R.C. COOPER VS.
UNION OF INDIA, (1970) AIR SC 564
Supreme Court has explained the word property
Highest right a man can have to anything, being that right which one has to lands or
tenements, goods or chattels which does not depend on another’s courtesy
It includes ownership, estates and interests in corporeal things, and also rights such as
trademarks, copyrights, patents and even rights in personam capable of transfer or
transmission, such as debts, and signifies a beneficial right to or a thing considered as
having a money value, especially with reference to transfer or succession, and to
their capacity of being injured”.
Thus the court has included all types of property viz. tangible.
R.C. COOPER VS. UNION OF INDIA, (1970) AIR SC 564
Bank nationalization in view of socialism and priority allocation of resources.
Landmark judgment of 11 judges bench
Constitutional Validity of bank nationalization by the Indira Gandhi Government was
challenged.
Nationalization to be invalid, SC by a majority of 10:1 observed that the nationalization
of banks impaired the right to compensation under Article 31(2) of the Constitution of
India and consequently was struck down primarily on the ground of violation of Article
31(2).
R.C. COOPER VS. UNION OF INDIA, (1970) AIR SC 564
AFTERMATH
Thereafter, the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 was
enacted by the Parliament but with inclusion of a specific amount of compensation to be
paid to each of the 14 banks.
R.C. COOPER VS. UNION OF INDIA, (1970) AIR SC 564
Govt. brought the Twenty-fifth Amendment 1971, curtailed the right to property,
and permitted the acquisition of private property by the government for public use, on
the payment of compensation which would be determined by the Parliament and not
the courts. The amendment also exempted any law giving effect to the article 39(b) and
(c) of Directive Principles of State Policy from judicial review, even if it violated the
Fundamental Rights.”
Key word : Cooper : Bank Nationalisation, Compensation to property rights,
valuation science.
SORAB D. TALATI VS. JOSEPH MICHEM, APPEAL NO. 101 0F 1949 IN R.A.
APPLICATION NO. 805 OF 1948 (INVESTMENT THEORY OF RENT)
In 1949, Small Causes Court of Bombay, for the first time, laid down principles of
Rent Fixation (Standard Rent) in the case of Sorab Talati.
In this case, the Court approved of Investment Theory in preference to Comparable
Rent Theory to fix Standard Rent of the rent controlled premises.
The court considered return or yield from Gilt Edged Security as the basis for
determining fair return to the landlord on his investments in land and buildings.
SORAB D. TALATI VS. JOSEPH MICHEM, APPEAL NO. 101 0F 1949 IN R.A.
APPLICATION NO. 805 OF 1948 (INVESTMENT THEORY OF RENT)
For land 1.50% more return i.e. more than the average yield on long term government
security was approved as fair return
For Building and 2.50 % return more than the average yield on long term government
security was approved as fair return on investment in buildings.
For leasehold properties, 1% extra yield on both types of investment was considered
fair, to account for extra risk of investing capital, in leasehold properties.
SORAB D. TALATI VS. JOSEPH MICHEM, APPEAL NO. 101 0F 1949 IN R.A.
APPLICATION NO. 805 OF 1948 (INVESTMENT THEORY OF RENT)
This case is Mariners Compass
This was the first case where courts spoke about rents
Later in 90s Shanti Devi,Virbhadrappa cases came up where courts spoke about Blue
chip companies and secured returns
Talathi case was useful in fixing Mesne profit.
Key word :Talathi : Rent fixation / Gilt securities
CWT VS. P.N. SIKAND (1977) 107 ITR 922 (SC)
The assesse holds the leasehold interest on condition that if he assigns it, 50 % of the
unearned increase in the value of the land will be payable to the lessor.
Court held that in determining the value of the leasehold interest of the assesse in
the land for the purpose of assessment to wealth tax, the price which the leasehold
interest would fetch in the open market would have to be reduced by 50%. of the
unearned increase in the value of the land on the basis of the hypothetical sale on the
valuation date.
