1993 (7) TMI 68 - HC - Wealth-tax

Summary

Issues:
1. Retrospective application of rule 1BB of the Wealth-tax Rules.
2. Determination of valuation of assets by the Wealth-tax Officer under section 16A.
3. Applicability of rule 1BB for valuation of residential property by the Valuation Officer.
4. Availment of the benefit of rule 1BB by an assessee falling under section 7(4) of the Wealth-tax Act.

Issue 1: Retrospective application of rule 1BB of the Wealth-tax Rules
The case involved the applicability of rule 1BB of the Wealth-tax Rules retrospectively for the assessment years 1973-74 and 1974-75. The rule was introduced in 1979 but was omitted in 1989. The court emphasized that statutes operate prospectively unless expressly provided otherwise. The court noted that the rulemaking authority intended for rule 1BB to be enforced from April 1, 1979, as explicitly stated in the notification. Therefore, the court held that rule 1BB could not be applied to cases prior to April 1, 1979, and would only apply to assessments between April 1, 1979, and March 31, 1989.

Issue 2: Determination of valuation of assets by the Wealth-tax Officer under section 16A
The Wealth-tax Officer was directed by the Income-tax Appellate Tribunal to consider the valuation of a residential property based on rule 1BB and determine if a reference to the Valuation Officer under section 16A was necessary. The Tribunal emphasized that the Valuation Officer could not ignore rule 1BB for the valuation. Additionally, the Tribunal highlighted the importance of giving the assessee an option under section 7(4) of the Wealth-tax Act after determining the value based on rule 1BB.

Issue 3: Applicability of rule 1BB for valuation of residential property by the Valuation Officer
The Tribunal held that the Valuation Officer must consider rule 1BB for the valuation of residential property. The court reiterated that the rule was a guideline, and the valuation for Wealth-tax Act purposes should align with the provisions of the Act, particularly section 7.

Issue 4: Availment of the benefit of rule 1BB by an assessee falling under section 7(4) of the Wealth-tax Act
The Tribunal emphasized that after determining the value and providing the benefit of rule 1BB, the assessee should be given a fresh option under section 7(4) of the Act. The court clarified that the method used for valuation should be efficacious and fair, without consideration of whether it favored the assessee or the Revenue. The court highlighted that rule 1BB, although procedural, could not be applied retrospectively to cases pending before April 1, 1979, as per the rule's specific enforcement date.

In conclusion, the court answered all four questions in the negative, emphasizing the limited retrospective application of rule 1BB and the procedural aspects of valuation under the Wealth-tax Act.