Wealth tax---

---- Appeal to Appellate Tribunal---Valuation of immovable property- Tribunal remanding matter---Tribunal was not justified in restricting value to a particular figure---Indian Wealth Tax Act, 1957, S.7---Indian Wealth Tax Rules, 1957, R.1-BB.

Rule 1-BB of the Wealth Tax Rules, 1957, prescribes the method of valuation of a house wholly or mainly for residential purposes providing a choice among well-known and well-settled modes of valuation. The said method is a recognised and accepted method and mandatory one. When the statutory provisions are more than clear and there is an order of remand, the Wealth Tax Officer should be left free to determine the question of valuation in accordance with the law and the material on record.

Held, that the Tribunal had passed the order of remittance of the proceedings to the Wealth Tax Officer. However, instead of leaving the Wealth Tax Officer free to consider the situation there was an additional direction freezing the value of the residential property at Rs.1,75,000. The Wealth Tax Officer should have been free to consider the situation in the light of the provisions of section 7(4) of the Wealth Tax Act, 1957, as well as rule 1-BB of the Wealth Tax Rules, 1957, in regard to the question of valuation of the property. The order of the Tribunal would need consequential modification in regard to freezing the value of the residential property at Rs.1,75,000.

CWT v. Sharvan Kumar Swarup & Sons (1994) 210 ITR 886 (SC) ref.

P.K.R. Menon and N.R.K. Nair for the Commissioner.

C. Kochunni Nair, M.A. Firoze and Dale P. Kurian for the Assessee.

JUDGMENT

V.V. KAMAT, J. ---In these references under section 27(1) of the Wealth Tax Act, 1957, the answer to the question posed would not be really necessary and if the Wealth Tax Officer had been given his own statutory powers and necessary freedom, the Tribunal would have been more than justified. Instead, the Tribunal has fixed the valuation of the property in question and proceeded to pass directions of a remand order. Only this needs modification, because when the statutory provisions are more than clear and there is an order of remand, the Wealth Tax Officer should be left free to determine the question of valuation in accordance with the law and the material on record.

The assessment year in question is 1980-81, in regard to which the valuation, date is August 16, 1979. The two assessees in these references were owning 1.60 acres of land and a residential house in the land at Kacheri Junction, Quilon, in equal shares. Out of this 27-1/2 cents of land was sold on May 24, 1979, at the rate Rs.4,000 per cent. While valuing the property with reference to the assessment year 1980-81, the Wealth Tax Officer allowed only 30 cents of land as land appurtenant to the residential building. The residential building and 30 cents of land appurtenant was valued at Rs. 1 lakh in the first instance and thereafter the remaining land of 92-1/2 cents came to be valued at Rs. 3,70,000 at the rate of Rs.4,000 per cent. Since the two assessees had equal shares, each of them came to be assessed at Rs.2,35,000 in respect of the property. This was confirmed by the first appellate authority by the order, dated September 20, 1983. The Tribunal, therefore, got concerned with two independent appeals of the assessee. What was urged for and on behalf of the assessees and the Departmental representative has been reproduced by the Tribunal in paragraphs 4 and 5, respectively. To summarise, the assessees submitted some material containing the statement of wealth as on August 16, 1970, which was filed alongwith the wealth tax return for the assessment year 1971-72. With regard to the subsequent year 1972-73, the statement of wealth as on August 16, 1971, was also placed on record alongwith the assessment order in regard thereto having been passed on December 27, 1974. The material in regard to the valuation of the residential property in accordance with the provisions of rule 1-BB of the Wealth Tax Rules, 1957, was also placed on record in the case of one of the assessees, Sri S.P. Rajagopala Iyer. On the basis of the material on record, it was submitted that the property has to be valued in accordance with rule 1-BB of the Wealth Tax Rules. It was also submitted that the provisions of section 7(4) of the Wealth Tax Act, 1957, are also necessary to be looked into. In connection with the above provisions, it was submitted that the value would come to about Rs.1,75,000.

It was submitted on behalf of the Department that the total area of the land, built up area and unbuilt area would also be required to be verified by the Wealth Tax Officer and consequently a submission is made by the Departmental representative that the matter may be remitted back to the Wealth Tax Officer. It is also seen that the Departmental representative also invited a direction to value the residential property by resort to the provisions of section 7(4) of the Wealth Tax Act. It is submitted that the Wealth Tax Officer should be free and entitled to consider the situation.

It is on the basis of the above rival submissions the Tribunal has passed the order of remittance of the proceedings to the Wealth Tax Officer. However, instead of leaving the Wealth Tax Officer in his perfect domain and independence, there is an additional direction of freezing the value of the residential property at Rs.1,75,000. In our judgment, the Wealth Tax Officer should have been free to consider the situation in the light of the provisions of section 7(4) of the Wealth Tax Act, 1957, as well as rule 1-BB of the Wealth Tax Rules in regard to the question of valuation of the property in question. That order of the Tribunal would need consequential modification in regard to freezing the value of the residential property at Rs. 1,75,000. By an emphasis that the order of remittance to the Wealth Tax Officer be understood to give freedom and statutory power as is available under section 7(4) of the Act and rule 1-BB of the Wealth Tax Rules to determine the question of valuation according to law, without getting restricted to the observations in regard to the freezing as stated above. Although it is not necessary, the position of law is more than certain that rule 1-BB of the Wealth Tax Rules, 1957, prescribes the method for valuation of a house wholly or mainly for residential purposes providing choice among well- known and well-settled modes of valuation. The apex Court in CWT v. Sharvan Kumar Swarup & Sons (1994) 210 ITR 886, has emphasised that the said method is a recognised and accepted method and a mandatory one.

For the above reasons, we find that answer to the question would be unnecessary except and to the extent of modification regarding the freezing of value of the residential property at Rs.1,75,000.

A copy of this judgment under the seal of the Court and the signature of the Registrar shall be forwarded to the Income Tax Appellate Tribunal Cochin Bench, as required by law.

M.B.A./1704/FC Matter disposed of.