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TMI Blog1990 (6) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... The beneficial interest is subjected to litigation. What value it would fetch if sold in open market ? The prospective buyer would indeed ponder over the point -- what actually he is buying -- jewel or litigation ? The main plank of Shri Palkhivala's argument was in regard to seeking adjustment to the total value of the jewellery adopted by Shri Jayant N. Chowlera, the Valuation Officer. Learned Counsel did not question the valuation as such as done by Shri Chowlera but he contended for adjustment on account of uncertainties, hazards and risks of litigation. The other issues relate to the principles of assessment. 4. The general conspectus of the main plank of Shri Rangabhashyam's argument was that the valuation by Shri Chowlera was done after considering the factors like uncertainties, hazards and risks of litigation though it is not clearly discernible from the valuation report. Since these factors have already been considered no adjustment on these counts is required in arriving at the correct valuation of the jewellery. Shri K. Rangabhashyam at the time of hearing made the following prayers :-- (i) that the request for adjustment by the approved valuer may be allowed and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we come to grips with these issues it would be beneficial to keep in focus the factual canvas of the case. His Exalted Highness, the late Nb. Sir Mir Osman Ali Khan Bahadur created "BEH the Nizam's Jewellery Trust" by the indenture dt. 29-3-1951. A copy of the trust-deed is placed before us. (Paper Book Volume I--Pages 1 to 88). The Settlor specified the names of the beneficiaries, their respective shares and also indicated the purpose, wherever required, for which the trust was created. 9. The corpus of the trust fund was notionally divided into 16 units for creation of different trusts. The following are the particulars of trusts created by the Settlor through the above referred single deed of trust. I-Prince Azam Jah Fund (4 units, clause v) :-- Prince Azam Jah was the elder son of the Settlor. He died on 9-10-1970. 4 Units of Prince Azam Jah's fund were further notionally divided into two equal parts. Two trusts were created in respect to this fund : One for the benefit of Prince Muffakham Jah Bahadur. Accordingly, out of the 4 units of Prince Azam Jah's fund, two units each were to be held for the benefit of Prince Mukkarram Jah Bahadur and Prince Muffakham Jah Bahadur. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fauzia Fatima and Sb. Amina Marzia are assessable under section 21(1) of the Act. It was submitted that the provisions of section 21(4) are applicable to six parts which have to be held on trust for the eldest male descendant. Therefore, it is necessary to evaluate the ultimate beneficial interest on actuarial principles assuming the death of the immediate beneficiary Prince Mukkarram Jah Bahadur on each of the valuation dates for the purpose of assessment under section 21(4) of the Act. The provisions of sec. 21(1A) are not applicable to this portion of the separate trust created by the Settlor. III-Sb. Begum's Fund (1 unit, clause vii) :-- Sb. Begum was a daughter of the Settlor. She died on 25-3-1985. She was alive on the valuation dates relevant for the asst. years 1980-81 to 1984-85. She had life interest in the above fund which never materialised as in the case of Prince Mauzzam Jah Bahadur. On her death, the corpus of the trust fund is to be held by the eldest male descendant on the same lines specified in relation to 6 parts of Prince Mauzzam Jah's fund. Only one trust is created through this fund. The following are stated to be the principles of assessment : (a) The ul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the benefit of the daughters. As per the terms of the trust deed daughters are entitled to life interest and on the death of any, the corpus of her respective trust shall be distributed amongst her children in the ratio of 2 shares for every male child and one share for every female child. The trustees filed the return distributing the corpus amongst the ultimate beneficiaries assuming the death of the immediate beneficiary. It was submitted by Sri Palkhivala that the provisions of section 21(1) of the Act are applicable for assessment of the ultimate beneficial interest. 10. The Settlor specified the names of their beneficiaries, their respective shares and also indicated the purpose wherever required for which the trust was created. In terms of the trust deed specified items of jewellery were handed over to the persons named therein and the balance 89 items of the jewellery form the "Principal fund of the Trust". The power of the trustees to sell the jewellery is contained in clause-13 of the trust-deed. The sale of jewellery could take place only after the demise of the Settlor and his eldest son Prince Azam Jah Bahadur. 11. The Settlor died in February 1967 and his eldest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es) 1980-81 4.50 1981-82 4.25 1982-83 4.85 1983-84 3.60 1984-85 3.60 18. For the asst. years 1957-58 to 1979-80, the valuation of the jewellery of the Trust was made in consonance with the report of Shri Mahendra G. Mehta, Valuation Officer. On getting revised return for the asst. years 1981-82 to 1982-83 and the regular returns for the asst. years 1983-84 to 1984-85, the Wealth-tax Officer referred the valuation of the jewellery of this trust to registered valuer Shri Jayant N. Chowlera, Bombay, on the 4th day of March, 1985 giving reference of the value of the principal fund estimated by the trustees in the returns filed originally. 