1989 (12) TMI 85 - AT - Wealth-tax

Summary

Issues: Valuation of house property under Wealth Tax Act, applicability of Rule 1BB of WT Rules, inclusion of property value in net wealth, interpretation of ownership in partnership

In this judgment by the Appellate Tribunal ITAT Delhi, the appeals filed by the assessee for the assessment years 1981-82 and 1982-83 were consolidated and heard together. The primary issue revolved around the valuation of a house property located in Civil Lines, Roorkee, which was partly self-resided by the assessee and partly rented out. The WTO valued the property at Rs. 5,48,000 and Rs. 6,13,000 for the respective years based on the report of the Asstt. Valuation Officer. The assessee contended that the property fell under the U.P. Rent Control & Eviction Act and should be valued according to Rule 1BB of the WT Rules. Additionally, a portion of the property was contributed to a partnership firm, M/s Rohit & Co., by the assessee, which should not be considered as part of the assessee's net wealth. The AAC upheld the WTO's valuation, leading to the appeal.

The assessee reiterated their arguments before the Tribunal, emphasizing that a portion of the property was transferred to the partnership firm, as accepted in a previous case, and that Rule 1BB was mandatory for valuation purposes. On the other hand, the Departmental Representative supported the AAC's decision, arguing that the Valuation Officer was not bound by Rule 1BB. The Tribunal referred to previous decisions, including one by the Allahabad High Court, establishing the mandatory nature of Rule 1BB and its applicability to valuation officers. It was held that the valuation of the property should be determined in accordance with Rule 1BB, unless Rule 1BB(5) was found inapplicable, in which case the valuation should still be done under Rule 1BB.

Moreover, the Tribunal considered an extract from a previous order related to a partnership firm, where it was held that the portion of the property brought into the firm by a partner should be considered as belonging to the firm, not the individual partner. Following this decision, the Tribunal concluded that the portion of the house property contributed to the partnership firm should not be included in the net wealth of the assessee. Consequently, the appeals were allowed based on the above reasoning.