Delhi High Court
Commissioner Of Wealth-Tax, ... vs Smt. Promila Bali on 20 May, 1982
Equivalent citations: 1983 141 ITR 942 Delhi
Author: Kapur
Bench: C Talwar, D Kapur
JUDGMENT
Kapur, J.
1. In this case, there are a number of questions raised for different years. In all four applications under s. 27(3) of the W.T. Act, 1957, have been filed by the Commissioner of wealth tax, Delhi I, relating to the assessment years 1971 72 to 1974-75. The following proposed question is common to all the four years :
"whether, on the facts and in the circumstances of the case, the Tribunal was justified and correct in holding that the value of the plot on the relevant valuation date was Rs. 21,200 which is the premium paid by the assessed, following the decision of the Tribunal dated May 10, 1976, in W.T.A. Nos. 592 to 594/74-75 in the case of Miss Beneeta Seth, Which has been agitated by the department in reference application under section 27(3) of the wealth tax Act ?"
2. The following question is said to arise in relation to three of the assessment years :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in fixing the value of the structure at Rs. 1,43,120 for the assessment years 1971-72 and 1972 73 and Rs. 2,06,229 for the assessment year 1974-75, in view of the Board's Circular No. 3 WT of 1957 dated September 18; 1957, which stood withdrawn by the Board in the relevant assessment year ?"
3. And the following question relates to all the four years :
"Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in not giving an opportunity of the valuation Officer in terms of section 24(5) of the Wealth tax Act, 1957 ?"
4. We have heard these applications along with the case relating to Miss Beneeta Seth which is mentioned in the first question. Unfortunately, no counsel represented the assessed in that case so the arguments have been advanced principally in this case on the question whether any referable question of law arose from the order of the Tribunal.
5. As far as the first question is concerned, it was held by the tribunal in Miss Beneeta Seth's case that the property was not freely salable in the open market as it was a plot as there was a total bar on transfer to a non member of the society. The Tribunal accepted the view that the plot was not transferable and, therefore, its value could be determined according to the contributions made to the society.
6. It was urged by the learned counsel for the department that a clear question of law arose because it should be assumed that for the purpose of valuation an open market did exist. Reliance was placed on the judgment of the supreme Court in Ahmed G. H. Ariff v. CWT [1970] 76 ITR 471. No doubt, in that case, the court held that if a property was wake-alal-aulad which was not transferable, it could be assumed that there was an open market, and, hence, the value could be found. On this principle, the there was a free market and free sale was permissible. However, it does not appear that the Supreme court laid down any principle regarding the method of valuation in the said case. It only held that the property could not be valued at nil on the footing that it was not transferable.
7. We think the case is distinguishable on other grounds also. The rights which were valued in the present case were the rights of a sublease. An owner whose rights to transfer are restricted can be treated on a different footing from a person who has only a leasehold right. A leasehold right can have a market value only if a transfer is permitted under the terms of the contract. If there is only a personal right which is not transferable, then it would not be possible to value the property on the basis that it was an absolute right equal to ownership To disregard the terms of the lease and to assume that the sub-lessee was an owner would naturally give rise to huge difference in the matter of any given property must be read in the light of the prevailing restrictions regarding that property. The valuation cannot be made without taking into account the legal rights and liabilities and obligations of the person involved.
8. Learned counsel for the respondent cited the judgment of the Supreme Court in CWT v. P. N. Sikand [1977] 107 ITR 922, showing that the restrictions in the lease have to be taken into account in determining the value. Reliance was placed by the Supreme Court on the Privy Council Judgment in Corrie v. MacDermott [1914] AC 1056, which was an appeal from Australia, wherein it was held that the valuation cannot be done by treating the leasehold rights as unrestricted. In our view, the case is covered by the judgment of the Supreme Court in P. N. Sikand's case [1977] 107 ITR 922. So, we hold that no state able question of law arises regarding the method of valuation adopted relating to non transferable plots. It seems to us to involve purely a question of fact and no reference can be called for regarding the first question.
9. Turning to the second question which relates to the valuation of the structure built on the property, we do not find this question mentioned in the order of the Tribunal. It was never urged that Circular No. 3 WT of 1957 was withdrawn. We cannot examine a new question not arising out of the tribunal's order. There is a reference to the circular on the footing that the valuation should not be disturbed every year and should be kept for at least two years. There is no reference in the Tribunal's order to any withdrawal of the circular. We refuse to call for a reference. Particularly as the Tribunal in rejecting the application under s. 27(1) of the Act has also stated that it was not brought to the notice of the tribunal that the circular had been withdrawn and thus this was a question of fact.
10. Coming now to the third question. We note that the Tribunal refused to state a case regarding this question on the footing that there was no reference to the valuation officer under s. 16A of the Act. The facts of the case were that this was a reopening of the assessment under s. 17 of the act and the valuation had been done with a view to collect material for reopening the assessment. This was not a case in which the provisions of s. 16A relating to making a reference to a Valuation Officer in a pending case were involved. We, accordingly, hold that this question does not arise in the present case.
11. We, accordingly, dismiss the application as questions Nos. 2 and 3 do not arise out of the order of the Tribunal and question No. 1 is basically a question of fact. The parties will bear their own costs.
