1984 (3) TMI 121 - AT - Wealth-tax

Summary

Issues Involved:
1. Valuation of immovable property known as "Datta Prasad".
2. Valuation of shares in M/s Chowgule & Co. (Hind) Pvt. Ltd. under Rule 1D of the WT Rules.
3. Inclusion of the value of silver utensils in the net wealth of the assessee.

Detailed Analysis:

1. Valuation of Immovable Property Known as "Datta Prasad":
The issue revolves around the valuation discrepancies between the assessee's declared value and the Valuation Officer's estimate. The assessee valued the property based on a registered valuer's report, while the WTO believed the returned value was less than the fair market value and referred it to the Valuation Officer under Section 16A(1)(a) of the WT Act, 1957. The AAC initially ruled in favor of the assessee, stating that the WTO had no justification for referring the valuation without specific reasons. However, the Tribunal disagreed with the AAC, clarifying that the WTO's reference to the Valuation Officer was valid as long as there was an honest opinion that the returned value was less than the fair market value. The Tribunal directed the AAC to re-examine the valuation, considering both the registered valuer's and the Valuation Officer's reports.

2. Valuation of Shares in M/s Chowgule & Co. (Hind) Pvt. Ltd.:
The valuation of shares, not quoted on the Stock Exchange, had to be done under Rule 1D of the WT Rules. The points of contention included:
- Provision for Gratuity: The Tribunal held that if the provision for gratuity represented the present value of future liability, ascertained on actuarial or scientific basis, it should be treated as a deductible liability.
- Advance Tax: Following the decisions of the Gujarat High Court, the Tribunal ruled that the amount of advance tax should not be deducted from the provision for taxation in the balance sheet.
- Provision for Dividend: The Tribunal upheld the AAC's decision that the provision for dividend should not be treated as a liability under Rule 1D, as it was not shown as a present liability in the balance sheet.

3. Inclusion of the Value of Silver Utensils:
This issue pertained to the assessment year 1971-72. The assessee claimed exemption under Section 5(1)(viii) of the WT Act for silver utensils valued at Rs. 84,150. The WTO added Rs. 44,340 based on previous year's remarks, which were not detailed in the judgment. The AAC rejected the exemption, citing that from 1st April 1963, no article for personal use or utensils made of gold or silver is exempt. However, the Tribunal clarified that for the assessment year 1971-72, the main provision of Section 5(1)(viii) was applicable, which exempted household utensils and articles of personal or household use, irrespective of their material. The Tribunal directed the AAC to re-evaluate whether the silver utensils qualified as "household utensils" or "articles of personal or household use" and determine their value accordingly.

Conclusion:
The appeals for the assessment year 1973-74 were allowed, while the appeals for the years 1971-72, 1972-73, and 1974-75 to 1977-78 were partly allowed. The cross objection for the assessment year 1971-72 was allowed for statistical purposes, and the cross objections for the years 1973-74 and 1974-75 were dismissed.