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2016 (4) TMI 333 - AT - Wealth-taxAddition to the declared value of the jewellery while framing the assessment - Requirement of obtaining report of registered valuer for value of jewellery exceeding ₹ 5 lakhs - Held that - It is seen from the records and has also been found by the Assessing Officer as correct that the valuation of stones in the wealth tax return in respect of valuation date as on 31.3.12 has been based on the last valuation report on 31.03.08. Hence, we agree with the contention of the Ld. AR that as per the procedure for valuation spelt out in Circular No. 646 of 1993, the assessee is permitted to use the valuation report given by an approved valuer for a particular year for next four years with appropriate adjustment only for the change in value of metal contained in jewellery. Hence, the assessee cannot be held at fault for not including appropriate adjustment/appreciation for the change in value of stones. No hesitation in holding that Circular No. 646 dated 15.3.93 issued by the CBDT which lays down that where the jewellery includes gold or silver or any alloy containing god or silver, the value of such gold or silver or alloy as on the valuation date relevant to the subsequent year shall be substituted for the value of such gold or silver or alloy on the valuation date relevant to the first Assessment Year. This, in effect, would mean that in the valuation of jewellery, the value of the metal, be it gold, silver or alloy, will have to be substituted every year whereas for the other items in the jewellery, the value as per the valuation report can be continued to be taken for a period of four years at the same valuation.is binding on the revenue authorities. In view of our findings, we delete the addition made to the declared value of the jewellery while framing the assessment. by the Assessing Officer. - Decided in favour of assessee
Issues Involved:
1. Valuation of jewellery for wealth tax purposes. 2. Binding nature of CBDT Circulars on revenue authorities. Detailed Analysis: Issue 1: Valuation of Jewellery for Wealth Tax Purposes The appellant filed a return declaring a net wealth of Rs. 3,32,73,735/-, which included immovable properties and jewellery. The jewellery was valued based on a report dated 31.3.2008, in accordance with CBDT Circular No. 646 of 1993. A search conducted on 20th and 27th January 2012 revealed that the market value of the jewellery was higher than the declared value. The Assessing Officer (AO) increased the jewellery valuation by 6%, adding Rs. 15,96,147/- to the net wealth. The appellant contended that the jewellery valuation should be based on the CBDT Circular, which allows using the same valuation report for four years with adjustments only for the metal value. The appellant argued that the AO's addition was unjustified as the valuation of stones did not require annual adjustments. The tribunal found that the appellant correctly interpreted the CBDT Circular, which mandates annual adjustments only for the metal value in jewellery, not for stones. The tribunal held that the appellant was not at fault for not adjusting the stone value and deleted the addition of Rs. 15,96,147/- made by the AO. Issue 2: Binding Nature of CBDT Circulars on Revenue Authorities The Ld. Commissioner of Wealth Tax (Appeals) [CWT(A)] held that CBDT Circulars cannot override the provisions of the Wealth Tax Act, relying on the Delhi High Court's decision in CIT vs. Nagesh Knitwears (P) Ltd. The appellant argued that the CWT(A) misinterpreted the judgment, which states that while circulars cannot override the Act, they are binding on revenue authorities unless challenged. The tribunal reviewed various judicial precedents, including decisions from the Supreme Court and High Courts, which consistently held that CBDT Circulars are binding on revenue authorities. The tribunal cited cases such as KP. Varghese v. ITO and UCO Bank vs. CIT, emphasizing that circulars, even if they deviate from the Act, must be followed by tax authorities to ensure uniform and fair administration. The tribunal concluded that CBDT Circular No. 646 dated 15.3.1993, being in force, was binding on the revenue authorities. Consequently, the tribunal allowed the appeal and deleted the addition made by the AO. Conclusion The tribunal allowed the appeal, holding that the appellant's interpretation of the CBDT Circular was correct, and the addition of Rs. 15,96,147/- made by the AO was unjustified. The tribunal emphasized that CBDT Circulars are binding on revenue authorities, ensuring a uniform and fair application of tax laws. The order was pronounced in the open court on 29.2.2016.
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