High Court Of Rajasthan : Jaipur Bench
Commissioner Of Wealth Tax vs. Rawal Rajeshwarsingh Of Samod
Section WT 7(4); WT RULE 1BB
Asst. Year 1975-76, 1976-77, 1977-78, 1978-79, 1979-80 1980-81
R.C. Gandhi, Actg. C.J. & M.N. Bhandari, J.
WT Ref. No. 36 of 1989
19th February, 2009
Counsel Appeared :
R.B. Mathur, for the Revenue
JUDGMENT
by the court :
The Tribunal, Jaipur Bench, Jaipur has referred the following question in R.A. Nos. 258 to 263/Jp/1988 arising out of WTA Nos. 32 to 37/Jp/1988 for the asst. yrs. 1975-76 to 1980-81 : “1 Whether on the facts and in the circumstances of the case the Tribunal was right in holding that r. 1BB of WT Rules was applicable to work out the value of the residential property known as Samod House which was used by the assessee for self-occupation ?”
2. Brief facts relevant to the case are that a property known as “Samod House” was used as residential house by the assessee and the question of its value came up for consideration before the WTO where such determination was made as per the provisions of s. 7(4) of the WT Act, 1957 (for short ‘the Act’). The order of WTO was then challenged before the AAC by the assessee. While hearing the matter by the AAC a question came up for consideration as to whether the valuation of property is to be determined by invoking r. 1BB of the WT Rules, 1957 (for short ‘the Rules) as r. 1BB of the Rules came by way of amendment in the Rules and accordingly the said rule was inserted w.e.f. 1st April, 1979. Taking the aforesaid rule to be procedural in nature, it was treated as retrospective. Rule 1BB of the Rules provides for method of determination of value of the house and accordingly the AAC gave a direction to the WTO to determine the value of the residential house by applying r. 1BB of the Rules. The order of the AAC was challenged before the Tribunal by the Revenue and the Tribunal maintained the order of the AAC. Accordingly, reference was sought as to whether the Tribunal was right in holding that r. 1BB of the Rules was applicable to work out the value of the residential house. It is a case where assessment years related to 1975-76 to 1980-81.
We have heard learned counsel for the Revenue and perused the record carefully. The issue for our answer relates to application of r. 1BB of the Rules for the purpose of determination of value of the residential property known as “Samod House”. Before referring to r. 1BB, it is necessary to refer the main provisions of ss. 7(1) and 7(4) of the Act for ready reference which are quoted hereunder :
“7(1) Subject to any rules made in this behalf the value of any asset, other than cash, for the purpose of this Act, shall be estimated to be the price which in the opinion of the WTO it would fetch if sold in the open market on the valuation date. 7(4) Notwithstanding anything contained in sub-s. (1), the value of a house belonging to the assessee and exclusively used by him for residential purpose throughout the period of twelve months immediately preceding the valuation date may, at the opinion of the assessee, be taken to be the price which in the opinion of the WTO, it would fetch if sold in the open market on the valuation date next following date on which he became the owner of the house, or on the valuation date relevant to the assessment year commencing on the 1st day of April, 1971, whichever valuation date is later : Provided that where more than one house belonging to the assessee is exclusively used by him for residential purposes, the provisions of this sub-section shall apply only in respect of one of such houses which the assessee may at his opinion, specify in this behalf in the return of net wealth. Explanation : For the purpose of this sub-section— (i) where the house has been constructed by the assessee, he shall be deemed to have become the owner thereof on the date on which the construction of such house was completed; (ii) ‘house’ includes a part of a house, being an independent residential unit”.
5. Sec. 7(1) of the Act provides that subject to any rules made in this behalf, the WTO will determine the value of asset based on sale price in open market. So far as s. 7(4) of the Act is concerned, it provides method for determination of value of house used for residential purpose notwithstanding anything contained in sub-s. (1) of the Act. Perusal of s. 7(4) reveals that if the property was in the ownership of an assessee prior to 1st day of April, 1971, then its valuation would be made by the WTO, which would be the value if sold in the open market on valuation date relevant to the assessment year for 1st April, 1971. Perusal of the aforesaid provision reveals that the 1st day of April, 1971 is a crucial date and accordingly the aforesaid provision, once valuation of the property is taken for the asst. yr. 1971-72, it would then be freezed for all subsequent assessment years. In the present matter, for the asst. yr. 1971-72 the valuation of the property was made. Now coming to r. 1BB, which is quoted hereunder for ready reference : “1BB. (1) For the purpose of sub-s. (1) of s. 7, the value of a house which is wholly or mainly used for residential purpose shall be the aggregate of the following amounts, namely : (a) the amount arrived at by multiplying the net maintainable rent in respect of the part of the house used for residential purposes by the fraction 100/8, and (b) the amount arrived at by multiplying the net maintainable rent in respect of the remaining part of the house, if any, by the fraction of 100/9 : Provided that in relation to a house which is built on leasehold, this sub- rule shall have effect as if for the fraction 100/8 in cl. (a) or, as the case may be, the fraction 100/9 in cl. (b), the fraction 100/9 and 100/10 respectively had been substituted. Explanation : For the purpose of this sub-rule, a house shall be deemed to be mainly used for residential purposes, if the built-up floor area thereof used for residential purposes is not less than sixty-six and two-third per cent of its total built-up floor area”. Perusal of the aforesaid rule reveals that how the value of the house would be determined. The aforesaid rule was brought on 1st April, 1979 and is being treated as retrospective, hence, was made applicable even for the assessment year prior to year 1979.
In view of the above, r. 1BB of the Rules becomes applicable even for the asst. yrs. 1975-76 to 1980-81. The question now remains as to whether by bringing r. 1BB of the Rules the valuation of the property having been determined for the asst. yr. 1971-72 and such assessment having been finalized can be redetermined for the purpose of assessment of the value of the property for subsequent assessment years. The perusal of s. 7(4) of the Act reveals that once the valuation is determined for the asst. yr. 1971-72, then same would be freezed for subsequent years and in the present matter, the valuation of the property was determined for the asst. yr. 1971-72 and the said assessment has attained finality as it was not challenged and assessment years involved in the present matter are of subsequent years.
8. In view of the above, it cannot be accepted that contrary to the provisions of s. 7(4) of the Act, value of the property is to be determined more so when the value of the property so assessed in the year 1971-72 has not been questioned by the assessee on the strength of r. 1BB of the Rules and thereby said assessment became final. Thus, in our opinion the question in reference has to be answered in favour of the Revenue and against the assessee and we hold that the valuation of house having been determined by the asst. yr. 1971-72 is to be applied for the subsequent years and as the assessment years involved in the present matter are of subsequent years. Thus, the value of the house would be determined accordingly. The question referred for our answer is accordingly answered.
[Citation : 322 ITR 39]