19. For the asst. year 1980-81, at the time of assessment the valuation report of Shri Chowlera was not available. In the absence of valuation report the Wealth-tax Officer had fixed the value of the Principal fund at Rs. 31.56 crores as on 31-3-1980. The basis for fixing this value was the valuation made earlier by the Departmental Valuer Shri Mahendra G. Mehta. Shri Mehta valued the principal fund as on 31-5-1978 at Rs. 28 crores and as on 31-3-1979 at Rs. 29.73 crores. There was an increase of 6.17 per cent within one year. Applying the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal against the cancellation of the appeal made by the CWT(A) I and numbered as WTA No. 621/H/81.The W.T.O. made protective assessment under section 16(3) read with section 21(4) of the Act in respect of ultimate beneficial interest of Prince Mauzzam Jah Fund, Basalath Ali Fund and Sb. Begum Fund. The CWT(A) gave directions for the purpose of treating this protective assessment as substantive assessment in respect of the ultimate beneficial interest of the eldest male descendant in the above funds. There is no dispute about the fact that the provisions of section 21(4) of the Act are applicable to these funds. The trustees filed an appeal (WTA No. 672/H/88) contending that :-- (i) The CWT(A) ought to have accepted the return filed by the trustees in evaluating the ultimate beneficial interest taking into consideration the value of the jewellery at 4.5 crores. (ii) The CWT(A) should have given direction for deduction of cumulative tax liability as per the provisions of section 2(m) of the Act. 23. Similarly the department has also filed appeal against the order of the CWT(A) (WTA No. 620/Hyd/88) contending that no adjustments need be made for evaluation of ultimate benefic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und. The department has not filed any appeal against this part of the order of the CWT(A). The trustees (WTA No. 677/H/88) and the department (WTA No. 719/H/89) are in appeal against the order of the CWT(A). The grounds of the appeal of the trustees and the department are similar as in the appeal Nos. 676 and 718/H/88 for assessment year 1980-81 referred to above. 28. In the assessment year 1982-83, the WTO passed a consolidated order under section 21(1A) of the Act treating the total corpus of the trust fund as a single trust and deducted therefrom the proportionate corpus that had devolved on the children of the deceased beneficiaries and also the total remaindermen's interest for the purpose of arriving at the residue corpus. The WTO has also passed regular assessments under section 21(1A) of the Act in respect of each fund separately. Against the order of the CWT(A), the trustees have filed appeal (WTA No. 1272/H/88) contending that the CWT(A) ought to have accepted the returns filed by the trustees in the matter of valuation of assets held by the trustees for the beneficial interests of the beneficiaries. The department has also filed appeal (WTA No. 1207/H/88) against the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are summarised here as under :-- (i) The CWT(A) ought to have accepted the value of the assets held by the trustees for the benefit of the various beneficiaries at the value declared in the respective returns of wealth. (ii) The CWT(A) ought to have accepted the contention of the trustees that for the purpose of determination of the value of principal fund, items of jewellery which were declared as 'art treasure' should be exempted under section 5(1)(xii) of the Act. (iii) Applicability of the provisions of section 21(1A) of the Act. (iv) The CWT(A) ought to have directed for deduction of cumulative tax liability as per section 2(m) of the Act. 34. The various contentions raised by the department, for the sake of convenience, can be epitomised as under :-- (a) The consolidated assessment under section 21(1A) in respect of the entire corpus of the trust fund should be upheld. (b) The total value of the assets held by the trustees for the finalisation of interest of the various beneficiaries should be fixed at the value determined by the departmental valuer Shri Jayant N. Chowlera. (c) The provisions of section 21(1A) of the Act are applicable even in respect of the corpus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income-tax and wealth-tax. More than 4 years have elapsed since the last valuation date relevant for the assessment year 1986-87. More than 9 years have elapsed from the assessment year 1980-81. Even assuming that a higher value is realised at a later date the percentage of the same discounted at 10 per cent would come to a very nominal figure. 