant Commissioner wherein he observed inter alia, as follows:—

“The properly was purchased for Rs. 1,20,000/- in March, 1964. The appellant's father Sri Shivo Charan Laul Talwar was a tenant in this house for over 20 years at a monthly rent of Rs. 434/-.

This property had 17 cottahs of land and a two storyed building consisting of 7 rooms, garage, servants' quarters etc.”

The Tribunal also in its appellate order observed as follows:—

“It appears that the assessee's father was living in the premises as a tenant at a monthly rent of Rs. 434/- and he continued to live in the premises as a tenant on a monthly rent even after it was purchased by the trustees for the benefit of the minor. The area of the said premises, according to the approved valuer's report, is 17 cottahs 6 chattaks. The building is two-storeyed and consists of 7 rooms and it has a lawn, a garage and servants' quarters attached to it”.

3. The situation of the property is admittedly in a good residential area of the city. The assessee got the property valued by an approved valuer. The said valuer valued the land at Rs. 86,875/- by applying the rate of Rs. 5,000/- per cottah. Making an allowance of 10 per cent for largeness of the area he determined its value at Rs. 78,000/-. He valued the building at Rs. 71,000/- after allowing depreciation of 30 per cent. After deducting 7 per cent simple interest towards deferred development the approved valuer valued the entire property as on each of the valuation dates at Rs. 1,10,000/- by applying the land-cum building method. The Wealth-tax Officer proceeded to make his own valuation by adopting the rental method. Having regard to the situation of the property, the size of the building and the amenties it commanded the Wealth-tax Officer was of the opinion that the property should fetch a rent of not less than Rs. 2000/- per month and that the rent of Rs. 434/- p.m being paid by the father of the assessee was ridiculously low and did not represent the real rental value of the said property. After making deduction on account of municipal taxes, collection charges etc. he determined the maintainable rent of the said property at Rs. 19,000/- and capitalised it by applying the multiple of 16. In this way he estimated the fair market value of the said property as on each of the valuation dates aforesaid mentioned at Rs. 3,04,000/-.

4. Aggrieved by the said valuation for the years under consideration the assessee went up in appeal before the Appellate Assistant Commissioner of Wealth-tux who proceeded to value the property by adopting lard-cum-building method as was done by the assessee's valuer instead of rental method that was adopted by the Wealth-tax Officer. At the same time the Appellate Assistant Commissioner, however, considered that the rate of Rs. 5,000/- per cottah adopted by the assessee's valuer was too low and not at all consistent with the market value of the lands prevailing in the locality. He further held that even on a conservative estimate the value of the land in the area under consideration should not be less than Rs. 15,000/- per cottah after allowing deduction of 10% for the largeness of the area. The Appellate Assistant Commissioner valued the property in question, that in 17 cottahs 6 chatttacks at Rs. 2,34,563/-. At the same time, he accepted the value of the building adopted by the assessee's valuer at Rs. 71,464/-. Though the value of the property in question on land-cum-building method came to about Rs. 3,06,027/- the Appellate Assistant Commissioner estimated the value of the property in question at Rs. 2,75,000/- on each of the aforesaid relevant valuation dates for the years under consideration against the value of Rs. 3,04,000/- estimated by the Wealth-tax Officer and Rs. 1,10,000/- disclosed by the assessee. Aggrieved by the order of the Appellate Assistant Commissioner of Wealth-tax both the assessee and the revenue preferred two different sets of appeals before the Tribunal. The Tribunal disposed of all those sets of appeal by a common order. On considerations of the rival contentions, the Tribunal observed as follows:—

13. We have given due consideration to these rival submisssons. The rental method of valuation cannot be adopted in this case for more reasons than one. Firstly, the assessee's own valuer has discarded it on the ground that the rental of Rs. 434/- per month which the assessee's father is said to be paying for the property to the trustees of the property is ridiculously low and the asssssee himself returned the value of the property on the basis of the valuer's report. Secondly, though the property is situated in Calcutta there is no evidence on record as regards the duration of the lease as to when the building was constructed and whether the tenant in occupation of the property, i.e the assessee's father is entitled to the protection of the Rent Control Act. Thirdly, it has now been explained by their lordships of the Calcutta High Court in their latest decision in J.N Bose v. CWT (104 I.T.R 88) that what method of valuation would be more suitable than the other would depend upon the particular features of the property. Having regard to the peculiar features of the case, we hold that the land cum building method adopted by the assessee's valuer as well as the Appellate Assistant Commissioner is that most appropriate method of valuation to be adopted in this case.

