9911796707
TMI Blog1996 (7) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustry, M/s. Maniklal Tea Factory and M/s. Sivaram Plywoods. The firms owned factories and are engaged in their respective businesses. In the course of the assessments under the Wealth-tax Act for each of these years it was found by the Assessing Officer that the assessee's interest in partnership firms was not taken in accordance with the provisions and therefore the assessee was given an opportunity to get the valuation of all the assets of the firm done to arrive at the correct share income. The assessees got the valuation done by an approved valuer and filed revised returns in all the years based on the valuation report on 6-3-1991. The returns were again revised withdrawing the revision made in the matter relating to the valuation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date determined in the manner laid down in Schedule-III to the Act. The learned counsel submitted that although the Schedule-III came into the statutory book with effect from 1-4-1989, nonetheless they should be applied for the purpose of valuation of the assets in respect of assessments that are finalised after 1-4-1989. According to him, in all these cases assessments were finalised after this date and therefore the valuation should be done in accordance with Schedule-III. The learned counsel pointed out that the rules pertaining to valuation are procedural in nature and therefore should be applied to all the pending proceedings. Our attention was drawn to the decision of the Ahmedabad Bench of the Tribunal in the case of Kishandas Govi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 to 7 of the Schedule III instead of one based on rule 20. 5. The departmental representative, on the other hand, strongly supported the impugned orders. According to him, the provisions of rule 20 of the Schedule-III dispenses with the application of rule 3 of the said Schedule. Therefore the valuation under land and building is the proper method for determining the partners' interest in the firms. 6. In reply the learned counsel for the assessees stated that the authorities below have not given reasons why the provisions of rule 3 to Schedule III are not applicable and therefore it was again stressed that we should direct the Assessing Officer to value the asset in accordance with the rules 3 to 7 of the Schedule-III. 7. We have ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of interest in the firms in which the assessees are partners, the said issue, is dealt in rules 15 and 16 of the Schedule-III which are as follows :-- " 15. The value of the interest of a person in a firm of which he is a partner or in an association of persons of which he is a member shall be determined in the manner provided in rule 16. 16. The net wealth of the firm or association of persons on the valuation date shall first be determined as if it were the assessee and, thereafter,-- (i) that portion of the net wealth of the firm or association as is equal to the amount of its capital shall be allocated among the partners or members in the proportion in which capital has been contributed by them ; (ii) the residue of the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is admissible, its book value ; (iii) in the case of closing stock its value adopted for the purposes of assessment under the Income-tax Act for the previous year relevant to the corresponding assessment year ; (b) where the value of any of the assets referred to in clause (a), determined in accordance with the provisions of this Schedule as applicable to that particular asset or if there are no such provisions, determined in accordance with rule 20, exceeds the value arrived at in accordance with clause (a) by more than 20 per cent, then the higher value shall be taken to be the value of that asset ; [Emphasis supplied] The effect of clause (b) is that in circumstances the book value is to be substituted by a different value as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (a) or clause (b) or clause (c), the value of the property shall be determined in the manner laid down in rule 20. " In the case before us, the Assessing Officer has not come to an opinion that it is not practicable to apply the provisions of the said rule 3 in the case of the assessees. He could have done it with the previous approval of the Dy. Commissioner. For want of this opinion, we are unable to accept the departmental stand that rule 3 is not applicable and therefore the valuation should be in accordance with rule 20. It may be again mentioned that resort to rule 20 should be done where it is an asset which is not covered by rules 3 to 19. The department should first see whether rules 3 to 19 are applicable to any particular ..... X X X X Extracts X X X X X X X X Extracts X X X X
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