39. Section 7 of the Act deals with the valuation of assets. The value of any asset shall be estimated by the price which in the opinion of the assessing officer it would fetch if sold in the open market on the valuation date. It does not contemplate any actual sale or the actual State of market. It assumes "willing buyer" and a "willing seller" of the asset for determination of the value of the asset. It enjoins on the assessing officer to make an objective assessment of the value if sold in the open market. It is statutory on the part of the WTO to take all the relevant facts and the material available for determination of the value which a willing buyer will pay for such an asset. The facts which have to be ignored by the WTO are contained in the Explanation of sub-section (i) of section 7 of the Act. Barring the facts which fall withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration. The possibility of securing higher/lower value at a future point of time has no relevance unless there is proximity of time. Subsequent events should not affect the valuation as on the valuation date unless there is certainty and proximity. 43. The valuation of any asset should be with reference to facts and circumstances of the case prevailing on the valuation date and it cannot lead to injustice. 44. Different methods of valuation give range of prices and in the absence of special facts or circumstances, the minimum valuation arrived by application of relevant methods should be adopted. 45. Commenting on the risk, hazards and uncertainties it was submitted by the learned counsel that :-- (i) As on the valuation dates relevant for the assessment years 1980-81 and 1981-82 no willing purchaser would offer even 10 per cent of the value of the jewellery in view of the last minute decision of the Central Government. The confidence of the willing buyers was totally shaken by the decision of the Central Government. (ii) The trustees challenged the decision of the Central Government by way of a writ petition before the Hon'ble Supreme Court only in respect of 37 it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability in view of the uncertainty of the time within which the issue relevant to the trust would be resolved. (c) The decision relating to trust are taken at the highest level in the Government from time to time and political uncertainty would adversely affect the value of the jewellery. (d) Interest on tax liability for non-payment. (e) The hazard of any likely enactment by the Parliament for acquiring the items of historical importance of the erstwhile rulers has a depressing factor on the value of the jewellery. (f) Permissions have to be obtained from the Reserve Bank of India and under the Gold Control and Customs Act for export of any items of jewellery from India and no buyer from abroad would be willing to take chances on the matter of obtaining permissions from Government agency. 46. International market for items of such rare and precious stones violently fluctuates and there is no assurance of the price that could be realised. For the past two years there has been a growing importance in the international market for the items of this nature which were not existing on the valuation dates relevant for the assessment years 1980-81 to 1986-87. 47. There is no time lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 1979-80 is estimated at Rs. 2 crores. 54. For the wealth-tax assessment years 1980-81 to 1986-87, on the basis of assessment completed in the limelight of departmental valuer Shri Chowlera's valuation report, the position stands as under :-- Wealth-tax assessment value of jewellery Wealth-tax liability year (Rs. in crores) (Rs. in crores) 1980-81 32.43 1.48 1981-82 32.43 1.48 1982-83 33.30 1.55 1983-84 34.18 1.62 1984-85 35.24 1.72 1985-86 35.24 1.72 1986-87 35.24 1.72 ------------- 11.29 ------------- According to learned counsel the total tax liability is estimated at Rs. 13.29 crores which may go up further to Rs. 19.29 crores. Taking into consideration, the order passed by the CWT(A) on the matter of valuation of jewellery and the further relief which may be granted by the authorities concerned, the total tax liability could be estimated at Rs. 10 crores. Interest under section 31(2) of the Act is estimated at Rs. 5 crores. In fact, according to learned counsel there is a minimum tax liability of about Rs. 12 crores even after taking into consideration the possible waiver of interest etc. by the Commissioner. 55. Shri Palkhivala submitted that any "work of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court enunciated the principle that for the purpose of determination of the value, it is necessary to assume open market. Without such assumption, the very purpose would be defeated in some cases. This decision does not deal with the qualitative and quantitative aspects of valuation. For this purpose it is necessary to look into the following decisions of the Hon'ble Supreme Court :-- (1) CWT v. P.N. Sikand [1977] 107 ITR 922. (2) Maharaja Kumar Kamal Singh's case. (3) Raghubar Narain Singh's case. (4) CWT v. K.S. Ranganatha Mudaliar [1984] 150 ITR 619 (Mad.). In P.N. Sikands case it was held that for the purpose of answering the question, what would be the price which the asset would fetch if sold in the market on the valuation date ? Under section 7 of the Act, it would be necessary to answer the following questions :-- (i) What is the nature of the asset ? (ii) What is the interest in property -- qualitative as well as quantitative which the asset represents ? (iii) The Hon'ble Supreme Court held that the terms of lease had the effect of depressing the value of the property which is to be taken into consideration for the purpose of arriving at the open market value unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) Risks, hazards and uncertainties prevailing on the valuation dates are relevant for assessment years under consideration. (d) Principles of valuation of corpus consisting of jewellery are under indefinite litigation. 