These 14 appeals filed as group arise out of wealth tax assessments made for asst. yrs. 1978-79 to 1980-81. They related Shri Tirath Ram Sahni (Ind). Shri Tirath Ram Sahni HUF and Shri Acharaj Lal (HUF). There are tow properties which are in dispute in these appeal; one is situated at 18 DLF Industrial Area, Najafgarh Road, New Delhi and other is situated at Photta Road, Sadar Bazar, Delhi bearing municipal number 4887 and 4888. assessee appeal are in respect of Najafgarh Road property while Department s cross appeal are in respect of reducing fair market value of Najafgarh Road property as well as Sadar Bazar property. Since points involved are common, it would be convenient to consolidate these apparels, hear them together and to dispose them of by consolidated order. We will take up assessee appeal first. assessee Shri Tirath Ram Sahni (Ind) owns 45 per cent share in property No. 18, DLF Industrial Area, Najafgarh Road, New Delhi. This property was purchased sometime in 1949. This property was let out to as many as 36 tenants. Shri Tirath Ram Sahni HUF held 271/2 per cent share in Najafgarh Road property and Shri Acharaj Lal HUF owned balance of 271/2 per cent share. For purpose of wealth-tax asst. yr. 1978-79 this property was valued at Rs. 11,86,200 by capitalising rental income of Rs. 94,898 at 12-1/2 per cent and share of assessee Shri Tirath Ram Sahani individual, at 45 per cent was returned at Rs. 5,33,990. Share of Shri Tirath Ram Sahni, HUF and Shri Acharaj Lal HUF of 271/2 per cent each was returned at Rs. 3.26,105 each. For asst. yr. 1979-80 property was valued again by capitalising net rental income, which amounted this year to Rs. 1,05,281. Capitalising at 12-1/2 per cent share of Shri Tirath Ram Sahni, Individual, of 45 per cent was returned at Rs. 5,92,200 and share of Shri Tirath Ram Sahni, Individual, of 45 per cent was returned at Rs. 5,92,200 and share of Shri Tirath Ram Sahnil HUF and Shri Acharaj Lal HUF was returned at Rs. 3,61,900 each vide papers 1 and 2 of paper book filed before us. WTO did not accept value of this property as returned. He referred valuation of this property to Departmental representative cell under s. 16A of WT Act, Valuation Officer valued this property at Rs. 35,18,700 and arrived at value of Shri Tirath Raam Sahni, Individual, share of 45 per cent at Rs. 15,83,400. WTO adopted this value and completed assessment. Similarly for other property situated at Photta Road, Sadar Bazar value adopted by Valuation Officer was Rs. 1,45,300 and share of 45 per cent of Shri Tiratgh Ram Sahni, Individual was arrived at Rs. 65,400, which was included in net wealth of assessee individual. Similarly for asst. yr. 1979-80 values of these properties were repeated by WTO in substitution of values returned by assessee. At this juncture, we may maintain relevant point, namely, that Valuation Officer had arrived at much higher value for these properties by adopting higher rental income than disclosed by assessee. Valuation Officer was of opinion that rent realised by assessee from certain tenants must be result of some collusion and therefore estimate of higher rent was called for. We will come to this point little later. There were then appeal filed before AAC as well as before CIT(A). It was pointed out before him that total rent was estimated by Valuation Officer at Rs. 3,45,600 as against Rs. 1,73,904 realised and shown by assessee and basis adopted by him for this increase in rent was totally incorrect. It was also pointed out that in regard to portion occupied by tenants, wherein assessee also had interest, assessee herein were tenants in those properties just like any other tenant and there was no justification whatsoever for adopting higher rent in respect of those portions except bare suspicion. It was also pointed out that Valuation Officer has taken into consideration potentiality to construct first floor on area of 1755 sq. Ft. But that assumption was totally wrong. assessees never applied for sanction of further construction and question of further construction therefore did not arise. It was pointed out that increase in rental on first floor was incorrect. It was also pointed out that Valuation Officer had no basis to come to conclusion that there was collusion between assessee and tenants and since those tenants were in occupation of these properties for several years, provisions of Delhi Rent Control Act became applicable, under which it was not possible to evict them and therefore question of collusion never tenants was accepted by ITO as proper and correct and assessment was framed on that basis, there was no room to further hold that there was collusion and estimating rents at imaginary figures. CIT(A) accepted assessee's contention in part. He held that in regard to termination of annual letting value so far as tenants than co-owners ware concerned, could not be any presumption of collusion in regard to rent. He held that there was no evidence to prove collusion. It was not possible for owner to enhance rents, when property was subject to Rent Control Act. He also did not approve of assumption made by Valuation