Wealth tax-------

----Reference---Valuation of, assets--- Exemption--- Jewellery---Question regarding valuation of jewellery--Question whether exemption could be claimed in respect of jewellery on the ground that they were art treasures--Questions of law--Indian Wealth Tax Act, 1957 Ss. 5(1)(xii), 16-A & 27.

Held, that the questions, (1) whether, on the facts and in the circumstances of-the case, the Appellate Tribunal was justified in confirming the order of the Commissioner of Income-tax (,Appeals) in so far as fixing the value of the jewellery forming part of the trust at 50 per cent. of the value fixed by the valuer on the alleged grounds of uncertainties, hazards and risks of litigation, etc.; (2) whether the Appellate Tribunal was justified in holding that the alleged uncertainties, hazards, risks of litigation and burden of tax liability, etc. pleaded by the assessee constituted factors for reduction of valuation up to 50 per cent. of the valuation fixed by the approved valuer; (3) whether the Appellate Tribunal was justified in holding that the Wealth Tax. Officer would be entitled to make further adjustments to the valuation as determined by the Valuation Officer under section 16-A(5) of the Wealth Tax Act, 1957; and (4) whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in allowing the exemption under section 5(1)(xii) of the Wealth Tax Act in respect of seven items of jewellery, claimed to represent art treasures, had to be referred.

S.R. Ashok for the Commissioner.

P. Murali Krishna for the Assessee.

JUDGMENT

P. VENKATARAMA REDDI, J.---The Revenue seeks reference of the following questions for reference under section 27(3) of the Wealth Tax Act, 1957, for consideration:

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that for the purpose of valuation of the jewellery under section 7(1) of the Wealth Tax Act, 1957, the alleged uncertainties, hazards, risks of litigation, burden of cumulative tax liability, etc, should be considered as the factors which would go to reduce the estimated market value?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in ignoring the position that the concept of a notional open market would preclude the assumption of any restrictions on the sale of the asset in that notional open market?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the order of the Commissioner of Wealth Tax (Appeals) in allowing a deduction of 50 per cent from the valuation fixed by the approved valuer, Shri Chowlera, in respect of the adjustment on account of uncertainties, risks, hazards of litigation, etc?

(4) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in allowing the exemption under section 5(1)(xii) of the Wealth Tax Act in respect of seven items of jewellery, claimed to represent art treasures?

(5) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that under section 16-A of the Wealth Tax Act, the Wealth Tax Officer would be entitled to make further adjustments to the valuation as determined by the Valuation Officer?

(6) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the cancellation of the assessment made under section 21(1-A) by considering the total corpus of the trust fund as a single trust and by deducting therefrom the proportionate corpus devolving on the children of the deceased beneficiaries and the total remaindermen's interest for the purpose of arriving at the residue corpus?

(7) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the scope of section 21(l-A) was nor made enough to cover the assessment completed under section 2 1(4) and that the provisions of section 21(1-A) would apply only to the assessment made under section 21(1) of the Wealth Tax Act?

(8) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in confirming the decision of the Commissioner of Wealth Tax (Appeals)-I fixing the value of the fund at 50 per cent of the value fixed by the departmental valuer, Sri Jayant N. Chowlera, when the departmental valuer, Sri Jayant N. Chowlera, had himself admitted before the umpire in the arbitration proceedings pending before the latter that he did not consider certain issues involved, while determining the value of the jewellery of the principal fund of the jewellery trust?"

Questions Nos. 1, 2, 3, 5 and 8 turn on the question of valuation of jewellery. Following our order just now pronounced in Wealth Tax Cases Nos.26 and 29 of 1994, we direct the said questions as recast by us in Wealth Tax Cases Nos.26 and 29 of 1994 to be referred for the opinion of this Court.

In addition to the above questions, we direct the reference of question No.4 also inasmuch as the said question raises a debatable question of law and, in fact, that question was referred by the Tribunal itself and R.C. No.318 of 1991 is pending on this point.

Questions Nos.6 and 7 do not arise out of the order of the Tribunal and, therefore, they need not be referred. Accordingly, we direct the following questions, which have a bearing on the question of valuation to be referred for the opinion of this Court in addition to question No.3 already referred by the Tribunal:

"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in confirming the order of the Commissioner of Income-tax (Appeals) in so far as fixing the value of the jewellery forming part of the trust at 50 per cent. of the value fixed by the valuer on the alleged grounds of uncertainties, hazards and risks of litigation, etc.?

(2) Whether the Appellate Tribunal is justified in holding that the alleged uncertainties, hazards, risks of litigation and burden of tax liability, etc. pleaded by the assessee constituted factors for reduction of valuation up to 50 per cent. of the valuation fixed by the approved valuer?

(3) Whether the Appellate Tribunal is justified in holding that the Wealth Tax Officer would be entitled to make further adjustments to the valuation as determined by the Valuation Officer under section 16-A(5) of the Wealth Tax Act?

Question No.4 extracted above should also be referred.

The Wealth Tax case is thus partly allowed. No costs.

M.B.P./1257/FC ???????? ????????????????????????????????????????????????????????????????Order accordingly.