CWT VS. P.N. SIKAND (1977) 107 ITR 922 (SC)
Value by assesse for WT
Value = Rs. 5,82,268 -
less Rs. 1,30,000 –unearned increase
-------------------
Rs. 4,52,268 ------ accepted by court
-----------------------------------
Value by w. tax officer
Net Annual rent = Rs. 82,956
YP = 10
Value = Rs.8,29,560 reduced to Rs. 6,00,000 since this figure was accepted by WTO last year
WHAT IS UNEARNED INCREASE
Buying rate – say Rs. 10 per sqft
Selling rate - say Rs. 100 per sqft
Unearned increase = Rs. 90 per sqft
50% = Rs. 45 per sqft
Key word : Sikand : Unearned increase
WENGER & CO.VS. DVO (1978) 115 ITR 648 DELHI HC
(COMBINATION OF METHODS)
PROPERTY
OWNER
TENENTED
OCCUPAIED
WENGER & CO. VS. DVO (1978) 115 ITR 648 DELHI HC
(COMBINATION OF METHODS)
DESCRIPTION VALUE OF TENANTED VALUE OF OWNER TOTAL VALUE
PART OCCUPIED PART
Estimated by Owner 82,613 89,392 1,72,005
Proposed By DVO 82,613 27,96,000 28,78,613
After Inspection 32,80,000
WENGER & CO.VS. DVO (1978) 115 ITR 648 DELHI HC
(COMBINATION OF METHODS)
District Valuation officer adopted two methods to value the property.
For owner occupied portion he calculated the value on the basis of what were the
rates prevalent for sale of commercial flats.
For the tenanted portion he capitalized the rental value.
The method adopted by District V. O. and his approach is not only acceptable but also
in accordance with the principles of evaluation.
Key word : :Wenger – Combination of methods
JAWAJEE NAGNATHAN VS. REVENUE DIVISIONAL OFFICER (1994) SCC
(4) 595 (SC)
Case of land acquisition
In case of Jawajee Nagnatham, the Court held, “It is therefore, clear that the Basic
Valuation Register prepared and maintained for the purpose of collecting stamp
duty has no statutory base or force. It cannot form a foundation to determine
the market value mentioned there under in instrument brought for registration.
Evidence of bona fide sales between willing prudent vendor and prudent vendee of
the land acquired or situated near about that land possessing same or similar
advantageous features would furnish basis to determine market value.”
JAWAJEE NAGNATHAN VS. REVENUE DIVISIONAL OFFICER (1994) SCC
(4) 595 (SC)
20 Guntha land acquired
LAO –on basis of letting value
Ref Court – Rs. 75 per sq yard
High Court – Rs. 300 per sq yard
SC – upheld high court
( Rs, 75 was RR rate for Resi. And Rs. 300 for Commercial – property commercial
land)
Key word : Jiwaji Nagnathan – Ready Recknor
CHIMANLAL HARGOVIND DAS VS. SLAO, PUNE AIR 1988 SC 1652
The following factors must be etched on the mental screen:
Instances to be taken into account
(1) If they are very proximate,
(2) Genuine and
(3) The acquisition itself has not motivated the purchaser to pay a higher price on
account of the resultant improvement in development prospects.
(4) Situation angle
CHIMANLAL HARGOVINDDAS VS. SLAO, PUNE AIR 1988 SC 1652
S No Positive Factors Negative factors
1 Smallness of size Largeness of area
2 Proximity to a road Situation in the interior at a distance from the
road
3 Frontage on a road Narrow strip of land with very small frontage
compared to depth
4 Nearness to developed area Lower level requiring the depresses portion to be
filled up
5 Regular shape Remoteness from developed locality
6 Level vis-a-vis land under acquisition Some special disadvantage factors which would
deter a purchaser.
7 Special value for an owner of an adjoin property to
whom it may have some very special advantage
CHIMANLAL HARGOVINDDAS VS. SLAO, PUNE AIR 1988 SC 1652
The evaluation of these factors of course depends on the facts of each case.
There cannot be any hard and fast or rigid rule.
Common sense is the best and most reliable guide.
For instance, take the factor regarding the size. Firstly while a smaller plot is within the
reach of many, a large block of land will have to be developed by preparing a lay out,
carving out roads, leaving open space, plotting out smaller plots, waiting for purchasers
(meanwhile the invested money will be blocked up) and the hazards of an
entrepreneur.
