9911796707
TMI Blog1998 (9) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... em one after the other and ultimately requested this court to dismiss these two writ petitions for want of merit. Heard the arguments advanced by learned counsel appearing for the petitioners and also those of learned senior counsel appearing for the Department, I have also gone through the contents of the affidavits, counter affidavit and also the order impugned together with all other relevant material documents available on record in the form of typed set of papers. I have also taken into consideration the various points raised by learned counsel appearing for the respective parties during the course of their arguments. In such circumstances of the case, the only point that arises for consideration in this case is, as to whether there are any valid grounds to allow these writ petitions or not. The brief facts of the case of the petitioners herein are as follows : Both the petitioners herein are assessees on the file of the second respondent and have been regularly assessed to income-tax and wealth-tax. They were partners in a firm known as "Admiralty Hotel" which owned certain lands and buildings. The property was utilised for being let out as a residential apartment as pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y should not be valued as follows, in respect of the assessment years 1981-82 to 1983-84. Rs. As on 31-3-1981 64,30,900 As on 31-3-1982 78,47,900 As on 31-3-1983 1,22,16,000 The District Valuation Officer, by an order purporting to have been passed under section 16A(5) of the Wealth-tax Act, determined the fair market value of the aforesaid property in the manner said above. The said order was passed on January 20, 1990. According to the petitioners herein, the aforesaid valuation and the order passed by the District Valuation Officer are wholly erroneous, illegal, without jurisdiction and violative of the provisions of the Wealth-tax Act. Under section 16A of the Wealth-tax Act, the assessing authority is empowered to refer the valuation of a property to the Valuation Officer. The Wealth-tax Act was amended by the Direct Tax Laws (Amendment) Act, 1989, with effect from April 1, 1989. Under the said amendment, Schedule III was introduced in the Act, which provided for the rules for determining the value of assets. Part B of the said rules provided for the valuation of immovable property. Under rule 3, the value of any immovable property being a building or land pertaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer herein has adopted the value of the property in question herein on the basis of the land and building method by adopting a cost of construction as estimated by him. In the valuation report, he has estimated the value of the building on his own basis by adopting land rate separately and the cost of construction separately for the building. The valuation report clearly states in para 4.1 that the method of valuation adopted by the Valuation Officer is the land and building method. This method has been adopted notwithstanding under Schedule III, a rent capitalisation method is provided as statutorily recognised method of valuation. The rules also provide for the determination of the net maintainable rent, for evaluating the fair market value by multiplication of the net maintainable rent by the multiple factor. In view of the specific statutory provision providing for the valuation of immovable property, the land and building method adopted by the valuer is erroneous and not justified. Further, the order of the Valuation Officer is binding on the Assessing Officer and the only remedy available to an assessee who desires to challenge the order of the Valuation Officer is to fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent erred in ignoring the provisions of rule 3 of the Third Schedule in regard to the valuation of immovable property and in adopting the land and building basis for valuing the immovable property. It is also contended by the petitioners that the Valuation Officer acting under section 16A(5) is bound by the rules of valuation under the, Act in valuing a property and cannot adopt his own method not being in consonance with the basis required to be adopted under the rules, and that the order of the first respondent is erroneous, illegal and violative of the provisions of law and the principles of natural justice in so far as the valuation has been made without giving the petitioner a full and reasonable opportunity as required by law. Per contra, in the counter affidavit, inter alia, it was contended by the respondents that the assessment years involved in these proceedings are 1981-82 to 1983-84 and that therefore Schedule III to the Wealth-tax Act which has been introduced by the Direct Tax Laws (Amendment) Act, 1989, with effect from April 1, 1989, has no application to the present case, that the decisions relied on by the petitioner have no application to the facts of the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count the said release deed. The second respondent thereafter invoked the provisions of section 16A of the Wealth-tax Act, 1957, and referred the valuation of the immovable property owned by the firm at No. 5, Norton Road, Mandavali, Madras 28, to the first respondent on February 15, 1989. Even though such reference made by the second respondent to the first respondent for valuation of the asset in question was objected to by the petitioners, this court is of the view that the same is valid and within his jurisdiction. Pursuant to the reference under section 16A, the first respondent issued notice on June 21, 1989, calling for the relevant documents of the property and the petitioners replied stating that all the documents had been furnished in connection with the valuation of the property for other co-owners. It is stated in the order passed by the first respondent that he inspected the property on November 27, 1989, in the presence of the authorised representative of the petitioners. Thereafter the first respondent issued a letter on November 29, 1989, estimating the preliminary value of the said property at Rs. 64,30,900 as on March 31, 1981, Rs. 78,47,900 as on March 31, 1982 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessments. Therefore, it is their case that in so far as the rules for valuation are procedural in nature, the rules, as they exist on the date of valuation, should be adopted for the valuation of the properties even in respect of pending assessments. In support of their said contention, learned counsel for the petitioner relied on the following judgments : 1. CWT v. Sharvan Kumar Swarup and Sons [1994] 210 ITR 886 (SC) ; and 2. CWT v. Sunder Lal Gupta [1997] 225 ITR 729 (Raj). In CWT v. Sharvan Kumar Swarup and Sons [1994] 210 ITR 886, the Supreme Court has held that rule 1BB partakes of the character of a rule of evidence. It deems the market value to be the one arrived at on the application of a particular method of valuation which is also one of the recognised and accepted methods. The rule is procedural and not substantive and is applicable to all proceedings pending on April 1, 1979, when the rule came into force, So also, in CWT v. Sunder Lal Gupta [1997] 225 ITR 729 (Raj), it has been clearly held as follows : "The provisions relating to valuation of the property, contained in Schedule III to the Act, are procedural in nature and the procedural law is applicable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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