1993 (7) TMI 15 - HC - Wealth-tax

Summary

Issues:
1. Interpretation of Board's Circular No. 326, dated February 6, 1982, in the context of determining property valuation for the assessment year 1982-83.
2. Whether reliance on an event occurring after the assessment year to determine property value is permissible under the income capitalization method.
3. The binding nature of circulars issued by the Central Board of Direct Taxes under section 119 of the Wealth-tax Act.

Analysis:
The judgment addressed the issue of interpreting Board's Circular No. 326, dated February 6, 1982, concerning property valuation for the assessment year 1982-83. The petitioner argued that the circular was merely directory and that the Tribunal should not have solely based its decision on it. The Tribunal, however, justified its reliance on the circular as it was in force during the relevant assessment year. The court held that the assessing authority or the Tribunal cannot determine property value based on an event occurring after the assessment year. The value should be calculated based on events up to the assessment year if it is subsequent to the year of sale. The circular was issued to ensure uniformity in property valuation methods, as highlighted in the case of K. P. Varghese v. ITO [1981] 131 ITR 597.

Regarding the permissibility of relying on post-assessment year events for property valuation under the income capitalization method, the court emphasized that such a practice is not recognized. The value should be derived from events up to the assessment year, not after. The court also reiterated the binding nature of circulars issued by the Central Board of Direct Taxes under section 119 of the Wealth-tax Act, as established in previous court decisions.

In response to the argument that the circular only provided guidelines and the actual property value for the assessment year 1982-83 should have been determined, the court noted that the question was not framed in that manner and thus did not require consideration. Consequently, the court concluded that no referable question of law was raised by the petitioner, leading to the rejection of the tax case petitions.