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TMI Blog1984 (2) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... ted with effect from 1-4-1978 was operative retrospectively ? " 2. Facts which have given rise to these questions are that the assessee held a property at 2, Maqbool Road, Amritsar. She returned the value of this property at Rs. 3,49,910 in her wealth-tax returns. She had valued the land at Rs. 1,23,575 and the building at Rs. 2,26,335. The WTO was not satisfied and valued the property at Rs. 8,25,450 for the assessment year 1972-73. He took the value of the land at Rs. 2,05,450 and assessed the value of the building at Rs. 6,20,000. The WTO similarly regarded the value returned for other years in the neighbourhood of Rs. 4 lakhs and took the value of Rs. 8 lakhs for each of these four years. The assessee assailed the finding before the AAC. Moved by her plea the AAC set aside the assessment so that the WTO may make the assessment de novo. The assessee had submitted that the valuation to be made for these years should be restricted to the valuation adopted for the assessment year 1971-72 on the basis of the provision contained in section 7(4) of the Act. The AAC had not agreed to the valuation but he directed the WTO to proceed to make the assessment de novo. The WTO made the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 735, where provisions contained in section 7(1) and 7(2) were referred to to contain two procedures for valuing the assets. This also is the view of the Bombay High Court as brought out in Smt. Kusumben D. Mahadevia v. N.C. Uppadhya [1980] 124 ITR 799. Their Lordships observed : " Section 7 of the Wealth-tax Act, 1957, is a machinery provision which requires the WTO to assume that there is an open market and the property can be sold in such market and it is on that basis that the value of the asset has to be determined for the purposes of computation of the net wealth of the assessee. When section 7(1) opens with the words 'subject to any rules made in this behalf', the rules contemplated are rules which would enable the WTO to determine the price. In other words, any rules made must be for the purpose of carrying out the object of section 7, the object being to determine the market value as contemplated by section 7(1).... " According to their Lordships, the entire provision contained in section 7 being of the nature of procedural provision, rules made to give effect to could not be treated otherwise as non-procedural provisions. It was acting on this view, the Special Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missing four reference applications of the revenue. In my view, the two questions proposed by the Commissioner, which are quoted below, are fit questions of law to be referred to the Punjab and Haryana High Court for all the four assessment years 1972-73 to 1975-76 for the reasons stated hereunder : " 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that value of assessee's residential house should be computed in accordance with rule 1BB of the Wealth-tax Rules, which rule was not in existence on the relevant valuation date ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that rule 1BB (inserted with effect from 1-4-1979) was operative retrospectively ? " 2. The revenue is disputing the applicability of rule 1BB which was inserted with effect from 1-4-1979 after being published in the Gazette of India on 30-3-1979, to any assessment years prior to the assessment year 1979-80. The Special Bench of the Tribunal in the case of Biju Patnaik held that it is a rule of procedure, which is retrospective in operation and applies to all pending proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion for referring to the Punjab and Haryana High Court : " Whether, on the facts and in the circumstances of the case, the ITAT is right in law in holding that the provisions of section 7(4) of the Wealth-tax Act, 1957, are applicable for the purpose of valuation of the assessee's residential house in respect of the assessment years 1973-74, 1974-75 and 1975-76 although the relevant provision came into force from 1-4-1976 and not with retrospective effect ? " This Bench, constituted by both of us, allowed the reference for three assessment years to the revenue and referred the question for the opinion of the Punjab and Haryana High Court. In my opinion, the position in the present case is no different in principle from that obtaining in the case of Smt. Patwant Kaur and, thus, I am unable to reject the revenue's request for reference. 3. I also find that the present Judicial Member sitting with my predecessor Accountant Member allowed a similar question to be referred to the Punjab and Haryana High Court in the case of CWT v. Hira Lal Mehra [R.A. No. 69 (Asr.) of 1982] arising from WT Appeal No. 123 (Asr.) of 1981, order dated 18-9-1982. This reference application was all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be made in accordance with rule 1BB. The valuation, therefore, was set aside by him with a direction to the WTO to take the value under rule 1BB. In the appeals of the revenue before the Tribunal the assessee's learned counsel relied on the Special Bench decision of the Tribunal in Biju Patnaik case decided on 17-2-1981. The Tribunal held that : " As far as the retrospectivity of the rule 1BB is concerned, it has already been established that the rule will have retrospective effect. Besides, the rule contained in rule 1BB relates to procedure of valuation. There is no presumption against the retrospectivity of a rule or provision relating to procedure. Looked at from this angle, we cannot dispute the right of the assessee to raise the plea that the valuation of the aforesaid property should be made according to the rule 1BB. A perusal of para 2 of assessment order shows that the WTO himself applied Wealth-tax Rule 1BB. In this background, there is no justification, on the facts of the case, to interfere with the findings of the AAC, which we uphold. " 2. The department came up before the Tribunal with applications to refer the following questions of law in R.A. Nos. 94 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as to the nature of the provisions. Since a reference is already being made, the additional question as to the retrospective operation of the rule being procedural could also be referred, both these being comprehensively covered by a common question as under : " Whether, on the facts and in the circumstances of the case, the value of the assessee's residential house should be computed for the purposes of wealth-tax assessments for the assessment years 1972-73, 1973-74, 1974-75 and 1975-76 in accordance with rule 1BB of the Wealth-tax Rules ? " 4. It requires, however, to be mentioned that in the course of the hearing certain other points came up. Rule 1BB, the applicability of which is in challenge in these references, has been made in exercise of the powers conferred by section 46 of the Act for the purposes of valuation of a house. In fact sub-rule (1) of rule 1BB deals specifically with 'the purposes of sub-section (1) of section 7'. Section 7(1) stipulates how the value of assets is to be determined. The basis laid down is 'the price which in the opinion of the WTO it would fetch if sold in the open market on the valuation date'. The valuation as per section 7(1), howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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