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Issues Involved:
1. Valuation of the corpus of the Trust. 2. Discount for risks and hazards. 3. Exemption of items of jewellery under section 5(1)(xii) of the Wealth-tax Act. 4. Levy of interest under section 17B. 5. Validity of reopening the assessment under section 17 for the assessment year 1984-85. Detailed Analysis: Issue 1: Valuation of the Corpus of the Trust The primary question was whether the value should be based on the compensation received by the Trust as determined by the Umpire and sanctioned by the Supreme Court, or on the valuation report of the Departmental Valuation Officer as per Schedule-III of the Wealth-tax Act. The court held that the value should be determined as per the valuation report of the Departmental Valuation Officer. The valuation report for the assessment year 1988-89 should be the basis for the subsequent four assessment years, as stipulated by Rule 19 of Schedule-III, despite the valuation officer's report for the assessment year 1989-90 being available later. Issue 2: Discount for Risks and Hazards The assessees claimed a 90% discount due to various risks and hazards, while the Tribunal previously allowed a 50% discount. The court upheld the principle that a discount for risks and hazards was permissible but found no reason to reduce the discount from 50% to 15% as done by the CWT(A). The court confirmed a 50% discount, considering the ongoing risks, including the litigation and the questioning of ownership. Issue 3: Exemption of Items of Jewellery under Section 5(1)(xii) of the Wealth-tax Act The court examined whether the jewellery items qualified as "works of art" or "art collections" and were not intended for sale. It was held that: - The seven items declared as "art treasures" and the 23 items declared as "antiquities" were eligible for exemption under section 5(1)(xii). - The remaining 59 items, including the Jacob Diamond, were not eligible for exemption as they were intended for sale and not declared as either antiquities or art treasures. Issue 4: Levy of Interest under Section 17B The court held that there was no obligation on the part of the beneficiary to file a return in terms of section 14(1) of the Wealth-tax Act, as this obligation was cast upon the trustee. Therefore, interest under section 17B for the delay in filing the returns by the trustees could not be levied on the beneficiaries. The court directed the Assessing Officer to verify if the beneficiaries had any other wealth, which would necessitate filing a return, and if so, the interest levy would stand. Issue 5: Validity of Reopening the Assessment under Section 17 for the Assessment Year 1984-85 The court upheld the order of the Commissioner of Wealth-tax (Appeals), which invalidated the reopening of the assessment under section 17. The reopening was based on the premise that the valuation done by the Departmental Valuer was on the lower side, but the court found that the original assessment was completed based on the valuation fixed by the Departmental Valuer, making the reopening invalid as per the decision of the jurisdictional High Court. Conclusion The appeals were partly allowed, confirming the valuation based on the Departmental Valuation Officer's report for the assessment year 1988-89, allowing a 50% discount for risks and hazards, granting exemption under section 5(1)(xii) for the seven items declared as art treasures and 23 items declared as antiquities, and deleting the interest levied under section 17B for the beneficiaries. The appeal regarding the reopening of the assessment for the assessment year 1984-85 was dismissed.
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