1997 (7) TMI 32 - HC - Wealth-tax

Summary

Issues:
Interpretation of rule 1BB of the Wealth-tax Rules - Applicability of rule 1BB retrospectively to assessment years prior to April 1, 1979.

Analysis:
The judgment by the High Court of Punjab and Haryana addressed the issue of whether rule 1BB of the Wealth-tax Rules could be applied retrospectively to assessment years before April 1, 1979. The case involved the valuation of a residential house owned by the assessee in Amritsar. The Income-tax Appellate Tribunal referred the question to the court regarding the retrospective application of rule 1BB. The Tribunal directed the Wealth-tax Officer to determine the valuation under both rule 1BB and section 7(4) of the Act, allowing the assessee to choose the preferred method. The Revenue challenged this decision, seeking clarification on the applicability of rule 1BB to the assessment years in question.

The court examined the introduction of rule 1BB in 1979 and its procedural nature. It was established that rule 1BB could not be applied retrospectively to assessment years before April 1, 1979. The court referenced the decision in CWT v. Hira Lal Mehra, which had a similar question regarding the applicability of rule 1BB to earlier assessment years. The court held that rule 1BB would only apply to the period from April 1, 1979, to March 31, 1989, during which the rule was in force.

The court acknowledged the differing views of other High Courts on the matter, citing cases where rule 1BB was deemed applicable to pending cases and assessment years before April 1, 1979. The Supreme Court's decision in CWT v. Sharvan Kumar Swarup and Sons supported the retrospective application of rule 1BB, considering it a rule of evidence for valuation. The Supreme Court's ruling impliedly disapproved the previous view of the High Court, emphasizing the applicability of rule 1BB to all pending cases, including those before April 1, 1979.

Conclusively, the court held that rule 1BB, being a rule of evidence, would be applicable to all pending cases, including assessment years prior to April 1, 1979. The judgment favored the assessee, aligning with the Supreme Court's decision in Sharvan Kumar Swarup's case. The court determined that the question referred to them should be answered in favor of the assessee and against the Revenue, based on the retrospective application of rule 1BB as a rule of evidence.