59. Learned counsel further stated that :-- (i) The Estate Duty was abolished from 16th March, 1985. For the wealth-tax assessment years 1985-86 and 1986-87, the trustees filed the returns distributing the total corpus of the trust fund. Therefore, the provisions of section 21(1A) are inapplicable. (ii) The valuation reports of the valuers appointed by the department under section 16A of the Act are binding on the department and the same are not contested by the trustees. (iii) The matter of allowing appropriate discounts considering the nature of uncertainties, attendant circumstances and the provisions of various enactments is upto the WTO, CWT(A) and Tribunal and does not rest with the Valuation Officer. 60. Regarding the applicability of provisions of section 21(1A) in case of assessments made under section 21(4) of the Act, Shri Palkhivala submitted that section 21(1A) contemplates only those cases where the value or the aggregate value of the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing factor, as alleged by the counsel for the assessee, was existing as on the valuation date. He explained this with reference to each of the valuation dates as under :-- 31-3-1980 : (i) 23 items of jewellery were treated as antiquities. The sale in respect of these items was prohibited outside the country. According to learned D.R. there existed " open market" in respect of these items within the country. (ii) 37 items were ordered to be auctioned by the Supreme Court on 20-9-1979. The auction was postponed at the instance of the Central Government. The Government decided to treat these 37 items as "Art treasures". (iii) For 21 items non-antiquity certificates have been given. Renewal of the certificate is not necessary under the law. (iv) The value of "Jacob Diamond" was taken at a ridiculously low figure. This is the third largest diamond in the world and in the open market its value is much more high. 31-3-1981 : Same conditions were prevailing in regard to the abovenoted categories of jewelleries. 31-3-1982 : Same conditions were prevailing as above. 31-3-1983 : The Government of India issued a notification on 8-11-1982 under the Antiquities and Art Treasure Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy was available against the action of the Government this, according to the learned D.R., mitigates the depressing factor. On these facts, Shri Rangabhashyam submitted that the value made by the Valuation Officer ought to have been accepted. To clarify the point apropos the applicability of the "Promissory Estoppel doctrine", reliance was placed on the ratio laid down in Motilal Padampat Sugar Mills Co. Ltd. v. State of UP [1979] 118 ITR 326 (SC). In this case the Court granted exemption to the Mills from sales tax for a period of three years. The State Government was not allowed to resile from its promise because it worked injustice to the mills and conferred no corresponding benefit on the public. 67. The learned D.R. stated that the CWT(A) relied on the evidence furnished by the counsel for the assessee regarding the correspondence with the Government of India from 1-7-1972 onwards mentioned in para 2.4 of that order. He has not mentioned whether that was additional evidence before him and how it was admitted. It is not known that whether due procedure of law was followed in consonance with the rules framed as regards the admittance of additional evidence. The counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R., in view of this decision, Estate duty liability need not be allowed. As in this case neither during the relevant year nor in subsequent years, there has been any death hence assumption of fictional death on the valuation date is not called for. He further invited our attention on the following two decisions :-- (i) CED v. Smt. P. Leelavathamma [1978] 112 ITR 739 (AP). (ii) CED v. Estate of Late Omprakash Bajaj [1977] 110 ITR 263 (AP). Smt. P. Leelavathamma's case it was the case of HUF. In this case sole survivor Hindu coparcener died leaving behind mother, wife and minor daughter. The question was whether estate duty payable was deductible from the value of the estate of the deceased. It was held that the estate duty payable was deductible from the value of the estate of the deceased. It was held that the estate duty payable cannot be deducted from the gross estate while computing net estate as it is neither a debt nor encumbrance u/s. 44 of the Estate Duty Act, nor can it be said that the market value of the property gets reduced by the estate duty payable u/s 36 of the Estate Duty Act. In the case of Estate of Late Omprakash Bajaj it was held that estate duty payable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1A) was introduced with effect from 1-4-1980. According to Shri Rangabhashyam, as long as life interest and remaindermen's interest are calculated following the actuarial basis there will always be some corpus left over and the same can be taxed only under section 21(1A) of the Act. Learned D.R., stated that the Supreme Court in Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust's case laid down that actuarial principle should be adopted in the remaindermen's interest. Hon'ble Supreme Court accepted the stand of the assessee. Now just for the sake of convenience the assessee cannot resile from their stand to the extent that the remaindermen interest will be calculated as per their shares in the corpus and not by actuarial principles. 