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TMI Blog1984 (11) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... hanced. The assessees appealed to the Commissioner (Appeals). The main argument before him was that rule 1BB of the Wealth-tax Rules, 1957 ('the Rules'), was applicable as the entire property was the residential property being occupied by five joint families. Rule 1BB is procedural in nature and being retrospective in operation, applied to all pending proceedings before various taxing authorities. The decision of the Tribunal in WT Appeal Nos. 614 to 624 (Delhi) of 1979 was relied upon. The gross maintainable rent of the property was Rs. 24,000 only and after deducting taxes and expenses for repairs, the net rent worked out to Rs. 18,683. On the basis of this rent and applying rule 1BB, the value will be Rs. 2,33,537. Out of the total area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt area exceeds the specified limit. Raising the value of the house arrived at in accordance with sub-rule (1) by a percentage, will not meet the requirements due to the existence of large unbuilt area of the type available in the present case. It appears to me that in the circumstances, rule 1BB cannot be used as such to arrive at the value of the entire property and, hence, I shall hold that having regard to the facts and circumstances of the case, it is not practicable to apply the provisions of this rule to the present case. No doubt, clause (i) of sub-rule (5) of rule 1BB had to be applied by the WTO with the previous approval of the Inspecting Assistant Commissioner of Income-tax, but it cannot be denied that the appellate authority, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racticable to apply the said rule, as it would work counter to the purposes of the Act. The Act will hold sway over the rules. In the present case, the property can be brought within the exceptions specified by sub-rule (5). According to him, 'practicable' means something which is not opposed to commonsense. If the value obtained by adopting rule 1BB is something ridiculously low, then it should be held that it is not 'practicable' to apply rule 1BB. The decision of the Madras High Court in K.M. Mammen v. WTO [1983] 139 ITR 357 indicated that the Rules are not mandatory. It was also stated that the decision of the Gujarat High Court in Hasanand Pinjomal v. CIT [1978] 112 ITR 134 at page 145 could be interpreted in favour of the revenue. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntions of the Act, we do not see any reason as to why this principle could be discarded in the case of Rules. Obviously, with a view to simplify valuation procedures, rule 1BB has been framed. If the value according to rule 1BB is much lower than the market rate, the rule cannot be rejected as unworkable. It is common knowledge that market values of properties are very much higher than the value arrived at by rent capitalisation method. If for that reason rule 1BB is not to be applied, then that rule will become otiose. Such an interpretation cannot be permitted. When rules are framed under the Act, they have to be followed. The Rules themselves provided, under what circumstances they are not to be applied. Sub-rule (5) of rule 1BB deals wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dow, etc.) real, that can be used as such. " The dictionary meaning is quite clear. It cannot be said that the valuation under rule 1BB is not 'practicable' just because it gives a lower value than the rent and building method. Stroud's Judicial Dictionary also states that the word 'practicable' cannot be construed as meaning equitable, fair or reasonable. If the property was subject to various types of encumbrances, easements, etc., that rule 1BB could not be applied, we could have said that it was not 'practicable' to apply that rule. Looked at from any angle, it is difficult to say that rule 1BB does not apply to valuation of the property in question. We, therefore, set aside the order of the Commissioner (Appeals) and restore the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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