Back
High Court Of Calcutta
Bimal Chandra Basak
SATYENDRA CHUNDER GHOSE - Appellant
Versus
WEALTH-TAX OFFICER - Respondent
Civilrule 14716 (W) Of 1976
Decided On : 03/14/1979
WEALTH TAX - Valuation of property - Reference to Valuation Officer - Jurisdiction of Wealth Tax Officer - Principles to be followed in valuation.
Fact of the Case:
The petitioner challenged the reference made by the Wealth Tax Officer (WTO) to the Valuation Officer (VO) for determining the fair market value of a property for the purpose of wealth tax assessment. The petitioner contended that the WTO had no jurisdiction to make such a reference since the assessment for the relevant years was already complete and final. The petitioner also challenged the method of valuation adopted by the VO, arguing that it was not in accordance with the principles laid down by the courts.
Finding of the Court:
The court held that the WTO had no jurisdiction to make a reference to the VO under Section 16a of the Wealth Tax Act, 1957, in respect of years for which the assessment was already complete and final. The court further held that the VO could not exercise his power under Section 16a(4) until he was of the opinion that the value of the asset was higher than the value declared by the assessee. The court also held that the VO was bound to follow the law laid down by the courts and other authorities whose decisions were binding on him.
Issues: 1. Whether the WTO had jurisdiction to make a reference to the VO under Section 16a of the Wealth Tax Act, 1957, in respect of years for which the assessment was already complete and final. 2. Whether the VO could exercise his power under Section 16a(4) without forming an opinion that the value of the asset was higher than the value declared by the assessee. 3. Whether the VO was bound to follow the law laid down by the courts and other authorities whose decisions were binding on him.
Ratio Decidendi: 1. The purpose of making a reference under Section 16a is to enable the WTO to complete the assessment. Therefore, such a power can be exercised only when the assessment is not complete. 2. The VO cannot exercise his power under Section 16a(4) until he is of the opinion that the value of the asset is higher than the value declared by the assessee. 3. The VO is bound to follow the law laid down by the courts and other authorities whose decisions are binding on him.
Final Decision: The court allowed the petition and quashed the order of reference made by the WTO under Section 16a(1) in respect of the years for which the assessment was already complete and final. The court also issued a writ of prohibition directing the respondents not to proceed further with the reference and the notices issued under Section 16a(2) and Section 16a(4) in respect of those years. The court directed the VO to proceed in accordance with law in respect of the years for which the assessment was not complete.
( 1 ) IN this application under Article 226 of the Constitution of India, the petitioner is praying for an appropriate writ directed against letters dated 29th March, 1976, being" annex. "g" to the petition, and 31st August, 1976, being annex. "j", to the petition, issued by respondent No. 2, i. e. , the Assistant Valuation Officer, and the purported reference alleged to have been made by respondent No. 4, i. e. , the WTO, " K " Ward, for determining the fair market value of the property at 16/2, Raja Santosh Road, Calcutta.
( 2 ) THE facts of this case so far as they are relevant for the purpose of determination of the case herein are as follows : according to the petitioner, he constructed a house on a portion of 16/1, Raja Santosh Road, which has been numbered as 16/2, Raja Santosh Road (hereinafter referred to as the " said house property "), in the year 1961-62, at a cost of Rs. 1,48,706. In the assessment year 1963-64, the WTO, District III (4), " E " Ward, Calcutta, accepted the said cost of construction. The petitioner states that immediately on completion of the said building, i. e. , from 1st December, 1962, the said house property was let out on a contractual basis to one Dr. C. Otto and Co. Ltd. (afterwards changed to Otto India Private Ltd.) on a monthly rent of Rs, 2,000 on a lease basis. The first deed of lease, which was registered, was operative from 1962 to 1969 and then again renewed by a further registered lease for 5 years, i. e. , from 1969 to 1974.
( 3 ) IT was again sought to be renewed for another 5 years from December, 1974, on the same rent of Rs. 2,000 per month as before but the lease in respect thereof was not registered as on the last occasion. The said tenant, M/s, Otto India Private Ltd. , is still a tenant at a monthly rent of Rs. 2,000. Although the cost of construction was accepted by the aforesaid WTO in the assessment year 1963-64, the WTO, in the assessment of the said house property for the assessment year 1964-65, took the valuation of the self-same house property at 16/2, Raja Santosh Road, at Rs. 4,00,708 by adopting the land and building method of valuation.
( 4 ) BEING aggrieved by the said order of assessment, the petitioner preferred an appeal before the AAC, Wealth-tax, Range "h", Calcutta. Before the AAC, Wealth-tax, the contention of the petitioner was that the fair market value of the property in question should be arrived at by multiplying the rental of Rs. 16,597 by 12. 5 times, as was the opinion given in the approved valuer's report submitted by the petitioner before the assessing authority. The AAC by his order dated 8th July, 1968, held that the land and building method was not appropriate for arriving at the valuation and, by applying the rental method, determined the value of the said building at Rs. 2,82,000. The AAC did not agree that the multiplier of 12. 5 would be correct and considering the year of construction fixed the multiplier to be 17 times. .
( 5 ) AGAINST the valuation determined by the AAC at Rs. 2,82,000 by taking 17 times the rental of Rs. 16,597, the WTO as also the petitioner preferred appeals before the Income-tax Appellate Tribunal which held that the land and building method of valuation could not have any sensible support for valuing tenanted property. Considering the year of construction and other circumstances, the Tribunal dismissed the appeal of the WTO and also of the assessee and confirmed the order made by the AAC of Wealth-tax. The Tribunal also considered that 17 items and not 12. 5 times was the just multiplier in regard to the valuation of the said property. Again in the assessment for the assessment years 1966-67 and 1967-68, the petitioner agitated the question of valuation on rental basis by applying the multiplier at 12. 5 instead of 17 before the AAC of Wealth-tax," G " Range, Calcutta, who by his order dated 21st August, 1972, rejected the contention of the petitioner and, following the earlier order
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
