1982 (10) TMI 58 - AT - Income Tax

Summary

Issues Involved:
1. Validity of reopening the assessments.
2. Determination of the value of the property at Major Banks Road, Lucknow.
3. Deduction of loans secured against Life Insurance Policies.

Detailed Analysis:

1. Validity of Reopening the Assessments:
The primary issue was whether the reopening of the assessments for the assessment years 1975-76 to 1978-79 under Section 17(1)(b) of the Wealth Tax Act, 1957, was justified. The WTO had reopened the assessments based on the valuation of a plot of land in the same locality belonging to another individual, which was valued at Rs. 8 per sq. ft., while the assessee's plot was valued at Rs. 6 per sq. ft. The assessee contended that there was no new information that was not already on record during the original assessment proceedings, and the reopening was merely a change of opinion by the successor WTO.

The Tribunal found that the assessee's approved valuer had already considered the rate of land in the locality, which ranged from Rs. 8 to Rs. 10 per sq. ft., and had appropriately valued the larger plot at Rs. 6.75 per sq. ft. The Tribunal concluded that the mere fact that another plot was valued at Rs. 8 per sq. ft. did not constitute new information. The Tribunal referenced the Supreme Court rulings in CIT vs. Dinesh Chandra H. Shah and CIT vs. Simon Carves Ltd., which stated that an assessment could not be reopened on the mere ground of a change in opinion. Consequently, the Tribunal held that the reopening of the assessments was not justified and the reassessments were invalid.

2. Determination of the Value of the Property at Major Banks Road, Lucknow:
The WTO had referred the valuation of the property to the Valuation Officer, who determined higher values for the property for the assessment years in question. The AAC upheld these valuations in the reassessment. The assessee argued that the original valuations by their approved valuer were based on a legitimate and accepted method, which considered both the income capitalization method and the land and building method. The Tribunal found that the method used by the assessee's valuer was valid and that the reassessment based on a different valuation method was not justified. Since the reassessments were invalidated, the issue of property valuation did not survive for further consideration.

3. Deduction of Loans Secured Against Life Insurance Policies:
The WTO had disallowed the deduction of loans secured against Life Insurance Policies on the grounds that the value of the Life Insurance Policies was exempt. The AAC, however, allowed the assessee's claim for the deduction. The revenue appealed this decision. The Tribunal did not need to address this issue in depth as the reassessments were declared invalid, rendering the revenue's appeal on this ground moot.

Conclusion:
The appeals filed by the assessee were partly allowed, primarily on the grounds that the reopening of the assessments was not justified. Consequently, the reassessments made by the WTO were invalidated. The revenue's appeals were dismissed for statistical purposes due to the cancellation of the reassessments.