Valuation of Life Interest

Average annual income   =   Average gross income of three yrs ending on valuation date     -      Average gross collection charges (restricted to 5% of average gross income)

For example

previous yr.        Gross income            collection charges

31.3.09                    100000                              6000

31.3.08                    120000                              7000

31.3.07                    110000                              5000

31.3.06                    115000                              6000

For the valuation date 31.03.09, Average annual income is;

       =                     100000 + 120000 + 110000         -        6000 + 7000 + 5000

                                              3                                                               3

      =                              110000          -        6000 (restricted to 5500/-)

      =                             104500/-

.