14. But the valuation made by the assessee's valuer and that made by the A.A.C suffer from the same infirmity so far as the building is concerned, there is no dispute. The A.A.C accepted the value given to the building by the valuer. The dispute is mainly with regard to the value of the land. The valuer has not given any data in support of the rate of Rs. 5000/- per cottah adopted by him. Nor has the A.A.C given any data in support of the rate of Rs. 15,000 per cottah adopted by him. We are unable to agree with the contention of the learned Departmental Representative that the rate adopted by the A.A.C is based upon his local knowledge and, therefore, it should be accepted in preference to that of the approved valuer. As against this contention, the other side may very well contend that the rate per cottah adopted by the approved valuer is based upon his local knowledge. The value of the land prevailing on the relevant valuation date is a matter to be decided with reference to the prices for which lands in the neighbourhood were sold near at out the dates of valuation. This information can be obtained either from the Registrar's office or from the persons who purchased or sold lands in the neighbourhood of the property in question near about the relevant dates of valuation. As the question of the valuation of the land was not decided by the A.A.C on the basis of relevant material and as we do not find any basis for the rate of Rs. 15,000/- per cottah adopted by the A.A.C we set aside his decision, restore the appeal to his file and direct to dispose them of afresh in the light of the above observations.”

5. Upon these, the question, as indicated above, have been referred to this Court. There is no dispute in this case from the narration of facts, that the entirety of the premises was let out. There is also dispute that the premises was let out at least for 20 years prior to the relevant dates. It was let out on the same rent as on the respective valuation dates. The premises in question was let out to the father of the assessee. There has been no change in the property, that is to say there is 17 cottah of land and it consists of 7 rooms, servants' quarters, as we have mentioned before. Now, the question is that in respect of the premises of this nature what would he the proper procedure of valuation i.e what would be the market pi ice on the respective valuation dates or what in the opinion of the Wealth Tax Officer, such a property should fetch in the open market on the respective valuation dates?

6. This question has been examined in several decisions. We may first refer to the decision of this Court in the case of Controller Of Estate Duty, West Bengal v. Radha Devi Jalan.*, 61 ITR 761 where, in the context of the valuation of land and building subject to Rent Control Act under the Estate Duty Act, this Court observed that in the case of buildings which were in the possession of tenants and the tenants could not either be evicted or rent payable by them enhanced except in accordance with the provisions of the Rent Control Act, the only appropriate method of valuation was to capitalise the annual rent by a certain number of years. The method of valuing the land and the building separately and adding up the value would be improper in such cases because that would ignore the impact of the Rent Control Acts on the value of the land and building. If there had been no rent restriction law in operation the Controller of Estate Duty could make a fair and objective estimate of the rent what that property might have fetched if a willing lessor wanted to let out the property to a willing lessee but if the property was subject to rent restriction Acts in estimating the rent on which the property was occupying on being let out the Controller was bound to take into account the restriction imposed by the Rent Control Act to arrive at the figure of fair rent accordingly. In the instant case before us that the premises is let out is not disputed. A point was sought to be made that what were terms of the lease have not been clearly ascertained by the Tribunal. It was not necessary. Either it was under the lease or it was under the monthly tenancy basis. If it was on the monthly tenancy basis and even then the restriction of rent laws would be equally applicable the tenant could normally be not evicted except on specified grounds the same, more or less, would be the position under lease. That is not disputed before us. It was not the case of either the revenue or the assessee that there was a lease before the authorities below, nor is it the case before us. Now could the rent be enhanced except in specified manner. These principles were again considered by this Court in the context of Wealth-tax Act in the case of J.N Bose v. Commissioner Of Wealth-Tax, West Bengal Ii., West Bengal-II, 104 ITR 83 where we had observed that the following principles emerged from the decided cases with regard to the valuation of a property for the purpose of Wealth-tax Act: (a) in respect of an immovable property, there was no fixed market, such as for shares or for other commodities like sugar cloth, etc. (b) there must be a certain amount of the guess but the guess must be an intelligent one based on certain objective factors which have rational nexus with the valuation; and (c) there are different methods that which would be suitable for a particular property must depend upon the particular features of the property; of those methods one should be preferred which could provide more objective datas for reliance. More or less, similar principle was reiterated in the decision in the case of Debi Prasad Poddar v. Commissioner of Wealth Tax, West Bengal III Calcutta, 109 ITR 760 where we had held that (1) Attempt must be made to find out the price which the immovable property would fetch on the valuation date, imagining a willing buyer to purchase the property from a willing seller. (2) In respect of immovable property, there was no fixed market such as market for share or for other commodities like sugar, cloth, etc. In order to arrive at a valuation in respect of the property, there must necessarily be a certain element of guess. But the guess must be based on certain facts and according to certain principles which would in the facts and circumstances of each case be as fair as possible to the revenue as well as to the assessee in trying to imagine reasonably and intelligibly the price which was expected to be fetched if it was possible to sell the property in question on the relevant valuation date. (3) Such a determination, therefore, involved adopting certain methods in determining the valuation and there were different kinds of methods, as mentioned in the Circulars of the Board of Revenue and the principles enunciated in the several decisions. (4) which one of the various methods would be suitable for a particular case must depend on the nature of the property, the location of the property the purposes for which the property was used and several other objective factors viz., when the valuation was made, the prospect of buying and selling in respect of the property at the relevant time and also special features in respect of the property, if there be any. Taking all these factors into consideration it was necessary to determine which one of the various methods would be most suitable to reach as accurately as possible the valuation on the valuation date. (5) Another factor that had to be borne in mind was that such a method should be preferred which had more objective reliable dates than mere subjective opinions. If there was any objective reliable evidence of any transaction of sale of the land or property, similar in quality or of the same type and at approximately the same time, that would provide a more reliable method to follow. It is not necessary to discuss the actual facts of that case.