74. Shri Rangabhashyam further stated that the words "such assets" as appearing in section 21(1A) does not denote beneficial interest. The words used in the section "Aggregate value of the interest" connotes the two categories of interest, viz., beneficial interest and remaindermen interest. According to learned D.R., the term "such assets" would mean only the assets in the corpus and not beneficial interest. Learned D.R. stated that for a mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of their interests in the trust properties through the trustees. Shri Palkhivala has therefore rightly pointed out that what is to be taxed is not the corpus of the trust but the aggregate value of the beneficial interest of the CESTUI QUE TRUST. 79. The beneficiary would always be assessable in respect of his interest in the trust properties since such interest belongs to him and the right of the revenue to make direct assessment on him in respect of such interest stands unimpaired by the provisions enabling the assessment to be made on the trustee in a representative capacity. Section 21(2) makes this clear by providing that nothing contained in section 21(1) shall prevent either the direct assessment of the beneficiary for whose benefit the trust properties are held or recovery from the beneficiary of the wealth-tax in respect of his interest in the trust properties which is assessed in the hands of the trustees. The revenue has thus two modes of assessment available for the assessment of the interest of the beneficiary in the trust properties. It may either assess such interest in the hands of the trustee in a representative capacity under section 21(1) or assess it d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned between the relatives in the proportion set out five equal units to constitute the reserve fund and the last 3 1/2 equal units to constitute the family trust expenses account. There is no doubt that separate funds were thus created even though the division of the original trust fund may have been notional. There is also no denying that it is open to Settlor to constitute two or more distinct trusts by a single document -- CIT v. Manilal Dhanji [1962] 44 ITR 876, 886 (SC)". 81. Respectfully following the decision of the Supreme Court that it is open to a Settlor to constitute two or more distinct trusts by a single document, in the present case, we find that Settlor had the intention to create a number of separate and distinct trusts and they were created by a single document. 82. Coming now to the applicability of section 21(1A) of the Act, in respect of assessment made under section 21(4) of the Act it is to be noted that section 21 of the Act deals with assessment in cases where assets are held by a Court of Wards, or an Administrator General or an official trustee or any receiver or manager or any other person, by whatever name called, appointed under any order of a Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be applicable if such excess value were the net wealth of an individual who is a citizen of India and resident in India, whichever course is more beneficial to the revenue. A suitable amendment has also been made in sub-section (4) of section 21(4)(b) to get over the difficulty resulting from the interpretation placed by the Hon'ble Supreme Court on the provision of that sub-section. 84. Under section 21(4) of the Act (prior to the 1980 amendment) wealth-tax was leviable on assets settled on a private discretionary trust at an average rate of 1.5 per cent or at the appropriate rate of wealth-tax which would be applicable if such assets were held by an individual who is a citizen of India and resident in India, whichever course happens to be more beneficial to the revenue. Under this provision, the average rate of 1.5 per cent applied to the whole of the net wealth without taking into account, the initial exemption of Rs. 1 lakh available under the rate schedule of wealth-tax. This provision applies in the case of a representative assessee where the shares of the persons on whose behalf or for whose benefit any such assets are held are indeterminate or unknown. 85. The Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable under section 21(1) of the Act. 87. Section 21(4) begins with non-obstente clause. The phrase "notwithstanding anything contained" in the sub-section is being used in contradiction to the phrase "subject to the provisions of" as used in section 21(1). As per the scheme of section 21(4), the entire value of the assets settled on a discretionary trust is charged to wealth-tax. In view of this, the scope and ambit of section 21(1A) is not wide enough to cover the assessments completed under section 21(4). Assessments made under section 21(1) of the Act, come within the ken of section 21(1A). 