Officer of further increase in rent on basis of potentiality for further construction. In regard to portions under occupation of co-owners in names of Sahni Industries and American Machine Tools, he found that area under occupation was 3,809 sq. ft. and 6,180 sp. ft. respectively and rent charged of Rs. 150 and Rs. 250 per month respectively was much less and estimate made by Valuation Officer of rent for these properties at rate of 0.66 paise per sq.ft. was quite reasonable. On that basis he approved enhancement in monthly rent by Rs. 6,193 thereby he reduced annual rent to Rs. 2,48,400 as against Rs. 3,45,600. In regard to outgoings, Valuation Officer had allowed only one months rent by way of repairs and maintenance but CIT(A) found that I would be reasonable to allow two months rent towards repairs and maintenance. As regards multiplier as against 12-1/2 per cent adopted Valuation Officer adopted 7-1/2 per cent and CIT(A) approved of that multiplier. Thus total value of property was worked out at Rs. 21,32,467 and share of Shri Tirath Ram Sahni, Individual, of 45 per cent therein worked out to Rs. 9,59,610. He directed that this value be substituted for value of Rs. 15,83,400 adopted by WTO. same value was directed to be adopted for asst. yr. 1979-80 and 1980-810 in case of Shri Tirath Ram Sahni, Individual. In case of Shri Tirath Ram Sahni, HUF and Shri Acharaj Lal, HUF, value as re-worked out by CIT(A) came to Rs. 5,86,425 each for all three years which was directed to be substituted for value of Rs. 9,67600 each adopted by WTO. Now contention raised before us by assessee is two fold; one was there was absolutely no justification even in case of cowers to disbelieve rent actually collected and hence increasing it Rs. 6,193. By filing before us various statements giving comparative figures and in particular rents collected from each party and rate per sq.ft., which was pages 41 to 44 in paper book, which also incidentally happened to be statements prepared by Valuation Officer, it was submitted that if comparison is made rents collected form Sahni Industries as well as American Machine Tools would be same as collected for similar area from other tenants and merely because rent happened to bellow, it did not mean that it was deliberately let out for low rent, nor can it be said that there was any collusion involved, and that is mere instance that property was let out for lower rent. It is further seen that this is no only property let out for that rent and there are also other properties let out at lower rents. CIT(A) having come to conclusion that there was no collusion in respect of other properties, where there was lower rent, committed error in coming to conclusion that there was collusion in respect of these two properties merely on ground that properties were let out to cowers ignoring fact that even her rent charged was lower. It is further submitted that Valuation Officer had not basis to estimate rent of these properties at such high rent of 66 paise per sq. ft. as if was only standard rent available or applicable in respect of these properties at time when they were let out. Several arguments were addressed to show how method adopted by Valuation Officer to ignore rent charged and to estimate it at higher figure was uncalled for backed and was baseless too. rents which were accepted for purpose of income-tax should have been accepted for purposes of wealth-tax and should not have been disturbed. only basis for disturbing rent is suspicion and not any fact. Further it was contended that for purpose of estimating market value, standard rent alone must be taken and not any other rent and rent estimated by Departmental Officers could not be said to be standard rent. This was view taken by Supreme Court in series of decisions applying which Tribunal held in another case of WTO vs. A.K. Tandon (1985) 14 ITD 300 (Del) (TM) that for purpose of capitalisation of income, rent to be taken should only be standard rent as fixed under Delhi Municipal Corporation Act. Substituting municipal letting value as per house-tax levied, learned advocate submitted statement which would show (vide pages 50-51 of paper book) that value of Najafarh Road property would come to only Rs. 7,92,187 as against which assessee's approved valuer had adopted value of Rs. 9,55,500. Therefore learned advocate contended that we should hold that value of property as returned by assessee was more than reasonable and should not have been disturbed at all. In this context he also contended that in all previous years commencing from 1975-76 to 1977-78 value of this property as returned by assessee was accepted by WTO which was value as declared on basis of report of valuer dt. 31st March, 1977. Having accepted value of this property, which was arrived at on basis of actual letting value of property, no deviation should have been permitted in fixing rental income of property when there was no change either on facts or in circumstances. learned Departmental representative on other hand, contended very kly that not only CIT(A) had erred in reducing value of this property by holding