COMMISSIONER OF WEALTH TAX VS HIRA LAL MEHRA
1999 P T D 2199
[235 I T R 561]
[Punjab and Haryana High Court (India)]
Before Ashok Bhan and N. K. Agrawal, JJ
COMMISSIONER OF WEALTH TAX
Versus
HIRA LAL MEHRA
Wealth Tax Reference No. 59 of 1982, decided on 14/07/1997.
Wealth tax---
---- Valuation of assets---Rule 1BB providing for method of valuation---Is essentially a rule of evidence---Not substantive but procedural---Operates retrospectively and applies to all pending proceedings---Indian Wealth Tax Rules, 1957, R.1 BB.
Rule 1BB of the Wealth Tax Rules, 1957, is essentially a rule of evidence as to the choice of one of the well-accepted' methods of valuation in respect of certain kinds of properties with a view to achieving uniformity in valuation and avoiding disparate valuation resulting from application of different methods of valuation respecting properties of a similar nature and character. Therefore, rule 11313 would operate retrospectively and would be applicable to all pending cases including the assessment years prior to April 1, 1979, when rule 11313 was introduced for the first time in the Wealth Tax Rules, 1957 C.W.T. v. Sharvan Kumar Swarup and Sons (1994) 210 ITR 886 (SC) fol.
C.W.T. v. Hira Lal Mehra (1994) 205 ITR 122 (P&H) held no longer good law.
CW.T. v. Kasturbhai Mayabhai (1987) 164 ITR 107 (Guj.); C.W.T. v. Lachmandas Bhatia (1987) 163 ITR 586 (MP); C.W.T. v. Niranjan Narottam (1988) 173 ITR 693 (Guj.); C.W.T. v. Tandon (O.P.) (1992) 195 ITR 688 (Delhi); C.W.T. v. Vidyavathi Kapur (1984) 150 ITR 319 (Kar.); Dilip Kumar Mitra v. C.W.T. (1993) 200 ITR 336 (Cal.); Izhar Ahmad Khan v. Union of India AIR 1962 SC 1052 and Manjushree Biswas (Sint.) v. C.W.T. (1988) 171 ITR 348 (Cal.) ref.
B. S. Gupta, Senior Advocate with Sanjay Bansal for the Commissioner. .
Nemo for the Assessee.
JUDGMENT
ASHOK BHAN, J.---The Income-tax Appellate Tribunal, Amritsar Bench, Amritsar, at the instance of the Revenue has referred the following question or law to this Court under section 27(1) of the Wealth Tax Act, 1957, (hereinafter referred to as "the Act"), alongwith the statement of the case:
"Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that rule 1BB of the Wealth Tax Rules, 1957, would operate retrospectively so that the valuation of the assessee's building as on January 31, 1975, should be made in accordance with the said rule although the said rule 1BB came into force with effect from April 1, 1979?"
The facts relevant to the aforesaid question are:
The assessee was the owner of a residential house at Mall Road, Amritsar. He returned the value of the house at Rs.1,40,000 but the Wealth Tax Officer valued the same at Rs.3,94,000. The Appellate Assistant Commissioner (Wealth Tax), gave some relief in respect of the valuation of the land and brought down the valuation both of land and building to Rs.3,47,540. The assessee relying upon the earlier decision of the Tribunal to W.T.A. No.64/65/ASR of 1980 which related to the assessment years 1973-74 and 1974-75, contended that the valuation should be made according to rule 1BB of the Wealth Tax Rules or under section 7(4) of the Act whichever was beneficial to the assessee. The Tribunal following its own decision in W.T.A. No.64/65/ASR of 1980 set aside the valuation made by the Appellate Assistant Commissioner- as well as the order of the Wealth Tax Officer. The Wealth Tax Officer was directed to ascertain the valuation both under rule 1BB of the Wealth Tax Rules as well as under section 7(4) of the Act and then to call upon the assessee to exercise his option choosing the mode of valuation. The Revenue filed a petition seeking the question of law referred to above in line with the similar question which had been referred to this Court in respect of the preceding years 1973-74 and 1974-75. .
The question referred relating to the assessment years 1973-74 and 1974-75 was considered by this Court in C.W.T. v. Hira Lal Mehra (1994) 205 ITR 122. Question No. 1 in the aforesaid case is similar to the question referred to us in this case.
Rule 1BB of the Wealth Tax Rules (hereinafter referred to as "the Rules") was introduced in the year 1979. The question before this Court was: whether rule 1BB which came in the statute book for the first time in the year 1979, would be applicable to the assessment years 1973-74 and 1974-75? I: was held that even though rule 1BB was procedural but the same could not be made applicable retrospectively with respect to the assessment years prior to April 1, 1979, and therefore, it would not apply to the assessment years 1973-74 and 1974-75. It was held that rule 1BB would apply to the assessment years for the period after April 1, 1979, to March 31, 1989, during which period the said rule remained in force.
