1991 (10) TMI 10 - HC - Wealth-tax

Summary

Issues Involved:
1. Refusal to grant registration under section 34AB of the Wealth-tax Act.
2. Validity of the Board's instruction regarding income criterion for registration.
3. Quasi-judicial function of the Chief Commissioner in considering registration applications.

Issue-wise Detailed Analysis:

1. Refusal to Grant Registration under Section 34AB of the Wealth-tax Act:
The petitioner, a civil engineer, challenged the decisions of the Chief Commissioner of Income-tax, Ahmedabad, and the Central Board of Direct Taxes for refusing to grant him registration under section 34AB of the Wealth-tax Act, 1957. The petitioner had initially been registered as a valuer on January 6, 1976, but did not reapply within the prescribed period after the insertion of section 34AE by the Finance Act, 1988. His subsequent application dated July 9, 1990, for renewal or fresh registration was rejected on the grounds of non-compliance with the time limit and insufficient professional activity in recent years.

2. Validity of the Board's Instruction Regarding Income Criterion for Registration:
The Chief Commissioner refused the petitioner's application based on his professional receipts being below Rs. 50,000 per annum in the last five years, as per the Board's instruction. The Board had prescribed that the gross receipts for consulting engineers should not be less than Rs. 50,000 per annum in any three out of the last five years. The court examined whether the Board had the authority to issue such an instruction, which effectively directed the Chief Commissioner to consider income as a criterion for determining sufficient experience.

3. Quasi-judicial Function of the Chief Commissioner in Considering Registration Applications:
The court held that the Chief Commissioner, while considering the petitioner's application for registration, was performing a quasi-judicial function. According to the Supreme Court's definition, a quasi-judicial act involves a body with legal authority determining questions affecting rights and having the duty to act judicially. The Chief Commissioner had the legal authority to decide on the application, and his decision would affect the petitioner's right to practice as a registered valuer. The Board's instruction interfered with this quasi-judicial function, as it directed the Chief Commissioner on how to exercise his discretion regarding the petitioner's experience.

Conclusion:
The court concluded that the Board's instruction was beyond its competence, as it interfered with the Chief Commissioner's quasi-judicial function. The instruction that the applicant's income should not be less than Rs. 50,000 per annum in any three out of the last five years was deemed invalid. The court emphasized that Rule 8A(2)(ii)(B) requires ten years of practice but does not specify that this period must be immediately before the application date. Therefore, the orders of the Chief Commissioner and the Board were set aside, and the Chief Commissioner was directed to reconsider the petitioner's application on its merits, without being influenced by the invalid income criterion.

Judgment:
The petition was allowed, and the orders of the Chief Commissioner and the Board were quashed. The Chief Commissioner was directed to reconsider the petitioner's application for registration as a valuer afresh, in light of the court's observations.