that there was no collusion in letting out property at lower rents, he was also not justified in observing that there was no potentiality of earning higher income in respect of portion of property where there was ample scope for construction of first floor. He kly relied upon order of WTO and valuation report to submit that value adopted by assessee was definitely on lower side and it called for revaluation upwards. He pointed out that on comparison of rents charged from various tenants, one thing is common that certain amount of concession was shown to tenants in charging rents. When property let out was in nature of sheds used for industrial purposes in same locality, normally one would expect rent charged to be common and uniform. rent charged here varied from as low as 9 paise per sq.ft. to 88 paise per sq.ft. between 1962 and 1974, This wide variation for almost identical nature of properties in same locality showed that there was possibility for negotiations and showing certain favours. Were this true, then conclusion drawn by Valuation Officer that there was possibility of collusion cannot be ruled out and therefore CIT(A) was wrong in assuming that there was no collusion and he was further wrong in assuming that Valuation Officer could not prove collusion by bringing evidence which he is not possibly to expect upon relying certain evidence to draw certain inferences, which is permissible in this case. Thus he stoutly defended assessments made by WTO on basis of valuation report. We have also heard Valuation Officer Shri S.C. Mittal. He submitted that except difference in rents no other evidence was available with him to step up rents in respect of properties (items 11 to 29 of chart filed at page 51 of paper book.). These are properties where rent charged was very much lower that rent charged for other properties and there was no reason why lower rent was charged when nature of construction, utility etc. remained same. Merely for reason that these properties were in continuous occupation of tenants did not rule cut possibility of collusion because in respect of properties let cut by showing concertinos. concessional rent will continue to be collected till tenancy continues or some other event happens under which rent might be alerted. continuous occupation by tenants therefore continues to show concessional rent charged and if this assumption of facts, stands proved, then obvious conclusions would only be that for purpose of arriving at market value, these concessional rents should be ignored and market rent should be substituted. It is therefore no ground to argue that in such even vacant possession is not permissible or possible because for purpose of s. 7 of IT Act we have to assume vacant possession being given by seller to buyer. Then it was pointed out that 66 paise per sq.ft. was fixed only keeping in view contemporaneous evidence. There were also instances where assessee collected 88 paise per sq.ft. but yet only 66 paise sq.ft. was taken because that was considered to be most reasonable. It was then pointed out on authority of Gujarat High Court decision in case of CIT vs. Sumatilal Chhotalal Shah (1980) 15 CTR (Guj) 32: (1980) 124 ITR 862 (Guj) that one instance was enough to rely upon estimate normal rate fo rent. Pointing out specifically to Acharaj Lal, learned Valuation Officer submitted that he became owner in his own right of property in 1971 consequent on death of his father Shri Kishorilal and therefore rent obtained at that point of time should be estimated to be market rent that could be recovered from Shri Acharaj Lal and that rent was 66 paise per sq.ft. He therefore justified valuation of property at figure arrived at by him in valuation report. We have considered carefully arguments addressed to us and we are We have considered carefully arguments addressed to us and we are of opinion that view taken by CIT(A) is not only correct but requires to be modified. argument of Departmental representative as well as of Valuation Officer proceeded on assumption that there was collusion of rent or concessional rent was charged and those rents did not represent correct market rent and therefore there existed case to revise rents for purpose of capitalisation to arrive at market value. This is only assumption made on basis of rents collected from other tenants. That by itself, in our opinion, would not provide ground to assume that there was collusion although it may provide k case for suspicion. Nothing was shown to us by which we can say that Valuation Officer had tried to establish collusion between assessee and tenants. Mere difference in rents cannot therefore be taken as evidence of collusion in order to give right to Valuation Officer to estimate rents nor we find any evidence in support of his estimate of 66 paise per sq.ft. in respect of all properties where rents charged were low. At page 41 of paper book names of tenants, description of building let out to them, amount of rent and rate per sq.ft. was given statement shows 36 tenants. There are different kinds of tenants using property for various purposes. letting out