7. In the case of Commissioner Of Income-Tax, West Bengal v. Smt. Ashima Sinha 116 ITR 26 the Division Bench of this Court was concerned with the question of valuation in the context of S. 269C of the Income Tax Act, 1961. There the Division Bench observed that if a statutory control was imposed on a commodity restricting the price or transfer or distribution of the same then the commodities ceased to be the commercial commodity, as understood, in common parlance and this became the controlled commodity and its effective value was its control value and not the imaginary commercial value. There, discussing the facts of the case, the Court observed that where the land was fully developed by building erected thereon, when the property was let out at rent and the rent had been proved and was likely to be maintained for years to come then the yield or the rental method of valuation should be applied to determine the value of the premises. More or less, the similar view was expressed in another decision by the same Division Bench in the case of Commissioner Of Income-Tax, West Bengal-Iii, Calcutta v. Panchanan Das, 116 ITR 212. There also the Division Bench reiterated that where the land was fully developed by building erected thereon, when the property was let out at rent from which the fair rent could be ascertained and when the rent had been proved and was likely to be maintained for years to come then the rental method of valuation should be applied to determine the market value of the property. On behalf of the revenue it was emphasised, in the last two cases, the Court had laid stress on the fact that the land was fully developed and the fair rent was ascertained. It was submitted that in the instant case, admittedly apportion of the 17 cottahs of land was vacant. Therefore, the land was not fully developed. While it is true land was not fully developed but it has to be borne in mind because of the findings of the Appellate Assistant Commissioner as well as of the Tribunal, the entirety of the premises meaning thereby the building with the land had been let out. Therefore the purchaser of the property would have to purchase the property with the tenant who was the tenant not only of the building but also of the land. Therefore, the difficulties for evicting the tenant, which were envisaged in the valuation of this property, would still be there as the property was let out to the tenant with a vacant land which formed part of the tenancy. Secondly it was suggested that rent must be a fair rent. In this case, it has been found by the Tribunal that the assessee's father was the tenant of the premises for 20 years before the purchase of the property and the rent had been the same. Therefore, taking that ground into account and the restriction imposed in increasing the rent, it cannot be said that the rent was unfair or low or it could not be considered to be the standard rent in the light of the rent restriction laws. In these background the facts of the case will have to be judged.

8. In the case of Suvkaran Chowdhury v. Inspecting Assistant Commissioner of Income Tax 118 ITR 771 sitting singly in a different context of S. 269C of the Income Tax Act, 1961 I had to consider this question where I reiterated the aforesaid principles. It is not necessary to deal with the facts in any greater detail.