CHIMANLAL HARGOVINDDAS VS. SLAO, PUNE AIR 1988 SC 1652
The factor can be discounted by making a deduction by way of an allowance at an
appropriate rate ranging approx. between 20% to 50% to account for land required
to be set apart for carving out lands and plotting out small plots.
The discounting will to some extent also depend on whether it is a rural area or
urban area, whether building activity is picking up, and whether waiting period during
which the capital of the entrepreneur would be looked up, will be longer or shorter
and the attendant hazards.
CHIMANLAL HARGOVINDDAS VS. SLAO, PUNE AIR 1988 SC 1652
Every case must be dealt with on its own facts pattern bearing in mind all these factors
as a prudent purchaser of land in which position the Judge must place himself.
These are general guidelines to be applied with understanding informed with
common sense.
Key words : Chimanlala Hargovinddas : Instances comparison
CED VS. RADHADEVI JALAN (1968) 67 ITR 761 (CAL)
Rented properties must be valued by rent capitalization method.
In case of building which are in possession of tenant and the tenants cannot either be
evicted or the rent payable by them can not be enhanced, except in accordance with
the provisions of the rent act, the only appropriate method of valuation is to
capitalise the annual rent by certain number of year’s purchase.
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 Act on the value of the land the building.
CIT VS. ASHIMA SINHA (1979) 116 ITR 26 (CAL)
The court has held that
“In the method adopted by the valuation officer, the value of land is taken twice viz,
i) the amount included in the yield method and
ii) again under the reversionary method. This is a novel approach but in our view is
erroneous”.
CIT VS. ANUPKUMAR KAPOOR & OTHERS (1980) 125 ITR 684 (CAL)
The valuation officer under the method adopted by him, has taken the value of the land
twice, once in arriving at the figure by the yield or rental’ method and again in applying the
‘reversionary’ method. This is in our view was wholly wrong.
In this case Calcutta court rejected concept of reversionary value of land. The above case
was fully tenanted property and obviously therefore land reversion was not possible and
hence its value could not be added.
CIT VS. SMT.VIMLABEN BHAGWANDAS PATEL (1979)118 ITR 134(GUJ)
The rate of capitalisation should be not unreal and must have due regards to the commercial
rate of return after taking into consideration the various constraints and insecurities in the
property market.
After considering payment provision v/s 11(1) of U.L.C.R. Act of 1976, the court opined,
“In our opinion, the reasonable and appropriate rate of capitalisation would be 8.33 time the
net average annual income which would give yield of 12% per annum on the investment of
capital in
CASE LAW KEY WORDS
SR. NO Name of Case Law Key Words - Statement
1 - Rustam C Cooper vs Union of India AIR 1970 Nationalization of Bank, Definition of property, Tangible Intangible assets.
SC 564
25th Amendment to the constitution.
2 - Wenger & Co. vs DVO (1978) 115 ITR 648 Owner Occupied by Sales Comparison Method &
Delhi HC (Combination of Methods) Tenanted portion by Rent Capitalization Method. (Combination of Methods)
3 Sorab Talati vs Josheph Michem Appeal 101 0f Gilt Edged Security as the basis for determining fair return to the landlord
1949 - Vol. - 2 of SOC- page 162 (Bombay) on his investments in land and buildings.
(Invest Theory of Rent)
4 CWT vs P N Sikand (1977) 107 ITR 922 SC Assesse holds the leasehold interest on condition that if he assigns it, 50 % of
the unearned increase in the value of the land will be payable to the lessor.
5 Jawaji Nagnathan vs REV. DIV. Officer (1994) Basic Valuation Register prepared and maintained for the purpose of
SCC - 4 Page 595 SC collecting stamp duty has no statutory base or force.
Evidence of bona fide sales between willing prudent vendor and prudent
vendee of the land acquired or situated near about that land possessing same
or similar advantageous features would furnish basis to determine market
value.
