1981 (7) TMI 90 - AT - Wealth-tax

Summary

Issues:
1. Valuation of property for wealth-tax assessment.
2. Application of Circular of the CBDT.
3. Rejection of valuation shown by the assessee.

Analysis:

Issue 1: Valuation of property for wealth-tax assessment
The case involved cross-appeals by the assessee and the Revenue against the order of the AAC of Wealth-tax, F-Range, Bombay, regarding the valuation of property for the assessment year 1973-74. The assessee declared a net wealth based on a valuation report, which was not accepted by the WTO. The WTO adopted the fair market value determined by the Valuation Officer under section 16A(5) of the Wealth Tax Act, rejecting the assessee's explanation. The AAC provided relief by determining the fair market value of the land based on specific considerations and directed the allowance of the assessee's claim for compensation payable to protected tenants.

Issue 2: Application of Circular of the CBDT
The main contention revolved around the application of Circular No. 3 (WT) dated 28th Sept., 1957, which stated that the valuation fixed in one assessment need not be disturbed for the two succeeding assessments unless there are special overriding reasons. The assessee argued that the valuation fixed in the earlier assessment year should be followed for the subsequent years, relying on the circular. The CBDT circular was withdrawn on 5th April, 1974, but it was in force on the valuation date of the assessment year under consideration. The Tribunal held that the circular applicable on the valuation date should govern the assessment, rejecting the Revenue's argument based on subsequent circulars and decisions.

Issue 3: Rejection of valuation shown by the assessee
The assessee contended that the valuation fixed in the earlier assessment year should be followed for the subsequent years, which was rejected by the authorities below. The Tribunal held that the assessee's stand was consistent before the authorities, and the valuation shown for the immovable property was justified based on the Circular of the CBDT applicable on the valuation date. Therefore, the Tribunal set aside the orders of the authorities below and accepted the valuation shown by the assessee for the immovable property, allowing the assessee's appeal and dismissing the Revenue's appeal.

In conclusion, the Tribunal allowed the assessee's appeal and dismissed the Revenue's appeal, holding that the valuation shown by the assessee for the immovable property was justified based on the Circular of the CBDT applicable on the valuation date.