1968 SCMR 157 (PLP)

HAMOODUR RAHMAN, J.-This is an appeal from a judgment of the High Court of West Pakistan in a reference under section 59(2) of the Estate Duty Act, 1950. It relates to the valuation of the assets of one Inayat Khan, who died on the 14th of September 1950, leaving both cultivated and uncultivated lands in the village of Kot Khan in the district of Dung. His son Ahmad Khan valued the lands left by his father at Rs. 50,000 only for the purposes of estate duty. The deceased had, it appears, left 3471 acres of cultivable land and 1,1(8 acres of uncultivable land. The Central Board of Revenue assessed the value of the cultivable land at.Rs. 1,73,750 @ Rs. 500 per acre and the uncultivable and at Rs, 2,21,600 at the rate of Rs. 200 per acre. On this estate duty was charged at the rate of 10% amounting to Rs. 39,

495. The High Court on receipt of the reference appointed Mr. Ihsan-ul-Haq, Advocate, as a valuer. He valued the property at Rs. 2,06,

160. Both sides filed objections to his valuation, which was ultimately set aside on the 13th of April, 1962, on the ground that the basis of his valuation was incorrect. He had, it appears, not included the uncultivable lands in his estimate of the value, as according to him, those lands were "water-logged areas" and there was no reas snable prospect of their reclamation in the near future. These uncultivable lands were mostly affected by thlw and were also water-logged. The High Court again appointed Mr. Ghulam Alt Alvi, an Advocate to re-value the estate after visiting the lands. He fixed the value of the estate at Rs. 1,60,000 only. The department took objection to this. He had, it appears, adopted three different modes of valuation, namely, (i) on the basis of produce index value as given in the booklet of produce value units used by the Rehabilitation Department and the Land Commission, (ii) on the basis of the average price paid in private transactions in the villages in question or in the neighbouring villages, and (iii) the value to be calculated on the basis of the net value of the produce of land. The High Court found his first and third methods of valuation unacceptable,. and proceeded to make its own valuation by calculating the value of the land on the basis of private sales of land in or near the villages in which the deceased had left his properties. The method of valuation prescribed in the statute is, as given in section 38 of the Estate Duty Act, to the following effect "38 (1) The principal value of any property shall be estimated to be the price which, in the opinion of Controller, it would fetch if sold in the open market at the time of the deceased's death. (2) In estimating the principal value under this section the Controller shall fix the price of the property according to the market price at the time of the deceased's death and shall not make any reduction in the estimate on account of the estimate being made on the assumption that the whole property is to be placed on the market at one and the same time Provided that where it is proved to the satisfaction of the Controller that the value of the property has been depreciated by reason of the death of the deceased, the depreciation shall be taken into account in fixing the price." The High Court, however, in making its calculation took into consideration private sales of two adjoining villages, namely, Sehjowal and Thathi Panah. from 1945 to 1950. The figures of these sales were taken from the report of the valuer Mr. Ghulam Ali Alvi. His report, however, annexed a statement showing the average sale price of lands on the basis of price paid in private transactions of not only Sehjowal and Thathi Panah but also of Kot Khan Kilcha itself. Besides, there were at least four transactions in Sehjowal during the year 1950 which were near to the date of death of lnayat Khan. The High Court, however, had selected only one transaction of 1950, one of 1949, one of, 1947 and four of 1945 for consideration and on the basis thereof agreed with the departmental valuation of cultivable lands at Rs. 1,73,750 at the rate of Rs. 500 per acre. After having come to this valuation it then went back and accepted the ratio laid down by the valuer Mr. Ghulam Ali Alvi with regard to uncultivable lands, namely, that they should be valued at 1/4th of the value of the cultivated lands, and in this way came to the total valuation of Rs. 3,12,

250. Leave was granted in this case to consider whether the assessment had been made by the High Court on correct principles. Learned counsel appearing for the appellant has, of course, assailed the valuation of the cultivated lands as well as being based on incorrect and unreliable data. The wide variation in the prices given for the private transactions, it is suggested, could furnish no reliable criterion for making a proper evaluation of the market price at the time of the death of the assessee on the basis that his entire estate was up for sale. It is suggested that the High Court was wrong in. taking the view that the average of the selected private transactions would furnish a more accurate basis for making the evaluation, particularly, since the transac tions cited by the valuer were of comparatively smaller areas of probably homestead land or lands subjected to pre-emption. It is further urged that it would have furnished a more correct basis if the High Court had adopted the system followed by the Land Commissioner or the Rehabilitation Authorities of making calculations of the productivity of the land in terms of produce index units. In this connection it has however to be stated that even Mr. Alvi valued the cultivated lands at Rs. 1,43,376 on the basis of produce index units and Mr. Ihsan-ul-Haq had valued the same at Rs, 2,06,

160. In the circumstances, we do not think that the valuation of the cultivable lands has been made upon an unreasonable basis. With regard to the uncultivable lands, however, there appears to be some force in the contention of the learned counsel that the valuation has been made -upon a wholly irrational and arbitrary basis. No reason has been given either by Mr. Alvi or by the High Court as to why the Banfar lands should be valued at 1/4th the value of the cultivated lands. It is pointed out to us that both the valuers found these lands to be affected by thur and water-logging. Mr. Ihsan-ul-Haq thought that they were of no value at all and indeed at one stage the appellant himself offered to sell these lands to Govern ment @ Re. 1 per acre but they refuse to take them even at that price, as it could not be utilised under the Utilization of Land Act. Mr. Alvi also thought that these lands should be treated as Ghair Mumkin. The Naib-Tehsildar, in his report also confirmed this finding and he could not value the estate at over -Rs. 90,

000. The reports of the Naib-Tehsildar, the Nazir and the Revenue Tehsildar all confirm that the land has been badly affected by sem and thur and the proper value of the estate, including both cultivable and uncultivable lands could not be more than Rs. 90,

000. Learned counsel for the Controller of Estate Duty, however, states that he has no instructions regarding either the offer made by the appellant for the sale of the uncultivable area @ Re. 1 per acre or the present condition of these lands. In order to take instructions regarding these and in particular the offer, which is repeated in Court by the learned counsel for the appellant, he prays for a month's time. This appeal is, accordingly, adjourned for One month to enable the learned counsel for the Controller to Obtain instructions regarding the above-mentioned matters.