CASE LAW KEY WORDS
SR. NO Name of Case Law Key Words - Statement
6 Chimanlal Hargovinddas vs SLAO- Pune, AIR Court derived Plus & Minus factors to be considered in Land Acquisition
1988 SC 1652 Valuation. Comparison of Instance plays major role in arriving at value.
7 CED Vs. Radhadevi Jalan (1968) 67 ITR 761 Properties that comes under purview of rent control act shall be valued by
(Cal) Rent Capitalization Method & increment in rent shall be considered in
accordance with the provisions of Rent Control Act.
8 CIT Vs. Ashima Sinha (1979) 116 ITR 26 (Cal) Hon. High Court have held that In the method adopted by Valuation officer
the value of land is taken twice viz.
i) The amount included in yield method
ii) Again under Reversionary Method – This is novel approach but in our
views is erroneous.
9 CIT Vs. Anupkumar Kapoor & others (1980) In case of fully Tenanted property, Reversionary value of land doesn't exists as
125 ITR 684 (Cal) the nature of tenancy is of perpetual nature.
10 CIT Vs. Smt.Vimlaben Bhagwandas Patel Rate of capitalisation must have due regards to the commercial rate of return
(1979)118 ITR 134(Guj) after taking into consideration the various constraints and insecurities in the
property market. Accepted YP is 8.33 & Rate of Interest is 12% in this case.
CASE LAW MCQ
Q1 Property includes ownership, estates and interests in corporeal things and also rights such
as trademarks, copyrights, patents.
a) Sorab Talati Vs Josheph Michem
c) Commissioner of Wealth Tax Vs P. N. Sikand
d) Wenger & Co Vs District Valuation Officer - Delhi Hc
d) Rustam C Cooper Vs Union of India
Rustam C Cooper Vs Union of India
CASE LAW MCQ
Q2. In this case, the court approved of investment theory in preference to comparable rent theory to
fix standard rent of the rent controlled premises. The court considered return or yield from Gilt
Edged security as the basis.
a) Rustam C. Cooper Vs Union of India
b) Sorab Talati Vs Josheph Michem
c) Commissioner of Wealth Tax Vs P. N. Sikand
d) Wenger & Co Vs District Valuation Officer - Delhi HC
Sorab Talati Vs Josheph Michem
CASE LAW MCQ
Q3. In which of the following case, the court has for the first time approved of
Investment theory of Rent fixation, by allowing 1.50 percent more return than the
return on gilt edged security on value of land and 2.5 percent extra yield on the cost of
the building, as fair return to the landlord on his investment in an immovable
property?
a) Commissioner of Wealth Tax Vs P. N. Sikand
b) Jawaji Nagnathan Vs Revenue Divisional Officer
c) Wenger & Co Vs District Valuation Officer - Delhi HC
d) Sorab Talati Vs Joseph Michem
Sorab Talati Vs Josheph Michem
CASE LAW MCQ
Q4. The Doctrine of Unearned Increase was enunciated because of a famous court
judgement. Select the correct judgement.
a) Sorab Talati Vs Josheph Michem
b) Wenger & Co Vs District Valuation Officer - Delhi HC
c) Commissioner of Wealth Tax, New Delhi vs. Sri P.N. Sikand
d) Jawaji Nagnathan Vs Revenue Divisional Officer
Commissioner of Wealth Tax, New Delhi vs. Sri P.N. Sikand
CASE LAW MCQ
Q5. The landmark judgement, Commissioner of Wealth Tax, New Delhi Vs. Sri P. N.
Sikand (1979) 107 ITR 922 (SC) states that:
a) the increase in value of the leasehold interest of the property leased is to be equally
shared by both the lessor and lessee.
b) only the lessor has the right to the increase in value
c) only the lessee has the right to the increase in value
d) the ratio of the lessor’s and lessee’s share is to be determined by negotiation.
the increase in value of the leasehold interest of the property leased is to be equally shared by both the
lessor and lessee.
