Commissioner Of Wealth Tax vs Mrs. Sheila Marett
1998 Latest Caselaw 807 Del

ORDER

Lahoti, J.

By this petition under section 27(3) of the Wealth Tax Act, 1957, the revenue seeks a mandamus to the Tribunal for drawing up a statement of the case and refers the following question of law for the opinion of the High Court:

"Whether the Tribunal was correct in law in interpreting the provisions of section 7(4) of the Wealth Tax Act and rule 1BB of the Wealth tax Rules that in respect of same property, the valuation could be made partly with respect to section 7(4) and partly with respect to rule 1BB ?"

2. The respondent- assessee is an individual. She has a house property situated at B-96, Greater Kailash Part-1, New Delhi. She filed her return of wealth for the assessment years 1985-86 and 1986-87 showing the value of the property at Rs. 3,86,750. The assessing officer did not accept the valuation and made a reference under section 16A of the Act. The Assistant Valuation Officer vide his report dated 29-1-1990 determined the fair market value of the property at Rs. 5,16,500 as on 31-3-1985 and Rs. 5,08,500 as on 31-3-1986.

2. The respondent- assessee is an individual. She has a house property situated at B-96, Greater Kailash Part-1, New Delhi. She filed her return of wealth for the assessment years 1985-86 and 1986-87 showing the value of the property at Rs. 3,86,750. The assessing officer did not accept the valuation and made a reference under section 16A of the Act. The Assistant Valuation Officer vide his report dated 29-1-1990 determined the fair market value of the property at Rs. 5,16,500 as on 31-3-1985 and Rs. 5,08,500 as on 31-3-1986.

3. During the course of the assessment proceedings, the assessing officer formed an opinion that the valuation report suffered from the following discrepancies :

3. During the course of the assessment proceedings, the assessing officer formed an opinion that the valuation report suffered from the following discrepancies :

(i) Covered area of the property was only 316.84 sq. mts. Main building, servant quarters and garages of about 46 sq. mts., which was found much less than the specified area under rule 1BB.

(ii) The property was claimed to be rental since 1981. However, relevant documents showed that it was rented for only three years.

(iii) The property in question was sold in 1988 for a consideration of Rupees one crore only.

4. The assessing officer formed an opinion that it was a fit case for application of rule 1BB of the Wealth Tax Rules. With the prior approval of the Dy. Commissioner of Income-tax, the assessing officer called for a re-valuation. The Assistant Valuation Officer, pending the final report, informed the assessing officer and the assessee both vide his letter dated 28-3-1990 that the fair market value of the property was estimated at Rs. 21,04,300 as on 31-3-1995 and Rs. 27,90,600 as on 31-3-1986. The valuation so proposed was adopted by the assessing officer subject to substitution by valuation which may be finally determined for assessing the taxable wealth.

4. The assessing officer formed an opinion that it was a fit case for application of rule 1BB of the Wealth Tax Rules. With the prior approval of the Dy. Commissioner of Income-tax, the assessing officer called for a re-valuation. The Assistant Valuation Officer, pending the final report, informed the assessing officer and the assessee both vide his letter dated 28-3-1990 that the fair market value of the property was estimated at Rs. 21,04,300 as on 31-3-1995 and Rs. 27,90,600 as on 31-3-1986. The valuation so proposed was adopted by the assessing officer subject to substitution by valuation which may be finally determined for assessing the taxable wealth.

5. The assessee went in appeal for both the years. The learned Commissioner (Appeals) observed that the property in question was self -occupied and partly let out. For self -occupied portion he observed that the valuation at Rs. 1,90,000 which was adopted in the assessment years 1983-84 and 1984-85 should be adopted for the years in question also as, as per the provisions of section 7(4) of the Act, the valuation adopted for the earlier years would stand frozen for all subsequent years with regard to the let out portion. The Commissioner (Appeals) accepted the contention of the assessee and took the valuation at Rs. 2,48,500. The assessing officer was directed to adopt the value of the property at Rs. 4,38,500, ie., Rs. 1,90,000 + Rs. 2,48,500. The revenue went in appeal to the Tribunal which upheld the finding of the Commissioner (Appeals) and dismissed the appeal.

5. The assessee went in appeal for both the years. The learned Commissioner (Appeals) observed that the property in question was self -occupied and partly let out. For self -occupied portion he observed that the valuation at Rs. 1,90,000 which was adopted in the assessment years 1983-84 and 1984-85 should be adopted for the years in question also as, as per the provisions of section 7(4) of the Act, the valuation adopted for the earlier years would stand frozen for all subsequent years with regard to the let out portion. The Commissioner (Appeals) accepted the contention of the assessee and took the valuation at Rs. 2,48,500. The assessing officer was directed to adopt the value of the property at Rs. 4,38,500, ie., Rs. 1,90,000 + Rs. 2,48,500. The revenue went in appeal to the Tribunal which upheld the finding of the Commissioner (Appeals) and dismissed the appeal.

6. The revenue filed an application seeking a statement of the facts of the case and reference of the question of law set out hereinabove for the opinion of the High Court which application has been rejected.

6. The revenue filed an application seeking a statement of the facts of the case and reference of the question of law set out hereinabove for the opinion of the High Court which application has been rejected.

7. It was submitted by the learned senior standing counsel for the revenue that the Tribunal should not have rejected the petitioners application for reference as the question suggested by the revenue involved interpretation of the relevant provisions of law such as sections 7 and 5 and rule 1BB.

7. It was submitted by the learned senior standing counsel for the revenue that the Tribunal should not have rejected the petitioners application for reference as the question suggested by the revenue involved interpretation of the relevant provisions of law such as sections 7 and 5 and rule 1BB.

8. The learned counsel for the respondent-assessee submitted that the answer to the question was obvious and, therefore, the Tribunal was justified in forming an opinion that no reference was called for.

8. The learned counsel for the respondent-assessee submitted that the answer to the question was obvious and, therefore, the Tribunal was justified in forming an opinion that no reference was called for.

9. Having heard the learned counsels for the parties, we are of the opinion that the question suggested by the revenue does arise as a question of law from the order of the Tribunal.

9. Having heard the learned counsels for the parties, we are of the opinion that the question suggested by the revenue does arise as a question of law from the order of the Tribunal.

10. The petition is, therefore, allowed. The Tribunal shall draw up a statement of the facts of the case and refer the question stated hereinabove for the opinion of the High Court. No order as to the costs.

10. The petition is, therefore, allowed. The Tribunal shall draw up a statement of the facts of the case and refer the question stated hereinabove for the opinion of the High Court. No order as to the costs.