1988 (3) TMI 88 - AT - Wealth-tax

Issues Involved:
1. Jurisdiction under section 8AA of the Wealth-tax Act.
2. Deduction of amount received from intending purchasers from property valuation.
3. Valuation of immovable properties.
4. Inclusion and valuation of jewellery, gold ornaments, and silver articles.
5. Inclusion of assets from Marriage Trust.
6. Valuation of interest in a partnership firm.
7. Valuation of time-barred debts.
8. Exemption of land in Laxmi Vilas Palace.
9. Exemption of Chimanbag Bungalow.
10. Exemption of Mangal Sutra.
11. Amount due from Jindan Enterprises.

Detailed Analysis:

1. Jurisdiction under section 8AA of the Wealth-tax Act:
The first common ground pertained to the technical grounds that the IAC (Asst.) erred in assuming jurisdiction u/s. 8AA of the Wealth-tax Act. This ground was not pressed by the assessee and, therefore, it was rejected.

2. Deduction of amount received from intending purchasers from property valuation:
The second ground concerned whether the amount received from intending purchasers under the agreement for sale of Jay Mahal Palace should be deducted from the valuation of the property. This issue was covered against the assessee in the case of CWT v. H. H. Maharaja F. P. Gaekwad [1983] 144 ITR 304 (Guj.), and the Supreme Court in Nawab Sir Osman Ali Khan v. CWT [1986] 162 ITR 888 approved this decision. Therefore, this ground was rejected.

3. Valuation of immovable properties:
The third ground involved the valuation of various immovable properties. The Tribunal decided to restore the issue of valuation of the Juhu property known as Mehrangarh property to the file of the Wealth-tax Officer, directing that the valuation should be made according to the provisions contained in Rule 1BB of the Wealth-tax Rules. The only objection raised by the revenue was that Rule 1BB is not retrospective. The Tribunal held that the valuation must be made based on the provisions contained in Rule 1BB of the Wealth-tax Rules, allowing this ground for statistical purposes.

4. Inclusion and valuation of jewellery, gold ornaments, and silver articles:
- Jewellery: The IAC included the jewellery due to the amended definition of personal effects, and the Commissioner (Appeals) confirmed this inclusion. The Tribunal, considering the decision in the assessee's own case for the assessment year 1972-73, directed the assessing officer to redecide the issue of jewellery valuation, treating certain jewellery as personal effects.

- Gold Ornaments (Not Containing Precious Stones): The IAC rejected the exemption claimed by the assessee for gold ornaments weighing 29,124 grams. The Tribunal accepted the assessee's contention that these articles form part of personal effects and granted the exemption.

- Silver Articles: The IAC granted exemption for silver articles meant for puja but included other silver articles in the net wealth. The Tribunal confirmed the inclusion made by the IAC, finding no infirmity in the orders passed by the authorities below.

- Gold Utensils and Articles for Puja: The IAC excluded certain gold articles used for puja from the assessment but included others. The Commissioner (Appeals) confirmed this decision, and the Tribunal found no reason to interfere with this decision.

5. Inclusion of assets from Marriage Trust:
The next ground involved the inclusion of Rs. 11,05,844 belonging to Prince Sangramsinh Marriage Trust. The Commissioner (Appeals) had directed the exclusion of the value of this asset from the assessment of the trustees of the Marriage Trust, and the Tribunal upheld this direction.

6. Valuation of interest in a partnership firm:
The IAC included the full value of the property in the assessment of the assessee due to certain clauses in the deed of partnership. The Commissioner (Appeals) held that the asset could not be regarded as the property of the assessee but should be included while finding out the value of the assessee's interest in the partnership firm. The Tribunal found that the Commissioner (Appeals) had already accepted the assessee's stand, and this ground did not arise out of the order of the Commissioner (Appeals).

7. Valuation of time-barred debts:
The IAC rejected the assessee's claim regarding time-barred debts. The Commissioner (Appeals) gave partial relief, estimating the erosion of the debt value uniformly over the period. The Tribunal, considering the subsequent settlement of the debt for Rs. 1 lakh, valued the debt at Rs. 50,000 for the assessment year 1968-69 and Rs. 60,000 for the assessment year 1969-70.

8. Exemption of land in Laxmi Vilas Palace:
The Commissioner (Appeals) held that 39.4 acres of land in Laxmi Vilas Palace should be treated as part of the palace complex exempt under section 5(1)(iii) of the Act. The Tribunal found no infirmity in this decision, considering a subsequent Circular issued by the CBDT.

9. Exemption of Chimanbag Bungalow:
The Commissioner (Appeals) granted exemption for Chimanbag Bungalow, situated in the Laxmivilas Palace compound, after considering the Tribunal's decision regarding Kismet Bungalow. The Tribunal upheld this decision, noting that the revenue had not appealed against the deletion of Kismet Bungalow's value.

10. Exemption of Mangal Sutra:
The IAC included the value of Mangal Sutra as part of jewellery, but the Commissioner (Appeals) held it was a personal effect and exempt under section 5(1)(viii) of the Act. The Tribunal upheld this exclusion, considering the Board's Circular of 1972.

11. Amount due from Jindan Enterprises:
This ground was common to the ground raised by the assessee in its appeals. The Tribunal's decision on this issue, as discussed earlier, applied to the ground raised by the revenue for the assessment years 1968-69 and 1969-70.

Conclusion:
The Tribunal modified the order passed by the Commissioner (Appeals) to the extent discussed and directed the assessing officer to pass appropriate orders in accordance with the law. The appeals filed by the assessee and the revenue were allowed in part.

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