1995 (12) TMI 29 - HC - Wealth-tax

Summary

Issues:
Interpretation of section 7(4) of the Wealth-tax Act, 1957 - Applicability of section 7(4) to pending assessments - Procedural nature of section 7(4) - Refusal of Tribunal to refer a question under section 27(1) of the Act.

Analysis:
The judgment pertains to an application filed under section 27(3) of the Wealth-tax Act, 1957 seeking a direction to the Tribunal to refer a question of law regarding the applicability of section 7(4) of the Act to pending assessments. The case involved a dispute over the valuation of a house property for wealth tax purposes. The assessee contended that the property value should be frozen under section 7(4) due to self-occupation, while the Wealth-tax Officer valued it higher. The Appellate Assistant Commissioner and Tribunal held that section 7(4) was procedural and applicable to pending assessments, leading to a lower tax liability for the assessee.

The court examined the provisions of section 7(4) inserted by the Finance Act, 1976, which allowed the value of a house used for residential purposes to be determined based on the price it would fetch in the open market. The court cited precedents such as CWT v. Lachmandas Bhatia and CWT v. Shri Kasturbhai Mayabhai, which held that similar rules were procedural and applied retrospectively. Additionally, the court referred to the Supreme Court decision in C. Beepathuma v. Velasari Shankaranarayana Kadambolithaya, emphasizing that the law of limitation, a procedural law, applies based on the provisions existing at the time of the suit.

Relying on legal precedents, the court concluded that section 7(4) of the Act was procedural in nature and could be applied to pending assessments, including those prior to the amendment in 1976. The court noted that section 7 of the Wealth-tax Act was considered machinery by the High Court of Bombay, further supporting the procedural nature of the provision. As a result, the Tribunal's decision to apply section 7(4) to the case was deemed justified, with no error demonstrated.

Ultimately, the court held that the question regarding the applicability of section 7(4) was settled by established case law and was not a valid question of law for reference. The court upheld the Tribunal's decision, rejecting the reference application and deeming further pursuit under section 27(5) futile. No costs were awarded, but counsel fees were specified for each side.