1982 (9) TMI 105 - AT - Wealth-tax

Issues Involved:

1. Valuation of the property situated at B-34, Greater Kailash, New Delhi.
2. Exemption in respect of shares held in an industrial undertaking under clause (xx) of sub-section (1) of section 5 of the Wealth-tax Act, 1957.

Issue-Wise Detailed Analysis:

1. Valuation of Property:

The primary issue in these appeals is the valuation of the property situated at B-34, Greater Kailash, New Delhi. The property was under personal occupation of the assessee up to the assessment year 1968-69, after which one floor was let out. The assessee contended that the property should be valued using the yield method rather than the land and building method, relying on the decision of the Hon'ble Calcutta High Court in the case of Sudesh Chandra Talwar. The revenue opposed this, arguing that the sale price of the property in January 1976 for Rs. 6,50,000 should be the basis for valuation, suggesting the following valuations for the respective assessment years:

- 1964-65: Rs. 3,16,000
- 1965-66: Rs. 3,41,000
- 1966-67: Rs. 3,66,000
- 1967-68: Rs. 3,91,000
- 1968-69: Rs. 4,16,000
- 1969-70: Rs. 4,41,000
- 1970-71: Rs. 4,66,000
- 1971-72: Rs. 4,91,000
- 1972-73: Rs. 5,16,000
- 1973-74: Rs. 5,41,000
- 1974-75: Rs. 5,66,000

The assessee countered that the property was vacant when sold in January 1976, and thus the sale price would not accurately reflect its value when tenanted. The Tribunal, referencing the Special Bench decision in Biju Patnaik v. WTO, concluded that rule 1BB of the Wealth-tax Rules, 1957, should be applied for valuation, covering both self-occupied and let-out residential properties. The Tribunal directed the WTO to re-compute the value using rule 1BB, with the caveat that if the computed value is less than the value shown in the assessee's return, the returned figure should be adopted.

2. Exemption for Shares in Industrial Undertaking:

The second issue pertains to the exemption for shares held by the assessee in an industrial undertaking under clause (xx) of sub-section (1) of section 5 of the Wealth-tax Act, 1957. The assessee claimed exemption for shares in Indo-Japan Steels Limited, arguing that the shares formed part of the initial issue and the company met the criteria of clause (d) of section 45. The WTO denied the exemption, stating that the company acquired machinery from Grand Smithy Works, which had been previously used, thus not fulfilling the conditions of clause (d) of section 45.

The AAC upheld the WTO's decision, noting that Indo-Japan Steels Limited had acquired some old machinery previously used in another business, thereby not meeting the requirements of section 45(d). The assessee argued that since the company was granted exemption under section 80J of the Income-tax Act, it should also qualify under clause (d) of section 45 of the Wealth-tax Act.

The Tribunal emphasized that the specific language of the statutes must be adhered to, noting differences between sub-section (4) of section 80J of the Income-tax Act and clause (d) of section 45 of the Wealth-tax Act. The Tribunal rejected the argument that the benefits under section 80J should automatically extend to clause (d) of section 45, highlighting that the two Acts have distinct provisions and fields of operation.

The Tribunal concluded that since the assessee's company was formed by transferring previously used machinery, plant, and building from Grand Smithy Works, it did not qualify for the exemption under clause (xx) of sub-section (1) of section 5. Consequently, the assessee's claim for exemption was denied.

Conclusion:

The appeals for the assessment years 1964-65 to 1967-68 are allowed in full, while the appeals for the assessment years 1968-69 to 1974-75 are allowed in part.

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