There is no appearance on behalf of the assessee in spite of the actual date notice issued to him.
Although we have stated that the question referred to us stands concluded by the judgment of this Court in Hira Lal's case (1994) 205 ITR 122, the same needs reconsideration in the light of the following facts:
Different High Courts in the following cases, i.e.:
C.W.T. v. Lachmandas Bhatia (1987) 163 ITR 586 (MP), C.W.T, v. Niranjan Narottam (1988) 173 ITR 693 (Guj.); C.W.T. v. Tandon (O.P.) (1992) 195 ITR 688 (Delhi); CW.T. v. Vidyavathi Kapur (1984) 150 ITR 319 (Kar.); Dilip Kumar Mitra v. C.W.T. (1993) 200 ITR 336 (Cal.), Manjushree Biswas (Sint.) v. C.W.T. (1988) 171 ITR 348 (Cal.) and C.W.T. v. Kasturbhai Mayabhai (1987) 164 ITR 107 (Guj.), prior to the view taken by this Court in Hira Lal's case (1994) 205 ITR 122, had taken a contrary view and held that rule 1BB would apply to all pending cases and that the same would apply to the assessment years prior to April 1, 1979, as well. These judgments had not been noticed by this Court.
One such matter was taken up to the Supreme Court in C. W . T. v Sharvan Kumar Swarup and Sons (1994) 210 ITR 886. Their Lordships of the Supreme Court approved the contrary view expressed by the other High Courts thereby impliedly disapproving the view taken by this Court, although the view expressed by this Court was neither noticed nor overruled specifically. It was held that rule 1BB partakes of the character of a rule of evidence and would be applicable to all pending cases as on April 1, 1979, and after, irrespective of the assessment years they related to. In that case the rule was made applicable to the assessment years 1977-78 and 1978-79. Assessments were made on February 8, 1983, by which time rule 1BB had been introduced into the rules. The assessee contended that its immovable property be valued by applying rule 1BB even though the assessments in question pertain to the years prior to April 1, 1979, on which date the said rule came into force. It was observed as under
"We may now turn to the scope and content of rule 1BB. The said rule merely provides a choice amongst well-known and well-settled modes of valuation. Even in the absence of rule 1BB it would not have been objectionable, nor would there be any legal impediment, to adopt the mode of valuation embodied in rule 1BB, namely, the method of capitalisation of income on a number of years' purchase value. The rule was intended to impart uniformity in valuations and to avoid vagaries and disparities resulting from application of different modes of valuation in different cases where the nature of the property is similar."
Rule 1BB thus 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. Even if a law raises a presumption and renders the presumption irrebuttable it is yet in the domain of the law of evidence. In Izhar Ahmad Khan's case AIR 1962 SC 1052, it was pointed out by this Court
"It would be noticed that as in the case of a rubuttable presumption, so in the case of an irrebuttable presumption, the rule purports to assist the judicial mind in appreciating the existence of facts. In one case, the probative value is statutorily strengthened but yet left open to rebuttal, in the other case, it is statutorily strengthened and placed beyond the pale of rebuttal. Considered from this point of view, it seems rather difficult to accept the theory that whereas a rebuttable presumption is within the domain of the law of evidence, an irrebuttable presumption is outside the domain of that law and forms part of the substantive law.
On a consideration of the matter, we are persuaded to the view that rule 1BB is essentially a rule of evidence as to the choice of one of the well-accepted methods of valuation in respect of certain kinds of properties with a view to achieving uniformity in valuation and avoiding disparate valuations resulting from application of different methods of valuation respecting properties of a similar nature and character. The view taken by the High Courts, in our opinion, cannot be said to be erroneous. "
In view of the decision rendered by their Lordships of the Supreme Court in Sharvan Kumar Swarup's case (1994) 210 ITR 886, the view expressed by this Court in Hira Lal's case (1994) 205 ITR 122 is no longer good law. The matter need not be referred to a larger Bench as the point involved stands concluded by the judgment of the Supreme Court. Following the view taken by their Lordships of the Supreme Court, it is held that rule 1BB being a rule of evidence would be applicable to all pending cases including the assessment years prior to April 1, 1979, when rule 1BB was introduced for the first time.
For the reasons stated above, the question referred to us is answered in the affirmative, that is, in favour of the assessee and against the Revenue.
M.B.A./2099/FC ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Order accordingly,