Document Fragment View

Matching Fragments

6. We are in respectful agreement with the principle enunciated by the Division Bench in the Electricity Board's case (AIR 1961 Ker 237), If we capitalise the income for the number of years during which the tree is expected to yield in future at the prevalent rate of interest the capitalised value will represent not only the return for those years, but in addition the capital that would remain intact at the end of the period. To put the same idea in a different way, it would represent such recurring return for all time and not for the limited period during which alone the tree would have continued to yield income. Therefore that would not be just equivalent of the compensation. If 5% return would be a reasonable return and the tree-s would normally be expected to yield, say for 25 years more what is paid as compensation must yield the annual return at 5% which would be equivalent of what the owner of the trees would have obtained had those trees continued to stand in the property for 25 years but since the trees would cease to yield income at the end of 25 years the amount paid a1-compensation must exhaust itself by the end of that period. In other words it will be as if the amount of income is received only for a period of 25 years. In that event the determination should be as if an annuity for 25 years is provided for. What amount invested today will yield annuity for a specified period will have to be computed. The present value of recurring payments for a specified number of years will have to be worked out. It will be easy to work it out on the basis of the valuation tables provided in the Appendix in "Parks on Valuations Land and Houses." The present value of Re. 1 per annum at specified rate of interest return for a specified number of years could be easily found from the table. That would serve as the basis for determining what such value will be applying the multiplier representing the specified number of years.