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TMI Blog1983 (1) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... en the learned members. The learned Accountant Member held that it will not apply while the learned Judicial Member held otherwise. Accordingly, the following question has been referred to me for decision under section 255(4) of the 1961 Act, by the President : " Whether, the provisions of section 7(4) of the Wealth-tax Act are applicable to the case of the assessee for the purpose of valuation of residential property at 696, Model Town, Jullundur in respect of the assessment years 1974-75 and 1975-76 ? " 2. On behalf of the assessee, reliance is placed on the order of the Judicial Member. He reiterated the same arguments as were advanced before him and he referred to the following decisions : Smt. Kusumben D. Mahadevia v. N.C. Upadhya [1980] 124 [ITR 799 (Bom.), Srichand Golecha v. WTO [1981] 25 CTR (Cuttack--Trib.) 1 and WTO v. Smt. Jytsana Baid [1982] 13 TTJ 47 (Cal.). The learned departmental representative, Mr. Berjinder Singh, relied upon the order of the learned Accountant Member and referred to a passage in Sampath Iyenger's Commentary under section 7(4). He further pointed out that there is no decision of the High Court which directly dealt with section 7(4) which ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is anomaly. From the very fact that the value fixed for the assessment year 1971-72 is pegged down so far as the residential house property is concerned, it would indicate that the same value should be adopted thereafter. It is not correct to hold that the value for the assessment year 1976-77 would be lower while the value for the earlier years would be higher especially in the state of inflationary conditions where the value of real properties has been going up and up. On a fair reading of sub-section (4), I feel that the Legislature wanted to fix the value of the residential property at a particular value determined for the assessment year 1971-72. 4. It may be also mentioned that the matter can be looked into from a slightly different angle. The valuation of the residential property has got to be made under the Wealth-tax Act and the fair market value as on the valuation date for each of the assessment years should be determined. In view of the rise in values year after year, even in respect of residential property the increased value will have to be shown and this would result in hardship to the assessees, inasmuch as, there is no return from the property. The property is me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t years 1973-74, 1974-75 and 1975-76. All the appeals are being disposed of by this common order for the sake of convenience. 2. It may be mentioned that the WTO has made a consolidated order of assessment for the assessment years 1972-73 to 1975-76 and similarly the AAC has passed a consolidated order for the above four years. However, before us only three years' matters are in appeal. The first question to be considered is regarding the valuation to be adopted in respect of the assessee's residential house located at 696, Model Town, Jullundur. The assessee had disclosed the value of this property at Rs. 1,19,110. This was based on the valuation report obtained from a valuer. The WTO found that the land on which this property was constructed consisted of 162 marlas and the covered area was 4,505 sq. feet. He referred to the other details of the accommodation available and pointed out that the value of the land and the construction shown by the approved valuer was very low. He pointed out that there was no basis for taking the value of the land at Rs. 400 per marla. He referred to the fact that the property was located in a very good locality in Jullundur and the construction wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property was located at a big piece of land and this fact should have been kept in view. 5. The departmental representative submitted that any provision of law should not be considered to be retrospective unless the statute makes it clear. A reference was made to the decision of the Punjab and Haryana High Court in the case of CWT v. M.R. Mahajan [1980] 126 ITR 706. The departmental representative then made a reference to the commentary by Sampat Iyengar where explaining the provisions of section 7(4) of the Act, it has been stated that it was applicable in the years 1976-77 onwards. He referred to the material mentioned by the WTO and submitted that the basis for valuation is indicated in the order of the WTO. It was contended by the departmental representative that it was not obligatory to make a reference to the Valuation Officer. He pointed found defective and, therefore, could out that the report of the valuer was not be relied upon. 6. I have considered the facts of the case. I find that the provisions of section 7(4) were not invoked by the assessee either before the WTO or before the AAC. In the grounds of appeal before the Tribunal it has also not been specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y clear how that case was relied upon for deciding this issue. As no other reasoning given in that order of the Tribunal, I cannot discuss such reasons any further. However, at this stage I may make a mention of the fact that a Special Bench of the Tribunal consisting of the President, Vice President and a Judicial Member considered the question about the valuation of a residential property particularly with reference to rule 1BB of the Act. That was the case of Biju Patnaik v. WTO [1981] 6 Taxman 56 (Delhi--Trib.). In that case Tribunal had the occasion to consider the application of section 7(4). The case of the assessee related to the assessment years 1964-65 to 1974-75. The Special Bench observed that the provisions of section 7(4) came on the statute book with effect from 1-4-1976 and the question regarding reconciling section 7(1) with section 7(4) did not directly arise in those appeals. The Tribunal further observed that in the case of certain interveners where assessment years after 1976 were involved this question would arise. The Bench, therefore, proceeded to consider the question of applicability of section 7(4). One thing is, however, clear from the order of the Speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing regard to the relevant rules and after having obtained report of the Valuation Officer in case the thinks that the valuation of the property would be higher by a substantive margin. In view of the above decision the departmental appeals have become infructuous as they have merely challenged the reduction in the valuation by the AAC. 10. The next ground which is common to all the three years is regarding the valuation of the agricultural lands situated in villages of Khurla and Wadala. The WTO found that in respect of Khurla village the assessee has shown the value of 78 kanals at Rs. 1,17,800. The WTO did not accept the capitalisation method on the basis of the land revenue and found that the location of the Khurla village is near the village Wadala. He referred to the certain cases like the case of Shri Jograj Singh where the same land has been sold for more than Rs. 3,000 per kanal. He therefore, adopted the value of Khurla village land at Rs. 3,500 per kanal. In respect of the land at Wadala, he took the value at Rs. 3,000 per kanal. 11. It has been submitted before us that the value has been stepped up without much justification and it was also pointed out that in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This matter will, therefore, go to the AAC for fresh consideration. In the result, the assessee's appeals as well as the departmental appeals shall be treated as allowed for statistical purposes. Per Shri U.S. Dhusia, Judicial Member --There are two issues in these appeals, filed by the assessee for the assessment years 1973-74, 1974-75 and 1975-76. One of the issues relates to the valuation of a property at 696, Model Town, Jullundur. The assessee had returned a value of this property at Rs. 1,19,101 on the face of the valuation made by the approved valuer. The WTO, applying the land and building method, determined the value at Rs. 3,00,000. The AAC reduced this valuation to Rs. 2,50,000. The assessee, in appeal, before us, contended that the value of this property must be determined under section 7(4). It has been held by my learned brother that section 7(4) being substantive provision, is not applicable for determining the value of the building for the years in issue. It came into effect on 1-4-1976 and, therefore, did not have any retrospective effect. The aforesaid view of my learned brother that, being a technical provision, it should be considered as a substantive provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his famous treatise on Interpretation of Statutes, has on page 222 observed that "the presumption against the retrospective construction has no application to enactments which effected only the procedural and practice of the courts. No person has a vested right in any course of procedure". Even where the presumption against retrospectivity is applied in respect of a substantive provision, the Court must be satisfied that the statute is, in fact, retrospective. Maxwell, on page 216, has quoted Crais on Statute Law Statute is retrospective, 'which takes away or impairs any vested right acquired under the existing laws, or quotes a new obligation, or imposes a new duty, or attaches a new disability in respect to transactions or considerations already past". Applying these tests, I am of the view that the provision contained in section 7(4) does not impair any vested right acquired under the existing laws, nor creates a new application or imposes a new duty or attaches any new disability on any one. In fact, the provision grants concession to the taxpayers. Therefore, applying the tests provided by Crais, sub-section (4) of the Act cannot be considered to be a provision lacking retrosp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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