2009 (2) TMI 344 - HC - Wealth-tax

Income deemed to received under section 7(4) valuation of assets House was used by the assessee as residential house and accordingly the Wealth-tax Officer valued the said property at a different value for the assessment years 1972-73 to 1981-82, for the assessment year 1971-72 the property had been valued at Rs. 2,50,000 by the commissioner of Income Tax(Appeals). The assessee claimed that the value of the property was required to be fixed at Rs. 2,50,000 and the same value should have been taken for the subsequent assessment years as the assessee was the owner of the property even prior to 1971. held that- for the assessment year 1971-72, the valuation of the property was made at Rs. 2,50,000 by the Commissioner of Income Tax (Appeals) and the said order has attained finality because it was neither challenged by the assessee nor the revenue. Thus, in view of the provisions of section 7(4) of the Act, the value of the property as taken at Ks. 2,50,000 for the assessment year 1971-72 would be applicable to the subsequent assessment years as the assessment years involved in the present matter are 1972-73 to 1981-82. The reference is accordingly answered against the Revenue and in favour of the assessee.

Issues: Interpretation of section 7(4) of the Wealth-tax Act, 1957 regarding valuation of property for subsequent assessment years.

Analysis:
1. The case involved a question referred by the Income-tax Appellate Tribunal regarding the applicability of section 7(4) of the Wealth-tax Act, 1957, for the valuation of a property known as "Samod House" for the assessment years 1972-73 to 1981-82. The dispute arose as the assessee claimed that the value of the property should be frozen at Rs.2,50,000 based on the provisions of section 7(4) of the Act.

2. The key contention revolved around the interpretation of section 7(4) of the Act, which states that the value of a house used exclusively for residential purposes by the assessee can be determined based on certain conditions. The provision allows the assessee to choose the price the property would fetch in the open market on specific valuation dates. In this case, it was argued that since the assessee was the owner of the property before the relevant valuation date, the value determined for the assessment year 1971-72 should be maintained for subsequent years.

3. The court examined the language of section 7(4) and emphasized that once the value of the property was finalized for a specific assessment year and not challenged by either party, that value should be frozen for subsequent assessment years. In this instance, since the valuation of Rs.2,50,000 for the property in the assessment year 1971-72 was not contested further, it should be applicable for the following years as well, as per the provisions of the Act.

4. Therefore, the court ruled in favor of the assessee, stating that the value of the property 'Samod House' as determined for the assessment year 1971-72 should be maintained for the subsequent assessment years 1972-73 to 1981-82. The judgment highlighted the importance of adhering to the provisions of section 7(4) of the Wealth-tax Act, 1957, in determining the valuation of properties used for residential purposes by the assessee.

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