began as early as 1962. rent charged in 1962 varied form 9 paise per sq. Ft. In case of item No. 12, M/s Friends Ind. corporation to 38 paise per sq.ft. in case of item No.6 Everest Electrical, In 1963 rent charged varied from 13 paise to 21 paise. In 1964 it was 30 paise per sq.ft. in 1965 it ranged between 27 paise per sq. Ft. To 45 paise per sqw.ft. and in 1966 it was 4 paise to 25 paise per sq.ft. In 1968 again it was 4 paise per sqw.ft. in 1971 it was 66 paise per sq.ft.; in 1972 it was 80 paise per sq.ft. and in 1975 it was 9 paise per sq.ft.; 1974 it was 11 paise per s. ft. and 88 paise per sq.ft.; and in 1975 it was 20 paise per sq.ft.; 22 paise per sq.ft.; 15 paise per sq.ft.; and 68 paise per sq.ft. and lastly in 1976 it was 75 paise per sq.ft. structures that were let out are all covered by A.C. sheets roof. Some are covered by corrugated galvanised iron sheets. Some have got more open area, some have got less open area. In this state of rents, how it is possible to say that properties let out at lower rents were necessarily result of collusion or concession for that matter. It can only be result of negotiation. These rents were fixed at time when assessee could have no inkling that Valuation Officer appointed under WT Act would one day descend upon them and value those properties by alleging collusion. These transactions appear to be those entered into in normal course of business and genuine and nothing more could be read into it because of fact that they were entered into much earlier, rents continued to be received by assessees and those rents were accepted for purposes of income tax. Even to ITO it is open to estimate rents in case he finds that they did not represent real position but he accepted them as proper and genuine. most important point to be noted here is that these properties as and when they were vacated, were being let out to new tenants and whenever there was new tenant, higher rent was charged but in case of Sahni Industries, it consisted of as much as 2571 sq., ft., of open land, pucca area being only 418 sq., ft. Therefore rent that was charged was only for covered area and not for open land whereas in case of other buildings, rent was charged for covered area e.g., in case of item No. 10 M/s. Laxmi Corrigated Board rent charged was 66 paise per sq., ft., for covered area of 3039 sq., ft. Similarly in case of American Machine Tools covered area is 2100 sq., ft., and open area is 4080 sq. ft. and it was let out at 4 paise per sq., ft. There are also other properties let out 9 paise per sq., ft., in 1966 and 22 paise per sq., ft., in 1975. We are therefore of opinion that mere variation in rent as we have observed earlier cannot be conclusive of decision reached by Valuation Officer that there was collusion and in order to establish collusion there ought to be some evidence otherwise we will be permitting assessment to be made on basis of suspicion, which we think is not permissible in law. fact that Shri Acharaj Lal became owner in 1971 bad therefore rent obtaining at that point of time should be taken is also not relevant because property was let out to Shri Acharaj Lal in 1968. rent obtaining at that point should only be considered i.e., in 1968. Once rents are fixed up under Rent Control Act, they cannot be varied except by due process of law. That is also very great inhibiting factor for increasing rent. impact of that legislation on rents is great diminishing factor as has been held by several Courts in country. That restricts legislation and its impact on valuation of properties does not seem to have been taken into account by learned Valuation Officer. We are therefore of opinion that CIT(A) is justified in holding that Valuation Officer was not justified in concluding that there was collusion and for very same reasons, we are not impressed to accept conclusion of CIT (A) that rents of properties let out to assessees as co-owners were also result of collusion requiring rent to be estimated higher than that charged. Here again compulsive enactment of Rent Control Act will operate according to which rent will not be allowed to be estimated and there is no presumption in low to hold that property when sold could be sold with vacant possession particularly when properties were occupied and fully tenanted. To estimate market value of property, condition in which property was, has to be kept in mind and not condition that would obtain if some improvements were made to property or vacant possession was given. In this context we may refer to decision of Calcutta High Court in case of CIT vs. Smt. Ashima Sinha (1979) 116 ITR 26 (Cal). relevant observations as quote from head-note are: "If statutory control is imposed on commodity restricting price or transfer or distribution of same, then commodity ceases to be commodity as understood in common parlance and becomes controlled commodity and its effective value is its controlled value and not imaginary commercial value. If State chooses to impose statutory control in respect of terms and conditions of tenancies in properties and such control is statutorily enforced, then during