9. So far as the rent aspect is concerned the question has been examined, of course in a different context, by the Supreme Court in the case of Dewan Daulat Rai Kapoor v. New Delhi Municipal Committee 122 ITR 700. There, the Supreme Court reiterated that in relation to a building within the jurisdiction of the New Delhi Municipal committee or the Corporation of Delhi, even if the standard rent had not been fixed by the Controller under the Delhi Rent Control Act, 1958 the landlord could not reasonably expect to receive from a hypothetical tenant anything more then the standard rent determinable under that Act. That would be so equally whether the building had been let out to a tenant who had lost his right to apply for fixation of standard rent or the building was occupied by the owner himself. Therefore, in all such cases, the annualy value of the building for purposes of house tax, whether under S. 3(1)(b) of the Punjab Municipal Act, 1911 or under S. 116 of the Delhi Municipal Corporation Act, 1957 was limited to the measure of the standard rent determinable on the principles laid down in the Rent Control Act and it could not exceed of standard rent. The Supreme Court observed at pages 715-716 of the report as follows:

“Now it is true that in the present case the period of limitation for making an application for fixation of the standard rent had expired long prior to the commencement of the assessment years and in each of the cases, the tenant was precluded by S. 12 from making an application for fixation of the standard rent with the result that the landlord was lawfully entitled to continue to receive the contractual rent from the tenant without any let or hindrance. But from this fact situation which prevailed in each of the cases, it does not follow that the landlord could, therefore, reasonably expect to receive the same amount of rent from a hypothetical tenant. The existing tenant may be barred from making an application for fixation of the standard rent and may, therefor, be liable to pay the contractual rent to the landlord but the hypothetical tenant to whom the building is hypothetically to be let would not suffer from this disability created by the bar of limitation and he would be entitled to make an application for fixation of the standard rent at any time within two years of the hypothetical letting and the limit of the standard rent determinable under the Act would, therefore, inevitably enter into bargain and circumscribe the rate of rent at which the building could reasonably be expected to let. This position becomes absolutely clear if we take a situation where the tenant goes out and the building comes to be self occupied by the owner. It is obvious that in the case of a self occupied building, the annual value would be limited by the measure of standard rent determinable under the Act, for it can reasonably be presumed that no hypothetical tenant would ordinarily agree to pay more rent than what he could be made liable to pay under the Act. The anomalous Situation which would thus arise, on the contention of the revenue, would be that, whilst the tenant is occupying the building, the measure of the annual value would be the contractual rent, but if the tenant vacates and the building is self-occupied, the annual value would be restricted to the standard rent determinable under the Act. It is difficult to see how the annual value of the building could vary according as it is tenanted or self-occupied. The circumstances that in each of the present cases the tenant was debarred by the period of limitation from making an application for fixation of the standard rent and the landlord was consequently entitled to continue to receive the contractual rent cannot, therefore, affect the applicability of the decision of the Life Insurance Corporation's case, AIR 1970 SC 1411 and the Guntur Municipal Council's case (1971) 2 SCR 423 and it must be held that the annual value of the building in each of these was limited by the measure of the standard rent determinable under the Act.”

10. In the light of the facts which we have discussed above, we are therefore, of the opinion that the proper method would be the rental method in the facts of this case. Or behalf of the revenue, it was emphasised that land and building is also a method of valuation and according to the valuer's report, which the assessee himself had submitted the rental method was not the proper method. Under the Wealth Tax Act, S. 7, it is the duty of the Wealth Tax officer to form his opinion as to what would be the market value of the property on the relevant date. The submission of the valuer's report either one way or the other cannot be determinative of the value which a property will be supposed to fetch in an open market on the relevant valuation date, as has been aptly observed: “In any event, even if the valuer was an expert, he is not a witness of fact but a mere witness of an opinion. That opinion, therefore, cannot bind the Court or the Tribunal or the Income Tax authorities.” (See the observation of Chief Justice P.B Mukharji in the case of Mahmudabad Properties (P) Ltd. v. Commissioner of Income Tax 85 ITR 500 at page 5281.

11. In the light of the aforesaid facts, we would answer Question No. 1 in the negative and in favour of the assessee. In that view of the matter, so far as Question No. 2 is concerned, we would say that the rental method based on actual rent received from the property subject to variation permissible under the rent restriction laws would be the proper method. This question is also answered in favour of the assessee.

The parties will pay and bear their own costs.

Sudhindra Mohan Guha, J.:—I agree.

Questions answered in favour of the assessee.