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2017 (10) TMI 603 - SC - Wealth-taxValuing an asset for the purposes of Wealth Tax Act - Correct method of the valuation of the property Alpana Cinema for assessment under Wealth Tax Act - reference was made to the Departmental Valuer by Assessing Officer - High Court has expressed opinion that Wealth Tax Officer was justified in adopting the land and building method as if there is loss in the business or in other words there is negative income, it cannot be possible to say that the property in question has no marketable value - Held that - Overriding power has been provided to override the normal method of valuation of property as given by subsection 7(1) to arm the Wealth Tax Officer to adopt the method of valuation as given in subsection (2)(a). The purpose and object of giving overriding power is not to fetter the discretion. The Wealth Tax Officer is not obliged to mandatorily adopt the method provided in Section 7(2)(a) in all cases where assessee is carrying on a business. The language of subsection (2)(a) does not indicate that the provisions mandate the Wealth Tax Officer to adopt the method in all cases of running business Resort to Section 7(2) (a) is discretionary and enabling provision to Wealth Tax Officer to adopt the method as laid down in Section 7(2)(a) for a running business but the above enabling power cannot be held as obligation or shackles on right of Assessing Officer to adopt an appropriate method. In the present case reference was made to the Departmental Valuer by Assessing Officer under Section 7(3). Thus there is a conscious decision of the Assessing Officer to obtain the report from the Departmental Valuer. The above conscious decision itself contains the decision of Assessing Officer not to resort to Section 7(2)(a). The Wealth Tax Officer having referred the Departmental Valuer to value the property, in consequent to which reference for valuation report having already been received on 26.07.1977 which has relied in the assessment. Objections to the valuation report were considered by the Appellate Authority and having been rejected, we do not find any fault with the assessment made by the Wealth Tax Officer. We are of the view that the High Court did not commit any error in interfering with the order of ITAT.
Issues Involved:
1. Correct method of valuation of the property "Alpana Cinema" for assessment under the Wealth Tax Act. 2. Interpretation and application of Section 7(1) and Section 7(2)(a) of the Wealth Tax Act, 1957. 3. Discretion of the Wealth Tax Officer in choosing the method of valuation. 4. Validity of the reference to the Departmental Valuer for valuation of the property. Detailed Analysis: 1. Correct Method of Valuation of the Property "Alpana Cinema" for Assessment under the Wealth Tax Act: The central issue in the appeals was the correct method for valuing the property "Alpana Cinema" for wealth tax assessment. The appellants argued for the income capitalization method, while the Wealth Tax Officer used the land and building method. The High Court supported the Wealth Tax Officer's approach, rejecting the income capitalization method. 2. Interpretation and Application of Section 7(1) and Section 7(2)(a) of the Wealth Tax Act, 1957: The court examined the provisions of Section 7 of the Wealth Tax Act, 1957. Section 7(1) states that the value of any asset should be the price it would fetch if sold in the open market. Section 7(2)(a) allows the Wealth Tax Officer to determine the net value of the assets of a business as a whole, based on the balance sheet, instead of valuing each asset separately. The court held that Section 7(2)(a) is an enabling provision, giving discretion to the Wealth Tax Officer, but it does not mandate the use of the income capitalization method in all cases of running businesses. 3. Discretion of the Wealth Tax Officer in Choosing the Method of Valuation: The court emphasized that the Wealth Tax Officer has the discretion to choose the appropriate method of valuation. The officer is not obliged to adopt the method under Section 7(2)(a) in every case of a running business. The court referred to previous judgments, including Commissioner of Wealth Tax, Calcutta vs. Tungabadra Industries Ltd., Calcutta, which supported the discretionary power of the Wealth Tax Officer. 4. Validity of the Reference to the Departmental Valuer for Valuation of the Property: The Wealth Tax Officer made a reference to the Departmental Valuer for valuing the property, which was challenged by the appellants. The court upheld the validity of this reference, stating that the officer's decision to obtain a valuation report from the Departmental Valuer was a conscious decision not to resort to Section 7(2)(a). The court found no error in the officer's adoption of the land and building method, supported by the valuation report. Conclusion: The Supreme Court upheld the High Court's decision, affirming the Wealth Tax Officer's use of the land and building method for valuing "Alpana Cinema." The court dismissed the appeals, concluding that the Wealth Tax Officer acted within his discretion and that the valuation method chosen was appropriate. The High Court did not err in interfering with the ITAT's order, and the assessment made by the Wealth Tax Officer was deemed correct.
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