1989 (11) TMI 93 - AT - Wealth-tax

Assessment Year, Immovable Property, Movable Property, Reference To Valuation Officer, Rule 1BB

Summary

Issues:
1. Applicability of Rule 1BB of the Wealth-tax Rules for assessment year 1977-78.
2. Whether the Valuation Officer is bound by Rule 1BB when valuation is referred under section 7(3).

Detailed Analysis:

1. The judgment involves two appeals by different assessees with similar facts and issues. The assessees, two Hindu Undivided Families (HUFs), jointly owned a property and claimed valuation under Rule 1BB of the Wealth-tax Rules for the assessment year 1977-78. The WTO did not accept this claim and referred the valuation to the Valuation Officer, who finalized the assessments. The AAC ruled in favor of the assessees based on a Tribunal decision and other High Court judgments supporting the applicability of Rule 1BB for the relevant assessment year.

2. The Department appealed, arguing that Rule 1BB did not apply for the assessment year and that when valuation is referred to the Valuation Officer under section 7(3), the WTO is not bound by Rule 1BB. The assessees' counsel cited various High Court decisions supporting the mandatory nature of Rule 1BB for valuation purposes. The counsel contended that the WTO must first determine the acceptability of the assessee's valuation under Rule 1BB before referring the matter to the Valuation Officer under Rule 3B.

3. The Tribunal agreed with the assessees on the applicability of Rule 1BB to pending assessments when the rule came into force. Regarding the second issue, the Tribunal noted that under section 7(1), the WTO must follow valuation rules, including Rule 1BB. However, section 7(3) allows the WTO to refer valuation to the Valuation Officer, who is not bound by Rule 1BB. The Tribunal emphasized that the WTO's decision to refer valuation under section 7(3) excludes the application of Rule 1BB, as the Valuation Officer operates independently in such cases.

4. The Tribunal addressed the argument that the Valuation Officer should be bound by Rule 1BB based on certain High Court observations. However, it clarified that the Valuation Officer's role is distinct from the WTO's, and the former is not bound by the rules applicable to the WTO. The Tribunal highlighted that the WTO's discretion to refer valuation under section 16A is separate from the valuation process under section 7(1), where Rule 1BB applies. As the valuation in this case was done under Rule 1BB without objections, the Tribunal upheld the assessee's valuation and dismissed the appeals.