OPINION OF THE COURT BY
PERRY, J.This is an appeal from a decision of the tax appeal court sustaining the assessment placed by the assessor upon land of the taxpayer-appellant. The property assessed contains nn area of 519,844 squaye feet but is leased in subdivisions or lots to various tenants. The *191return was made by the taxpayer upon that portion of an ordinary tax return blank which is entitled “Lessor’s Eeturn of Eeal Property Leased” and in the return as made the various lots are enumerated, the two royal patents or grants of which they all form a part are set forth, the area is given together with the date of the lease covering each lot, the number of years for which the demise was made in each instance, the annual rents reserved, the names of the lessees arid a separate valuation for each lot. The total valuation placed upon the whole tract is also given, to wit, in the amount of $125,685. In the notice given by the assessor to the taxpayer in April of the taxation year, as required by law, showing the assessment as made, the matter is similarly treated by the assessor, that is to say, by setting forth information in some but not in as much detail concerning each lot. The total valuation returned is given in that notice together with the total of the assessment of $258,266. If there were nothing more to this feature of the case it may be that the return would be susceptible of the construction that it was a return of each lot separately and not of the tract as a whole. But that is not all that appears from the record. In appealing from the assessment the ordinary printed blank customarily prepared and furnished by the assessor was used. The statement therein made is that the “real property” was returned at $125,693 and assessed at $238,266. In this notice of appeal no reference was made to any subdivided lots or to any particular portions of the tract. The notice was evidently accepted by the assessor as a correct statement of the facts of the return and the assessment. In the briefs filed before the tax appeal court, and doubtless in the oral argument as well, the questions at issue were argued by both sides as though the return and the assessment were both of the one tract as a whole and no discussion was there had of *192the values of any individual lots. The tax appeal court also treated the matter in the same way, giving in its written decision no consideration whatever to the value of any separate lot or lots and placing a valuation of $258,266 on the property as a whole and declaring that it was thereby sustaining the assessment as made. The appeal to this court by the taxpayer was similarly from the decision sustaining the assessment and recited that the land in question was returned by the taxpayer at the valuation of $125,685. Again no objection was made by the assessor or his ..representative. So also in this court the treatment of the case throughout by counsel on both sides has been upon the theory that it was the tract as a whole that was returned and assessed and no effort has been made either in the oral or the written argument by counsel on either side to ascertain the value of any particular lot or lots.
Both the return and the assessment are easily susceptible of the construction that they related to the tract of land as a whole and under the circumstances above recited they should be so construed. It is unnecessary either from the point of view of the form of the return and the assessment or in the consideration of the value of the tract as a whole to make any study of or reference to the value of any one or more or all of the separate lots.
The principles involved in the taxation of property have been definitely and firmly established in this jurisdiction. The property must be assessed at its “cash value” as of the assessment date, which in this instance was January 1, 1922. The term “cash value,” as used in the statute, means the highest price which the property will bring for cash whether sold as a whole or in lots,— whichever will bring the higher return — and after reasonable and fair advertisement. It means the cash price as aforesaid obtainable if all the property were sold on *193the assessment date, — it does not mean what the property would bring if some of its subdivisions were sold on the assessment date and others from time to time through á period of six months or one year after the assessment date. See R. L. 1915, Sec. 1241, as amended by S. L. 1921, Act 250; In re James B. Castle, 15 Haw. 1, 2; Kash Co. v. Assessor, 15 Haw. 476, 478.
