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2002 (10) TMI 69 - HC - Wealth-tax1. Whether Tribunal was justified in holding that the amendment made by the Finance Act 1988 removing wealth-tax on stock-in-trade was a substantive law and hence not retrospective in operation? - 2. Whether Tribunal was legally justified in directing that the immovable properties be valued as per Schedule III to the Wealth-tax Act for the assessment of assessment year 1984-85 whereas the said Schedule III came into existence with effect from the assessment year 1989-90? - 3. Whether the Court in the case of CWT v. Sharwan Kumar Swarup and Sons given in respect of the Wealth-tax Rules was applicable to the provisions of Schedule III to the Wealth-tax Act and thereby in giving retrospective effect to the provisions contained in Schedule III to the Wealth-tax Act? - the first question is answered in favour of the assessee and against the Department. - It has been held by the apex court in this case that rule 1BB partakes of the character of a rule of evidence. It deems the market value to be the one arrived at on the application of a particular method of valuation which is also one of the recognised and accepted methods. The rule is procedural and not substantive and is applicable to all proceedings pending on April 1 1979 when the rule came into force. The procedural law generally speaking is applicable to pending cases. No suitor can be said to have a vested right in procedure . - Since the controversy stands concluded by the aforesaid judgment of the Supreme Court no referable question of law arises
Issues Involved:
1. Retrospective application of the Finance Act, 1988, regarding the removal of wealth-tax on stock-in-trade. 2. Valuation of immovable properties as per Schedule III to the Wealth-tax Act for the assessment year 1984-85. 3. Applicability of the Supreme Court's decision in CWT v. Sharwan Kumar Swarup and Sons to the provisions of Schedule III to the Wealth-tax Act. Detailed Analysis: Issue 1: Retrospective Application of the Finance Act, 1988 The Tribunal held that the amendment made by the Finance Act, 1988, removing wealth-tax on stock-in-trade, was substantive law and not retrospective. The assessee argued that the amendment was declaratory and intended to remove unintended hardship caused by section 40 of the Finance Act, 1983. The court reviewed the legislative background, noting that the revival of wealth-tax aimed to curb tax avoidance by transferring unproductive assets to closely held companies. The Finance Act, 1988, amended these provisions to remove unintended hardships and provide incentives for growth and modernization. The court cited principles of statutory interpretation and past judgments, concluding that the amendment was curative and should be applied retrospectively. Thus, the first question was answered in favor of the assessee, establishing that the amendment had retrospective effect. Issue 2: Valuation of Immovable Properties as per Schedule III for the Assessment Year 1984-85 The Tribunal directed that immovable properties be valued as per Schedule III to the Wealth-tax Act for the assessment year 1984-85, despite Schedule III coming into effect from the assessment year 1989-90. The court referenced the Division Bench's decision in CWT v. Chhagan Lal Gupta, which held that procedural amendments are retrospective unless explicitly stated otherwise. The Supreme Court's decision in CWT v. Sharwan Kumar Swarup and Sons was also cited, affirming that procedural rules, such as valuation methods, apply to pending cases. Therefore, the court concluded that the procedural amendment regarding property valuation under Schedule III was retrospective and applicable to the assessment year 1984-85. Issue 3: Applicability of the Supreme Court's Decision in CWT v. Sharwan Kumar Swarup and Sons The third issue questioned whether the Supreme Court's ruling in CWT v. Sharwan Kumar Swarup and Sons, which dealt with the Wealth-tax Rules, applied to Schedule III of the Wealth-tax Act. The court noted that the Supreme Court had deemed procedural rules as retrospective, applying to all pending matters. This principle was reiterated in CWT v. Chhagan Lal Gupta, confirming that procedural amendments, including those in Schedule III, are retrospective. Consequently, the court affirmed that the Supreme Court's decision was applicable, supporting the retrospective application of Schedule III. Conclusion: All three issues were resolved in favor of the assessee. The court held that the Finance Act, 1988, amendment removing wealth-tax on stock-in-trade was retrospective, the valuation of properties as per Schedule III applied to the assessment year 1984-85, and the Supreme Court's decision in CWT v. Sharwan Kumar Swarup and Sons was applicable to the provisions of Schedule III.
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