subsistence of such control such properties would necessarily have value which is controlled. State cannot then turn around and say that for other purposes properties would have national commercial value." These observations though made in context of acquisition of immovable properties under s. 269-C of IT Act, have got great relevance in fixing value of property. Therefore if one is to have regard to statutory control imposed by Rent Control Act, then full effect of that control must be given. If under law delivery of vacant possession is not permissible or improvements are again impermissible like properties situate in Military Cantonment Area, it is not possible to assume that properties would be offered for sale with vacant possession or after improvements. Since there is no evidence to show that properties let out to Sahni Industries or American Machine Tools were at all offered on lower rents, it cannot be said that in those Machine Tools were at all offered on lower rents, it cannot be said that in those two cases also rent has to be estimated. Even if it is assumed that rent could be estimated, there is no evidence shown to us that it could be let out for 66 paise per sq., ft., when property in same year was let out for must much lower rent. assumption that these properties should be let out at 66 paise per sq., ft., alone is patently incorrect. rental income having been accepted for income-tax purposes should not have been disturbed for wealth-tax purposes without there being any evidence to suggest that these rents were manipulated with view to reduce market value. Further values given for these properties on basis of actual rental income realised was accepted by Department in all earlier years as seen from figures furnished to as in paper book vide assessment orders at pages 53 to 58 and statements filed at pages 16,18 and 20. We, therefore, find no justification for disturbing values for these years on ground that there could be possibility for collusion of rents. We not only agree with view expressed by CIT (A) that there was no collusion in regard to fixation of rents but we go step further and say that such case is not established even in case of properties let out to assesses i.e, taken for self occupation. We are also of opinion that rate of multiple adopted by assessee is quite reasonable and there is no basis to adopt multiple of 7.5 per cent. No defect whatsoever was shown in value returned by assessee except bare suspicion that they could be lower. Those values having been accepted in earlier years, rents not being shown to be result of collusion, those rents should have been accepted and these values should have been repeated for these years also. We direct accordingly. This will apply to all assessments of all three assessees herein and our conclusion here that Valuation Officer was not justified in estimating rental income on mere suspicion would dispose of departmental appeals also on same point. Coming to Photta Road, Sadar Bazar property, only point raised was that CIT(A) was not justified in directing WTO to exclude reversionary value of land. Ion this context also case referred to above concludes issue in favour of assessee and against Revenue because Calcutta High Court in that case held that if value of property was arrived at on basis of rental income by capitalising it, value of land would automatically get included and if value of land is again included as reversionary value, that would amount including value of land twice. Calcutta High Court described this method as novel and erroneous. In view of this decision of Calcutta High Court, we hold that CIT (A) was justified in directing WTO to exclude reversionary value of this land at Photta Road, Sardar Bazar. We see no wrong in it and we confirm that value. Once reversionary value of land is held to be not includible and is held to have been included in method of rent capitalisation, then question of location of land however important it be, would be of no consequence. In all these cases what is to be seen is rent and control on tenancy and rent. These two will have great diminishing aspect on value of land. To show that inspite of these controls, land has still higher value, onus would then shift very heavily to person asserting it and person asserting it in this case is WTO and he has no evidence to show except assertion that it has got reversionary value. conclusion of CIT (A) is therefore correct and we uphold it. only other point raised in Departmental appeals is whether CIT (A) is justified in allowing two months' rent as deduction towards repairs and maintenance. We find that this is normal deduction to be granted even under IT Act for purpose of arriving at net income. Further properties being very old, highly tenanted being only sheds, they require higher rate of maintenance which means higher expenditure and in that context we are of view that CIT(A) is justified in permitting two months rent as statutory deduction. In result, appeals filed by assessees are allowed whereas appeals filed by Department are dismissed. *** TIRATH RAM SAHNI v. WEALTH-TAX OFFICER