What is the evidence in the case at bar? On behalf of the assessor the following witnesses testified: Messrs. Aona, Beers, Tinker, Vicars and Stone, and for the taxpayer Messrs. Collins and Gurney. The testimony of Messrs. Aona and Beers was to the effect that the County of Hawaii in amicable settlement of judicial proceedings brought by the county for condemnation of certain land in Hilo desired for road-widening purposes had paid for that property from $2 to $2.50 per square foot. The only inference deducible from the record is that the circumstances surrounding.this property and the purchase thereof were not such as to entitle this evidence to any force in connection with the ascertainment of the value of the taxpayer’s property involved in this appeal. No party to the present controversy seems to attach any great weight to this testimony. It is entitled to none. Mr. Tinker testified that he did not know the area of the frontage of the property in question, gave no information as to the total value of the property, said that he thought it worth 50c per square foot “for the whole thing as an average” but added that the “back lots” would sell only “if sold on easy terms.” This last statement of his shows that in forming his estimate of 50c per square foot he had not the correct legal principles in mind. The law contemplated not “easy terms” but a sale for all cash. Mr. Vicars, without knowledge of the frontage of the tract, thought that its front portion; 100 feet in depth, would be worth “around 60c a square foot.”' “Quite a number *194of lots would sell at 60c” lie said, adding that “I do not think there would be people interested in that land” (meaning all the front lots) “who have got the money to buy it with.” This witness therefore likewise failed to apply correct legal principles. What is desired is not what a portion or portions of the tract would bring but what the whole of it could sell for on that date. Mr. Stone, the deputy tax assessor who made the assessment, testified expressly that he did not consider the income-producing capacity of the property, that he valued the whole of the property at 50c per square foot, aiid that in his opinion the value was “conservative.” In explanation, however, of his opinion, he said: “Of course, maybe you could not sell it at any one time; it would take a reasonable length of time and things are dull in every line of business as well as in real estate and some property maybe could not be sold but it still has the value. It might take a year to sell the frontage at that price. No such frontage of 2000 feet could be readily disposed of, not at the present time, it would take quite a while to dispose of any such amount of property as that.” This witness, too, showed a lack of appreciation of the correct principles involved and his evidence therefore is not of value.
The case stands therefore as though no evidence had been adduced by the assessor which can be of assistance to this court in determining the “cash value” of the tract on the assessment date.
For the taxpayer Mr. Collins testified that for five years he had been superintendent of the land department of the Bishop Estate, gave in detail a description of the land involved, including its dimensions, and otherwise showed an entire familiarity with all the facts of the case. He gave it as his opinion that the amount returned “represents the fair cash value of this property.” Mr. G-urney, *195the other witness for the taxpayer, testified to a residence of twenty-four years in Hilo and to his familiarity with real estate values there. He said that he thought that the return as made was “a fair return” but expressed doubt “that this property, if put up as a whole, would bring as much as the amount of the return,” adding that if the tract were sold by lots, “some lots might bring 50c per square foot but not all the lots could be sold at the present time.” Such evidence as this, coming from experts familiar with real estate values, is always admissible in cases of this kind. There is no reason for doubting the credibility of these two witnesses or the soundness of their judgment.
In another way also the same result is reached. The evidence is undisputed that there are outstanding on this tract twenty-six “old leases,” as they are called (meaning thereby leases made prior to 1919), covering about 199,000 square feet and expiring in various years from 1922 to 1936. The total rentals in force on the assessment date amounted to $5638 per annum or an income of a little less than 4%% on the amount returned by the taxpayer. The evidence is undisputed that investors purchasing property of this nature would require assurance of a return of 8% per annum on the capital invested. It also appears that if the “old leases” had all expired prior to the assessment date and leases at the same rate secured in the “new leases” were in effect for all of the property the rental would be a return of 6% on a capital value of $179,750 or of 8% on a value of $134,812. The fact remains, however, that the “old leases” were still existing at the assessment date and constituted an encumbrance rendering the total value of the property less than it would be if they had been wholly substituted by new leases. Without resorting to exact or intricate mathematical calculations, it is obvious that the difference be*196tween the amount of the return, $125,685 and the sum of $134,812 is clearly not too great an amount to allow for the depreciation caused by the existence of the outstanding “old leases.”
A. G. M. Robertson (Robertson & Gastle on the brief) for the taxpayer.. H. R. Hewitt, Deputy Attorney General (also on the brief), for the assessor.It cannot be doubted at this date that the income-producing capacity of property is an important consideration in determining its taxable value. In re Tax Assessment Appeals, 11 Haw. 235, 237, and In re Taxes Kapiolani Estate, 21 Haw. 667, 671.
The improvements have all been taxed separately to the lessees and for that reason alone need not be further considered in this case. Moreover, the undisputed evidence is that the buildings are-all wooden structures and of cheap construction. Ordinary experience teaches that they will be of very little, if any, value at the expiration of the leases. The tax court which purports to place some emphasis upon this matter of improvements has not in its decision stated what improvements it found on the property which did not fall within the description given in the testimony here recited. The assessor has presented no evidence tending to show that the improvements will be of any material, salable value at the expiration of the leases or tending to show the present worth of the lessor’s interest in them at the assessment date. From all of the evidence the only finding that can be made is that they do not add to the value of the lessor’s interest in the property.
In view, therefore, of the opinions of the experts who testified for the taxpayer and upon a consideration of the income-producing capacity of the property the judgment should be reversed and the taxpayer’s return sustained.