Delhi High Court
The Pr. Commissioner Of Wealth Tax ... vs Smt. Padma Dalmia on 14 March, 2018
$~30 & 31
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 14.03.2018
+ WTA 8/2017 & CM APPL. 41757/2017
THE PR. COMMISSIONER OF WEALTH TAX
CENTRAL-3 ..... Petitioner
Through: Mr.Ruchir Bhatia and Mr.Puneet Rao,
Advs.
versus
SMT. PADMA DALMIA ..... Respondent
Through: Mr.Simran Mehta, Adv.
WTA 9/2017 & CM APPL. 41758/2017
THE PR. COMMISSIONER OF WEALTH TAX
CENTRAL-3 ..... Petitioner
Through: Mr.Ruchir Bhatia and Mr.Puneet Rao,
Advs.
versus
SH. RAGHU HARI DALMIA ..... Respondent
Through: Mr.Simran Mehta, Adv.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE A. K. CHAWLA
HON'BLE MR. JUSTICE S. RAVINDRA BHAT (ORAL)
%
The question of law involved in this case is as follows:
"Whether the ld. ITAT was right in directing the Assessing
Officer to disregard the recent valuation report and adopt old
valuation report inspite of the fact that current valuation of the
assets was available with the assessee at the time of filing of
Wealth Tax return?
2. The assessees were subjected to search under Section 132 of the
Income Tax Act, 1961 on 20.01.2012. Based upon the valuation of their
assets, which included jewellery, the Wealth Tax Officer (WTO) made
additions in excess of `88 lacs which resulted in wealth tax liability. The
challenge to the Commissioner of Wealth Tax was unsuccessful.
Consequently, they appealed to the Tribunal which granted relief, based
upon a circular issued on 15.03.1993.
3. It is urged on behalf of the Revenue that the circular in this case
merely allows the assessee to use the report of the registered valuer obtained
for one assessment year to assess the value of jewellery for subsequent four
assessment years but under no circumstances it undermines the power of the
Wealth Tax Officer to rely upon the later valuation report. The assessees
resist the appeal; apart from setting up the circular (dated 15.03.1993). They
rely upon the combined effect of Rules 18 & 19 to urge that the valuation
report once adopted is deemed to be in effect for four years and that in the
present case, the time for filing the fresh valuation report, had not yet arisen.
The occasion for a fresh valuation occurred on account of search which
resulted in a separate valuation. Ld. Counsel also relied upon Rule 19A to
highlight that the value of assets other than gold and jewellery, did not
require fresh annual revisiting.
4. Rules 18 & 19 of the Third Schedule to the Wealth Tax Rules (which
form the mechanism for valuation of wealth, in terms of Section 7 of the
Wealth Tax Act), read as follows:
"18. Valuation of jewellery. - (1) The value of the jewellery
shall be estimated to be the price which it would fetch if sold
in the open market on the valuation date (hereafter in this rule
referred to as fair market value).
(2) The return of net wealth furnished by the assessee shall be
supported by, -
(i) a statement in the prescribed form, where the value of
the jewellery on the valuation date does not exceed rupees
five lakhs;
(ii) a report of a registered valuer in the prescribed form,
where the value of the jewellery on the valuation date
exceeds rupees five lakhs.
(3) Notwithstanding anything mentioned in sub-rule (2), the
Assessing Officer may, if he is of opinion, that the value of the
jewellery declared in the return
(a) is less than its fair market value by such percentage or
such amount as is prescribed under sub-clause (i) of
clause (b) of sub-section (1) of section 16 A;
(b) is less than its fair market value as referred to in
clause (a) of sub-section (a) of section 16A,
he may refer the valuation of such jewellery to a Valuation
Officer under sub-section (1) of the said section and the value
of such jewellery shall be the fair market value as estimated by
the Valuation Officer]
19. Adjustment in value of jewellery for subsequent
assessment years. - The value of any jewellery determined in
accordance with [sub-rule (3) of] rule 18 for any assessment
year (hereinafter referred to as the first assessment shall be
taken to be the value of such jewellery for the subsequent four
assessment years, subject to the following adjustments,
namely:
(a) where the jewellery includes gold or silver or any alloy
containing gold or silver, the value of such gold or silver or
such alloy as on the valuation date relevant to the concerned
subsequent assessment year shall be substituted for the value
of such gold or silver or alloy on the valuation date relevant to
the first assessment year;
(b) where any jewellery or part of jewellery is sold or
otherwise disposed of by the assessee, or any jewellery or part
of jewellery is acquired by him, on or before the valuation
date relevant to the concerned subsequent year, the value of
the jewellery determined for the first assessment year shall be
reduced or increased, as the case may be, and the value as so
reduced or increased shall be the value of the jewellery for
such subsequent assessment year."
5. It is evident that a conjoint reading of the Rules require valuation of all
assets; furthermore, the valuation operates not on a year to year basis but for
a four year cycle. The only exception made out is that where jewellery
includes gold or silver or any other alloy, the valuation of gold has to be
undertaken annually. Furthermore, if the jewellery or any part of such asset
is sold or acquired before valuation date (i.e. within the four year period)
such value has to be reduced or increased as the case may be and has to be
reflected in the subsequent assessment year.
6. It is evident from the facts of the present case that the search was an
event which per se could not have compelled the assessee to go in for fresh
valuation, unless there was a compulsion in law to do so. In these
circumstances, the assessees acted within their rights in relying upon the
prevailing valuation, which ended on 31.03.2012.
7. For the above reasons, the question of law framed is answered in
favour of the assessees and against the appellant/revenue. The appeals are
dismissed. All the pending applications also stand disposed of.
S. RAVINDRA BHAT, J
A. K. CHAWLA, J
MARCH 14, 2018
rk