CASE LAW MCQ
Q6. For owner occupied portion, the District valuation officer calculated the value on
the basis of what were the rates prevalent for sale of commercial flats in Connaught
place. For the tenanted portion, he capitalised the rental value. The method adopted by
him is acceptable.
a) Commissioner of Wealth Tax Vs P.N. Sikand
b) Wenger & Co Vs District Valuation Officer - Delhi HC
c) Jawaji Nagnathan Vs Revenue Divisional Officer
d) Sorab Talati vs Josheph Michem
Wenger & Co Vs District Valuation Officer - Delhi HC
CASE LAW MCQ
Q7. In which of the following cases, the court approved comparable sales method of
valuation for owner occupied portion of the building and rental method of valuation for
tenanted portion of the same building.
a) Rustam C. Cooper Vs Union of India
b) Sorab Talati Vs Josheph Michem
c) Wenger & Co Vs District Valuation Officer - Delhi HC
d) Commissioner of Wealth Tax Vs P.N. Sikand
Wenger & Co Vs District Valuation Officer - Delhi HC
CASE LAW MCQ
Q8. Basic valuation register for the purpose of collecting stamp duty cannot form a
foundation to determine the market value
a) Jawaji Nagnathan Vs Revenue Divisional Officer
b) Commissioner Of Wealth Tax Vs P. N. Sikand
c) Chimanlal Harigovinddas Vs Special Land Acquisition Officer
d) Wenger & Co Vs District Valuation Officer - Delhi HC
Jawaji Nagnathan Vs Revenue Divisional Officer
CASE LAW MCQ
Q9. In the method adopted by the valuation officer, the value of land taken twice viz.
i) the amount included in the yield method and ii) again under the reversionary
method. This is a novel approach but in our view is erroneous.
a) Chimanlal Harigovinddas Vs Special Land Acquisition Officer
b) Commissioner of Income Tax Vs Vimlaben Bhagwandas Patel
c) Controller of Estate Duty Vs Radha Devi Jalan
d) Commissioner of Income Tax Vs Smt. Ashima Sinha
Commissioner of Income Tax Vs Smt. Ashima Sinha
CASE LAW MCQ
Q10. The valuation officer under the method adopted by him, has taken the value of
the land twice, once in arriving at the figure by the yield or rental method and again in
applying the reversionary method. This is in our view was wholly wrong.
a) Commissioner of Income Tax Vs Vimlaben Bhagwandas Patel
b) Commissioner of Income Tax Vs Anup Kumar Kapoor and ors.
c) Chimanlal Harigovinddas Vs Special Land Acquisition Officer
d) Controller of Estate Duty Vs Radha Devi Jalan
Commissioner of Income Tax Vs Anup Kumar Kapoor and ors.
CASE LAW MCQ
Q11. The rate of capitalisation should be not unreal and must have regard to the
commercial rate of return after taking in to consideration the various constraints and
insecurities in the property market.
a) Controller of Estate Duty Vs Radha Devi Jalan
b) Commissioner of Income Tax Vs Anup Kumar Kapoor and ors.
c) Commissioner of Income Tax Vs Smt. Ashima Sinha
d) Commissioner of Income Tax Vs Vimlaben Bhagwandas Patel
Commissioner of Income Tax Vs Vimlaben Bhagwandas Patel
CASE LAW MCQ
Q12. 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 Rent
Control Act on the value of the land and building.
a) Chimanlal Harigovinddas Vs Special Land Acquisition Officer
b) Controller of Estate Duty Vs Radha Devi Jalan
c) Commissioner of Income Tax Vs Vimlaben Bhagwandas Patel
d) Commissioner of Income Tax Vs Anup Kumar Kapoor and ors.
Controller of Estate Duty Vs Radha Devi Jalan
CASE LAW MCQ
Q13. The court cannot take into account the award passed by the SLAO unless it is
produced and proved before the court. The market value is to be determined as on
date of publication of the notification under sec 4 of LAA. Plus factors and minus
factors are to be considered while determining the market value.
a) Chimanlal Harigovinddas Vs Special Land Acquisition Officer
b) Jawaji Nagnathan Vs Revenue Divisional Officer
c) Commissioner Of Wealth Tax Vs P. N. Sikand
d) Wenger & Co Vs District Valuation Officer - Delhi HC
Chimanlal Harigovinddas Vs Special Land Acquisition Officer
Thank You
