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Issues Involved:
1. Valuation of Birhana Road (Kanpur) property. 2. Ownership and assessment of the property situated at A-1/54, Safdarjung, New Delhi. Detailed Analysis: 1. Valuation of Birhana Road (Kanpur) Property: The first issue concerns the valuation of the Birhana Road property in Kanpur, jointly held by the two assessees. The Wealth Tax Officer (WTO) valued the property using the rental method, applying a multiple of 20 to the net rental income based on the assessees' own declarations for the assessment years 1970-71 to 1973-74. For subsequent years, the WTO adopted the declared value of Rs. 1,66,000 by each assessee. The Appellate Assistant Commissioner (AAC) disagreed with the WTO's valuation method, suggesting that a multiple of 15 was more reasonable. Consequently, the AAC deleted the additions made by the WTO. Upon appeal, the Tribunal agreed with the assessees' counsel that Rule 1BB of the Wealth-tax Rules, 1957, should be applied retrospectively. The Tribunal cited a Special Bench decision in Biju Patnaik v. WTO, which held that Rule 1BB was procedural and mandatory, applying to all pending assessments. The Tribunal restored the matter to the WTO for fresh consideration in light of these observations. However, no relief was granted for the assessment years 1974-75 to 1978-79 as the declared values were accepted by the WTO. 2. Ownership and Assessment of Property at A-1/54, Safdarjung, New Delhi: The second issue pertains to the ownership and assessment of the property at A-1/54, Safdarjung, New Delhi. The property was purchased jointly by the two assessees using rental income from the Kanpur property and other sources. Initially, the income from this property was claimed to belong to an Association of Persons (AOP) consisting of the two assessees. The Income Tax Officer (ITO) did not accept this claim, assessing the income equally in the hands of both assessees. In the wealth-tax assessments, the WTO followed the income-tax findings, presuming joint ownership of the Delhi property and assessing half of its value to each assessee. The AAC, however, found that the shares in the Delhi property were indeterminate and held that the property belonged to an AOP. Consequently, no share of the property was assessable in the hands of the assessees. The department appealed against the AAC's findings. The Tribunal examined whether the Delhi property was held by an AOP and if the shares were determinate. The Tribunal concluded that the shares in the Delhi property were indeterminate due to the mixed sources of investment and the absence of a clear agreement on ownership shares. Consequently, the property was held to belong to an AOP, and the shares of the assessees were indeterminate. The Tribunal further noted that Section 4(1)(b) of the Wealth-tax Act, 1957, required the inclusion of the value of an individual's interest in an AOP in their net wealth, determined in the prescribed manner. However, Rule 2(1) of the Wealth-tax Rules, which prescribes the method for such determination, was found inapplicable due to the indeterminate shares. The Tribunal concluded that no portion of the Delhi property could be assessed in the hands of either assessee. The Tribunal also acknowledged the introduction of Section 21AA in the Wealth-tax Act, 1957, by the Finance Act, 1981, which addressed the taxation of assets held by an AOP with indeterminate shares. The Tribunal upheld the AAC's order excluding the value of the Delhi property from the assessments of the two assessees. Conclusion: The appeals were partly allowed. The valuation of the Birhana Road property was remanded to the WTO for fresh consideration under Rule 1BB. The value of the Delhi property was excluded from the assessments of the two assessees, recognizing it as belonging to an AOP with indeterminate shares.
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