| SooperKanoon Citation | sooperkanoon.com/62852 |
| Court | Income Tax Appellate Tribunal ITAT Delhi |
| Decided On | May-12-1987 |
| Judge | S Narayanan, V Wz, A Prakash, U Dhusia |
| Reported in | (1987)22ITD1(Delhi) |
| Appellant | Wealth-tax Officer |
| Respondent | Smt. Shanti Devi Meattle |
2. One of the two issues raised in these appeals is regarding the order of the AAC setting aside the finding of the WTO regarding the valuation of a property numbered 26, Prithavi Raj Road, New Delhi. The assessee in filing the wealth-tax return, claimed that she was entitled to claim ownership of half of the property. This was as per the return originally filed under the Wealth-tax Act. Subsequently she revised the return and claimed that she was entitled to only 1/3rd in the value of the said property. The WTO, however, did not accept the claim of the assessee as made out in her returns and assessed the full value of the property in her hand as a part of her net wealth. The reason he gave out for this approach was that the issue whether the assessee was entitled to 1/2 or 1/3rd share was pending before the High Court for decision. The AAC found that the assessee had taken the approach that she was entitled to only 1/3rd interest in the said property was because of a letter dated 7-9-1979 issued from Asstt. Settlement Commissioner Land & Development Office, Ministry of Works and Housing, New Delhi to the assessee. The letter informed that the said property would stand jointly and severally in her name as well as in the names of her two sons viz. Ravi Kamal and Vishwa Kamal in equal shares. The letter also clarified that although the letter clarified that no Sub-division will be permitted in effect a subdivision was recognised when it was clarified in the letter from Asstt. Settlement Commissioner that the three persons were three co-owners and were entitled to equal shares. The AAC, however, found on an appraisal of facts brought on record that it was not possible for him to record a conclusive finding.
He made the following remarks :-- A copy of the assessee's letter dated 14-6-79 to the Assistant Settlement Commissioner has not been filed before me. It is not known in what circumstances Sub-division was made and whether the assessee had relinquished part of her interest in favour of her sons. If it was done only on 14-6-79 on which date she sent an intimation to the Asstt. Settlement Commissioner, this may not affect her ownership in the valuation dates i.e. 31-3-1978 for the assessment year 1978-79 and relevant valuation date 31-3-1979 for A.Y. 1979-80 under appeal. However, these facts need proper examination on the part of the WTO. I have, therefore, no option but to set aside the two assessments for reconsideration of the assessee's contention with regard to the ownership of the property.
3. After having heard both sides we are unable to appreciate that revenue has succeeded in making out a case against the finding of the AAC. In our consideration the order of the AAC on the point is liable to be maintained, in spite of his observation that interest of the assessee was dependent on the issue of the letter dated 12-9-79 from the Asstt. Settlement Commissioner. The Asstt. Settlement Commissioner in the circumstances could only give legal expression or recognition to the interest of the assessee and other coparceners in the said property and not read the same. But he could not precisely define the share of the assessee as a co-owner in that interest which he had paid. In spite of this finding therefore we are to hold that the order of the AAC to set aside the finding of the WTO to determine the precise nature and value of her interest in the said property cannot be considered by us to be an ineligible order. Therefore, we dismiss the appeal of revenue on this issue.
4. Another issue raised in this appeal is regarding the application of Wealth-tax Rule 1-BB for making out the valuation of the said property.
The WTO in valuing the house at 26 Prithavi Raj Road, placed the valuation at Rs. 6,37,880. Aggrieved the assessee took this matter in appeal before the CWT (Appeals). The CWT (Appeals) placing his reliance on the Special Bench decision of the Tribunal in the case of Biju Patnaik v. WTO [1982] 1 SOT 623 (Delhi) set aside the finding of the WTO and directed him to revalue the property in accordance with WT Rule 1-BB. Revenue having felt aggrieved by this finding of the CWT(A) has brought the issue in appeal before the Appellate Tribunal.
5. This issue has been considered by the Special Bench of the Tribunal in the case of Biju Patnaik (supra) where it was held that the Wealth-tax Rule 1 BB being a procedural provision was retrospective and therefore applied to the valuation for earlier years also, if the proceedings were pending. Following this view they had decided the appeals for the earlier assessment years 1972-73 to 1976-77 and also for assessment year 1977-78. We cannot take another view for assessment years 1978-79 and 1979-80 in the present appeals. Therefore, upholding the finding of the CWT (Appeals) we reject the contrary plea of revenue.
6. In the result revenue's appeals for both the assessment years under consideration are hereby dismissed.
1. I have gone through the order of my learned Brother. For determining the value of 26, Prithviraj Road, my learned Brother has directed the WTO to follow the ratio of the decision of the Spl. Bench of the ITAT in the case of Biju Patnaik (supra) in which it was held that Rule 1BB was mandatory and that it applied equally to appellate authorities and that, therefore, when circumstances existed which indicated the application of Rule 1BB, there was no option open to the appellate authorities and of course, to the WTO to go but by Rule 1BB for the valuation of the immovable property.
