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Issues Involved:
1. Justification of the Appellate Tribunal in determining the value of the property on a rental basis applying rule 1BB of the Wealth-tax Rules, 1957. 2. Justification of the Appellate Tribunal in directing the Commissioner of Gift-tax (Appeals) to determine the value of the property gifted on a rental basis while setting aside the assessment. Issue-wise Detailed Analysis: Issue 1: Justification of the Appellate Tribunal in determining the value of the property on a rental basis applying rule 1BB of the Wealth-tax Rules, 1957. The core issue revolves around whether the Appellate Tribunal was justified in holding that the value of the property should be determined on a rental basis by applying rule 1BB of the Wealth-tax Rules, 1957. The property in question, located at No. 32, Nungambakkam High Road, Madras, was transferred by way of gift on February 1, 1974. The Gift-tax Officer initially valued the property at Rs. 3,25,700 based on the Assistant Valuation Officer's report, which considered the area and depreciated value of the superstructure. The Commissioner of Gift-tax (Appeals) later reduced this value to Rs. 2,25,000. Upon appeal, the Tribunal opined that for let-out properties, the rental method should be adopted for valuation. The Tribunal noted that the value should not exceed Rs. 1,81,020, as argued by the assessee based on rule 1BB of the Wealth-tax Rules, 1957, which was in effect from April 1, 1979, to March 31, 1989. However, the court noted that rule 1BB was not in force during the relevant assessment year (1974-75) and there was no link between the Gift-tax Act and the Wealth-tax Act at that time. Despite this, the Tribunal did not explicitly refer to rule 1BB but rather to the generally accepted rental method for valuing let-out properties. The court acknowledged that the rental method was recognized even before rule 1BB was introduced and could be applied independently of the Wealth-tax Rules. Issue 2: Justification of the Appellate Tribunal in directing the Commissioner of Gift-tax (Appeals) to determine the value of the property gifted on a rental basis while setting aside the assessment. The Tribunal had remanded the matter back to the Commissioner of Gift-tax (Appeals) to determine the value on a rental basis, allowing the Commissioner to ascertain the fresh value through the Departmental valuer and confront the same to the assessee before making a final decision. The court considered the argument that the valuation should be based on the Valuation Officer's report as per section 15(6) of the Gift-tax Act, which allows the Assessing Officer to refer the valuation to a Valuation Officer if the returned value is believed to be less than the fair market value. The respondent-assessee argued that the Tribunal's decision was based on the well-recognized rental method, not specifically on rule 1BB. The court referred to precedents, including the Supreme Court's decision in CWT v. Sharvan Kumar Swarup and Sons, which held that rule 1BB is a procedural rule applicable to all pending proceedings under the Wealth-tax Act as of April 1, 1979. The court also cited the Bombay High Court's decision in Jehangir Mahomedali Chagla v. M. V. Subrahmanian, which applied the rental method under rule 1BB to the Estate Duty Act despite no explicit link between the Acts. Ultimately, the court found significant merit in the argument that the rental method should be adopted for valuing let-out properties, as it is a well-accepted valuation method. The court emphasized the importance of achieving uniformity in valuation and avoiding disparate valuations for similar properties. Conclusion: The court concluded that the Tribunal was justified in adopting the rental method for valuing the property and directing the Commissioner of Gift-tax (Appeals) to determine the value on this basis. The court deleted the clause "applying rule 1BB of the Wealth-tax Rules, 1957" from the first question and answered both questions in the affirmative, against the Revenue. No costs were awarded.
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