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Issues Involved:
1. Valuation of immovable property. 2. Exemption under Sections 5(1)(iv) and 5(1)(xiii) read with Section 5(1a). 3. Enhancement of assessment for assessment years 1976-77 to 1981-82. Detailed Analysis: 1. Valuation of Immovable Property: The appeals pertain to the valuation of an immovable property, 'Prakash Talkies', owned by a partnership firm in which the appellants are partners. The property valuation for the years under consideration (1974-75 and 1976-77 to 1981-82) was disputed. The valuation returned by the appellants, based on reports from three approved valuers, was significantly lower than the valuation determined by the Department Valuation Office (DVO) under Section 16A of the Wealth Tax Act, 1957. The Appellate Assistant Commissioner (AAC) confirmed the order of the Income Tax Officer (ITO). The appellants argued that with the insertion of Schedule III in the Act effective from 1st April 1989, which contains rules for determining the values of assets as required by Section 7(1) read with Section 4(1)(b) and Rule 2 of the Wealth Tax Rules 1957, the valuation of the property should be determined as per these rules. This argument was supported by a decision of the Tribunal in the case of Krishnadass Govind Dass Parikh vs. WTO, which held that the rules in Schedule III are procedural in nature and retrospective in effect, applicable to all pending matters of valuation. The Departmental Representative disputed the retrospective application of the rules in Schedule III but alternatively submitted that if the cited decision is followed, the ITO should be permitted to consider the applicability of these rules to the facts of the case. The Tribunal, agreeing with the appellants, held that the valuation of the property should be made as per the rules contained in Schedule III of the Act, keeping the powers of the WTO under Rule 8 of the said schedule open. The grounds relating to this point were allowed accordingly. 2. Exemption under Sections 5(1)(iv) and 5(1)(xiii) read with Section 5(1a): The appellants claimed exemptions under Section 5(1)(iv) for their proportionate shares in the value of the theatre building and under Section 5(1)(xiii) for their shares in the values of the shares of limited companies belonging to the partnership firm. The WTO accepted these claims for the assessment years 1976-77 to 1981-82 but disallowed them for 1974-75. The AAC, while examining the issue for 1974-75, concluded that a firm has an independent status regarding the assets owned by it vis-a-vis its partners and that the wealth of the firm cannot be regarded as the wealth of the partners. The AAC directed the WTO to recompute the net wealth of the firm after deducting the exemptions and then compute the appellants' shares in the net wealth of the firm. The appellants argued that they were entitled to exemption under Section 5(1)(iv) based on a Tribunal order in a similar case, while the Departmental Representative supported the AAC's order, citing various High Court decisions. The Tribunal found merit in the appellants' submissions, noting that a firm is not an "assessee" under the Act, but the taxable assets belonging to a firm are not excluded from the wealth tax in the hands of its partners. The Tribunal preferred the view that exemptions under Section 5(1)(iv) and 5(1)(xiii) read with Section 5(1a) should be given to the appellants in respect of their shares in the immovable and movable properties belonging to the partnership firm in their individual assessments. The AAC's orders were modified accordingly. 3. Enhancement of Assessment for Assessment Years 1976-77 to 1981-82: The WTO had allowed exemptions under Sections 5(1)(iv) and 5(1)(xiii) read with Section 5(1a) for the assessment years 1976-77 to 1981-82, but the AAC withdrew these exemptions, thereby enhancing the assessments for those years. The Tribunal did not approve of the AAC's order, noting that the AAC exercised his power of enhancing the assessment without giving notice to the appellants, thereby denying them an opportunity to be heard. This violated the principles of natural justice. The Tribunal held that the AAC's orders for the assessment years 1976-77 to 1981-82 could not be sustained and were vacated, restoring the ITO's orders. The appeals were allowed for statistical purposes.
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