88. (i) In the facts and circumstances of the case and considering the rival arguments placed before us we hold that the provisions of section 21(1A) of the Act are not applicable wherein assessments were made by applying the provisions of section 21(4) of the Act. (ii) The provisions of section 21(1A) are applicable wherein assessments were made under section 21(1) of the Act. 89. Dispute as regards the allowance of fictional estate duty was dicided earlier by the Tribunal. The matter is dealt elaborately in the earlier orders referred before us. The arguments of the learned D.R., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the returns filed by the trustees in respect of residue corpus of each such fund was treated as a substantive assessment. He also fixed the value of principal corpus at 50 per cent of the value determined by Shri Chowlera. 93. We have examined the report submitted by Shri Chowlera. The first thing which struck to our notice was that Shri Chowlera did not submit this report in consonance with the provisions laid down under the Wealth-tax Rules, 1957 (hereinafter referred to as the Rules). This can be exemplified as under :-- (i) As per Rule 8-D, the report of valuation by a registered valuer in respect of any asset specified in column 1 of the table below shall be in form specified in corresponding entry in column 2 thereof and shall be verified in the manner indicated in such form : Table -------------------------------------------------------------------------------------------------------------------------------------------------- (1) (2) ------------------------------------------------------------------------------------------------------------------------------------------------- (i) ............................ ........ (ii) ............................ ........ ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses of section 16A, as he is not in the process of completing any assessment, for the purposes of which he wants to check up from the valuation officer, the veracity of the valuation of the assets disclosed by the assessee in the return. 95. In order to augment administrative set up of official valuation machinery, the Taxation Law Amendment Act, 1972 made several changes in the Act. It created Valuation Officers for the revenue and registered valuers for the taxpayers. Technical job connected with the valuation of the asset has been delegated to the Valuation Officer under the provisions of section 7(3) read with section 16A and section 38A of the Act. The report of the Valuation Officer to the extent of the valuation of the asset determined by applying his technical expertise is binding on the WTO. As per the provisions of section 7(3) of the Act, the Valuation Officer determining the value of any asset referred to by the WTO under section 16A. This value shall be the price which in the opinion of the Valuation Officer, it would fetch "IF SOLD IN THE OPEN MARKET ON THE VALUATION DATE". 96. It may be noted that wording used in sub-section (3) of section 7 in the matter of valua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is an open market in which asset can be sold. A catena of cases in similar stream developed around this classic decision of the Supreme Court. In our opinion, the Valuation Officer failed to understand the implication of the ratio as laid down by the Hon'ble Supreme Court. The words "open market" could only be construed with reference to the context only. The facts of the Ahmed G.H. Ariff' s case are different from the present case. However, the principle laid down by the Hon'ble Supreme Court is relevant in the present context to the extent that for determining the value of the jewellery "open market" can be assumed but that assumption must be in conformity with the various limitations laid down by the law in connection with the sale of jewellery. For example, if the export of the jewellery is banned, the concept of open market cannot be extended to the international market. 99. In regard to the applicability of the doctrine of Promissory Estoppel rule, we are of the opinion that in the facts, it has got no nexus with the valuation of jewellery. We do not find it necessary to discuss in detail the various implications of the doctrine. But one thing is clear, assuming that an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hetical market it is inevitable that differences of opinion as to value will become even more marked. 104. We have carefully gone through the various aspects apropos the valuation. Neither the revenue nor the learned counsel for the assessee did question the valuation as such as done by Shri Chowlera. Despite the defects in the report we find here it not necessary to tinker with the report as the valuation in the report was not disputed before us. Both the parties agreed to the valuation done by Shri Chowlera. 105. Coming now to the adjustment on account of uncertainties, hazards and risk of litigation, we find that all these factors escaped the notice of Valuation Officer and Wealth-tax Officer. The Valuation Officer discarded the depressing factors brought to his knowledge by calling them "unwarranted". The Wealth-tax Officer did not make any deduction despite the fact that these were brought to his notice. The First Appellate authority, in our opinion has correctly made a deduction for adjustment on account of uncertainties, hazards and risk of litigation. In view of the factum of joint ownership, cumulative burden of tax liabilities and various other uncertainties, hazards an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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