Transfer restrictions affect wealth-tax valuation, but do not justify a mechanical market value cap.

Restrictions under the Rajasthan Urban Property (Restriction on Transfer) Act, 1973 were a relevant factor in determining market value for wealth-tax purposes because they reduced the owner's ability to deal with the plots freely in the open market. The Tribunal, however, could not mechanically cap the valuation at Rs. 3,00,000 solely on that basis. It had to consider the assessee's other objections and apply the correct valuation principles. The reference was answered in favour of the Revenue, and the matter was remanded to the Tribunal for fresh consideration of the valuation objections.

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Issues: Whether the restrictions imposed by the Rajasthan Urban Property (Restriction on Transfer) Act, 1973 were to be taken into account while determining the market value of the plots for wealth-tax purposes, and whether the Tribunal was justified in limiting the valuation to Rs. 3,00,000.

Analysis: The restriction on transfer was held to be a relevant factor affecting valuation because it diminished the owner's right to deal with the property in the open market. At the same time, the valuation could not be mechanically capped at Rs. 3,00,000 merely because of the statutory restriction. The Tribunal was therefore required to consider the assessee's other objections and determine the value in accordance with the correct valuation principles.

Conclusion: The reference was answered in favour of the Revenue, and the matter was remanded to the Tribunal for reconsideration of the valuation objections.

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