2. While holding as above, the Hon'ble Tribunal had followed the ratio of the decision of the Hon'ble Allahabad High Court in the case of CWT v. Sripat Singhania [1978] 112 ITR 363. Reference may be made in this connection to para 20 of the Tribunal's order appearing at page 630 of Selected Orders of ITAT, Vol. I. Following the above ratio, the finding of the Spl. Bench was as below : We, therefore, hold that Rule 1BB is procedural in nature, is retrospective in operation and, therefore, applies to all pending proceedings whether they are pending before the WTO, AAC/CIT (Appeals) or the Tribunal.
3. The Hon'ble Delhi High Court had recently the occasion to examine the applicability of the Rules of valuation to the Valuation Officer and to the appellate authorities in Sharbati Devi Jhalani v. CWT [1986] 159 ITR 549. Their Lordships specifically noted the ratio of the judgment of the Hon'ble Allahabad High Court in the case of Sripat Singhania (supra) and dissented from it by observing, inter alia, as follows : We are, however, unable to agree that even the appellate authorities are bound by the said Rule even if the said Rule is applicable.
Section 7 expressly refers to the powers of the WTO while arriving at the valuation of the unquoted shares. It is true that in Rule 1D, there is no mention of the same being applicable only to the WTO but Section 7(1) itself refers to the "opinion of the WTO" and not the opinion of any one else. The opinion of the WTO is to be subject to any rules made under the Act. A taxing statute has to be construed strictly. When Section 7(1) refers, only to the opinion of the WTO, the said section cannot be construed so as to include the opinion of the appellate authorities as well. The powers of the appellate authorities are governed by the provisions other than Section 7(1).
For example, the power of the appellate Tribunal contained in Section 24 of the Act is of the widest amplitude. The said power cannot be restricted by the provisions of Rule 1D. It is obvious that a Rule cannot be so construed, as to override, restrict or amend the provisions of the substantive statute under which the said Rule is framed. Even though the appeal to the AAC and a further appeal to the Tribunal may be parts of an integrated process, nevertheless the jurisdiction of the appellate authorities, as we have already observed is to be governed by the provisions of Sections 23 and 24 of the Act.
As the Delhi Benches of the Tribunal are working under the jurisdiction of the Hon'ble Delhi High Court, in my opinion, it is not open to us to follow the ratio of the Hon'ble Allahabad High Court in the case of Sripat Singhania (supra) from which the Hon'ble Delhi High Court has specifically dissented. The judgment of Biju Patnaik is, therefore, no more good law with regard to this subject and has to yield way to the ratio of the judgment of the Hon'ble Delhi High Court in the case of Sharbati Devi Jhalani. In terms of the said ratio, it is not open in my opinion to the Tribunal to refuse to examine the valuation of the property in question on merits and instead to direct the WTO to go by Rule 1BB because it is mandatory. It may be mandatory to the WTO but it is not mandatory vis-a-vis the Tribunal and when the question of valuation of a property travels to the Tribunal, the Tribunal in my opinion is expected to apply its own mind to the merits of the case in view of the judgment of the Hon'ble Delhi High Court in Sharbati Devi Malawi's case (supra). Accordingly, I accept the revenue's appeal on this point and restore the matter back to the CWT(A) for re-determining the question of valuation on merits rather than going by Rule 1BB presuming that to be mandatory for him.
As it has not been possible for us to agree with regard to ground No. 2 of the Revenue's appeal, we refer the following question for the opinion of the Hon'ble Third Member : Whether, the learned CWT (Appeals) has erred in law in directing the WTO to value the property in accordance with the provisions of Rule 1BB of the Income-tax Rules, presuming the said Rule to be mandatory and applicable to the appellate authorities also 1. Both these appeals are by the Revenue. A common issue is involved for both the years in appeal (1978-79 and 1979-80).
2. The assessee is an individual. She has an interest in the immovable property at 26, Prithvi Raj Road, New Delhi. The question of valuation of the said immovable property came up before the Tribunal in these appeals. The learned Judicial Member, who wrote the leading order, accepted the assessee's claim that the property had to be valued in terms of Rule 1-BB of the Wealth-tax Rules, 1957. He noted in this regard that the WTO had valued the property at Rs. 6,37,880 and the assessee while contesting the said valuation, had argued before the AAC that the property be valued in terms of Rule 1-BB and that the Commissioner (A) following the decision of the Special Bench of the Tribunal in Biju Patnaik's case (supra) had accepted the assessee's contention and directed the WTO to revalue the property in accordance with Rule 1-BB. While confirming this approach of the Commissioner (A) as correct, the learned Judicial Member observed as under :-- 5. This issue has been considered by the Special Bench of the Tribunal in the case of Biju Patnaik supra, where it was held that the Wealth-tax Rule 1-BB, being a procedural provision was retrospective and, therefore, applied to the valuation for earlier years also, if the proceedings were pending. Following this view, they had decided the appeals for the earlier assessment years 1972-73 to 1976-77 and also for assessment year 1977-78. We cannot take another view for assessment years 1978-79 and 1979-80 in the present appeals. Therefore, upholding the finding of the CWT (Appeals), we reject the contrary plea of revenue.
