Judgment:
Mrs. A. Subbulakshmy, J.
1. The assessee is a company. The property of which the valuation was in dispute is at Chokikulam, Madurai. The Assessing Officer took the view that the difference between the specified area and the unbuilt area exceeded 20 per cent. and hence Rule 1BB could not be applied to value it and Section 40(4) of the Finance Act, 1983, excluded application of Section 7(1) and Rule 1BB made thereunder and accordingly assessed the property at Rs. 19,48,000 as determined by the Valuation Officer as against Rs. 6,43,300 which was disclosed by the assessee. On appeal, the Commissioner of Wealth-tax found that the difference between the specified area and built up area would be 0.17 per cent. i.e., less than 5 per cent. if the pavement is taken into account and 18.29 per cent., i.e., less than 20 per cent. if the pavement is ignored and the provisions of Rule 1BB would have to be applied in making the valuation. The Commissioner agreed with the assessee's case that Section 40 of the Finance Act, 1983, did not exclude the operation of Rule 1BB and accordingly directed the Assessing Officer to refer the matter again to the Valuation Officer to determine the value of the property on the basis of net maintainable rent as per Rule 1BB. On appeal to-the Tribunal, the Tribunal, held that the provisions of Rule 1BB could not be ignored since the valuation had to be made under Section 7(3) and thus dismissed the appeal.
2. On that the reference has arisen at the instance of the Revenue and the following questions have been referred to this court for our opinion :
'(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in concluding that the direction given by the Commissioner of Wealth-tax to the Assessing Officer to file an appeal in the case of the present assessee was clearly discriminatory, untenable and not maintainable
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that even where a property is valued under the specific provisions of Sub-section (4) of Section 40 of the Finance Act, 1983, for the purpose of levy of wealth-tax in the case of closely held companies, the provisions of Section 7(1) and Rule 1BB must be applied ignoring the provisions of Section 40(5)(b) of the Finance Act, 1983 ?'
3. Learned counsel for the Revenue submitted that the value determined by the Valuation Officer is to be accepted and Rule 1BB is not applicable.
4. Counsel for the assessee submitted that Sub-section (5) of Section 40 specifically excluded certain sections of the Wealth-tax Act except Section 7(1) and, therefore, Rule 1BB was applicable. He relies upon the decision in CWT v. Sharvan Kumar Swarup and Sons : 1995ECR425(SC) , wherein the Supreme Court has held that (headnote) :
'Rule 1BB of the Wealth-tax Rules, 1957, which came into force on April 1, 1979, prescribing the method for valuing a house wholly or mainly used for residential purposes, 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 have been 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 valuation 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 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. The rule is procedural and not substantive and is applicable to all proceedings pending on April 1, 1979, when the rule came into force.'
5. The Commissioner took the view that Section 40 of the Finance Act did not exclude the operation of Rule 1BB which was confirmed by the Tribunal. The view taken by the Tribunal and the Commissioner is in conformity with the law laid down by the Supreme Court in the decision cited supra. Hence, we do not find any error in the order passed by the Tribunal.
6. We answer both the questions in favour of the assessee and against the Revenue. No costs.