1987 (5) TMI 9 - HC - Wealth-tax

Summary

Issues Involved:
1. Legality of Tribunal's valuation based on the assessment year 1977-78.
2. Applicability of rule 1BB of the Wealth-tax Rules, 1957.
3. Tribunal's decision on the application of rule 1BB by the Appellate Assistant Commissioner.
4. Sustainability of the Tribunal's valuation of the property.

Summary:

Issue 1: Legality of Tribunal's Valuation Based on the Assessment Year 1977-78
The Tribunal upheld the valuation of the property at 8/1, Middleton Row, Calcutta, as determined for the assessment year 1977-78, at Rs. 31,31,825 for the subsequent assessment years 1978-79, 1979-80, and 1980-81. The Tribunal noted that earlier assessments were relevant evidence in subsequent assessments and should not normally be departed from unless there were special reasons or fresh facts.

Issue 2: Applicability of Rule 1BB of the Wealth-tax Rules, 1957
The Tribunal held that rule 1BB, which became operative from April 1, 1979, was mandatory but did not apply it, reasoning that there had been a reference to the District Valuation Officer under section 16A of the Wealth-tax Act in the earlier assessment year 1977-78. The Tribunal observed that the rule had no compelling force where there was such a reference.

Issue 3: Tribunal's Decision on the Application of Rule 1BB by the Appellate Assistant Commissioner
The Appellate Assistant Commissioner had applied rule 1BB for the assessment years 1978-79, 1979-80, and 1980-81, determining the valuation based on the gross maintainable rent. The Tribunal set aside this application, holding that the valuation made by the District Valuation Officer in the earlier assessment year should be followed.

Issue 4: Sustainability of the Tribunal's Valuation of the Property
The Tribunal's decision to uphold the valuation of Rs. 31,31,825 for the subsequent assessment years was challenged. The court held that section 7(1) of the Wealth-tax Act, which provides for the estimation of the value of assets subject to rules, was procedural. Rule 1BB, being procedural, should apply retrospectively to pending assessments. The court concluded that the assessee was entitled to have the property revalued under rule 1BB for the relevant assessment years.

Conclusion:
The court answered the questions in favor of the assessee, holding that the Tribunal misdirected itself in not applying rule 1BB and that the valuation for the assessment year 1977-78 should not be binding for the subsequent years without revaluation under the applicable rules. The reference was disposed of with no order as to costs.