3. The learned Accountant Member, however, did not agree with the above order of the learned Judicial Member. He passed a separate dissenting order in which he recorded the following:-- (a) The Delhi High Court examined the applicability of the Rules of valuation under the Wealth-tax Act as regards the Valuation Officer and also the appellate authorities. See Sharbati Devi Jhalani's case (supra). The Court specifically dissented from the decision of the Allahabad High Court in Sripat Singhania's case (supra). The Special Bench of the Tribunal had relied upon Sripat Singhania's case (supra) in its order in Biju Patnaik's case (supra). Delhi Benches of the Tribunal are bound by the rulings of the Delhi High Court and hence it was not open to the Delhi Benches to follow the ruling of the Allahabad High Court. In other words, Biju Patnaik's case (supra) was no more good law and had to yield way to Sharbati Devi Jhalani's case (supra).
(c) In the light of Sharbati Devi Jhalani's case (supra) it was not open to the Tribunal to refuse to examine the valuation of the property in question on merits and instead to direct the WTO to go by Rule 1-BB on the ground that it was mandatory. As laid down in Sharbati Devi Jhalanis case (supra) the ruling may be mandatory to the WTO but not mandatory vis-a-vis the Tribunal and when the question of valuation of a property travels to the Tribunal, it is expected to apply its own mind to the merits of the case.
(d) Hence the Revenue's appeals on this point have to be accepted and the matter restored to the Commissioner (A) for redetermining the question of valuation on merits, rather than going by Rule 1-BB on the assumption that the said Rule was mandatory for him.
The learned Members then formulated the point on which they differed as under :-- Whether the learned CWT (Appeals) has erred in law in directing the WTO to value the property in accordance with the provisions of Rule 1-BB of the Income-tax Rules presuming the said rule to be mandatory and applicable to the appellate authorities also 4. The matter has come up before me as Third Member under the direction of the President.
5. I have heard both Shri K.S. Yadav, Departmental Representative and Shri H.G. Malik, learned counsel for the assessee. Shri Yadav strongly relied upon the reasoning of the learned Accountant Member, referred to supra. Shri Malik, on the other hand, supported the order of the learned Judicial Member and emphasised the following :-- (a) The assessee has all along been assessed by the WTO, Aligarh.
This would be evident from the assessment orders for these two years. These orders were passed by the WTO, C-Ward, Aligarh on 24-3-1984.
(b) Appeals were filed to the Commissioner (A), Agra, against these assessments. The address given in the Memorandum of Appeal for these years was "Shanti Meatle C/o. M.H. Singhal & Co. Chartered Accountants, Railway Road, Aligarh.
(c) The Commissioner (Appeals), Agra disposed of the appeals for both the years by his consolidated order dated 27-3-1985. Thereupon the CWT Agra (Shri T.N. Pandey) authorised the WTO, C-Ward Aligarh to file an appeal (against the said order of the Commissioner (Appeals) dated 27-3-1985) to the Tribunal by his order dated 3-6-1985. This order also specified the ground of appeal to be taken by the WTO, C-Ward, Aligarh, before the Tribunal.
(d) Accordingly, the WTO, C-Ward, Aligarh filed appeals before the Tribunal on 5-6-1985 for both the years.
(e) In fact, the CIT, Agra had earlier taken out an application for the assessment year 1972-73 against the assessee (Income-tax Application No. 224/79) and this was dismissed by the Allahabad High Court on the ground that no stable question of law arose vide its order dated 3-9-1979.
6. From the above, it was submitted for the assessee that there could be no manner of doubt that the jurisdictional High Court so far as the assessee here was concerned was the Allahabad High Court and hence the opinion expressed by the Allahabad High Court was to be preferred to that of any other High Court including the Delhi High Court.
7. I have considered the position. Undoubtedly the facts on record show that the jurisdictional High Court in the instant case is the Allahabad High Court. Nor is there any dispute that, in the light of the opinion expressed by the Allahabad High Court, Rule 1-BB would be mandatory in application. I would, therefore, agree with the learned Judicial Member on the point of difference referred for me. The matter will now go back to the regular Bench for disposal of the appeals in accordance with law.