1990 (11) TMI 109 - HC - Wealth-tax

Court Upholds Revenue's Rule Reliance

The court clarified that rule ID of the Wealth-tax Rules does not override section 24(6) of the Wealth-tax Act. It allowed the Revenue to rely on rule ID ... - Issues:1. Interpretation of whether rule ID of the Wealth-tax Rules overrides the provisions of section 24(6) of the Wealth-tax Act.2. Determining if the Revenue can rely on rule ID even if not specifically argued before the Tribunal.3. Justification of the Tribunal's adoption of the valuation made by valuers not based on the statutory method of valuation provided under rule 1D.4. Clarification on whether valuers are legally bound to follow the method of valuation prescribed by rule 1D of the Wealth-tax Rules.Analysis:The judgment addresses a case involving an individual assessee holding unquoted shares of companies within the J.K. Group. The assessee valued these shares using a combination of methods in her Wealth-tax Act returns, which was contested by the Wealth-tax Officer. The matter proceeded to the Tribunal, where the valuation method adopted by the assessee was upheld by the Appellate Assistant Commissioner. However, the Department appealed this decision. During the appeal process, other family members had similar appeals pending before the Tribunal, leading to a reference to valuers under section 24(6) of the Wealth-tax Act. The Tribunal, upon receiving the valuation report from these other cases, disposed of this appeal based on the valuation provided by the valuers, prompting the Revenue to seek clarification on several questions.Regarding the first issue, the court clarified that rule ID of the Wealth-tax Rules does not override the provisions of section 24(6) of the Wealth-tax Act since both operate in distinct fields. Section 24(6) allows for valuation references to valuers, while rule ID specifies the method for valuing unquoted shares. The court emphasized that valuers must follow the method prescribed by rule ID when valuing shares under section 24(6), indicating no conflict between the two provisions.Moving to the second issue, the court acknowledged that although the Tribunal's order did not explicitly mention rule ID, the Revenue's argument for valuing shares using the break-up method aligned with rule ID, which was applicable at the time of filing the appeal. The court deemed it permissible for the Revenue to rely on rule ID in the reference, even if not expressly raised before the Tribunal, dismissing the assessee's technical objection.Addressing the third issue, the court declined to answer whether the Tribunal was justified in adopting the valuation by the valuers, as the factual basis for this question was lacking in the Tribunal's order. Since no objections were raised by the Revenue regarding the valuer's report's compliance with rule ID, the court refused to presume non-compliance or allow the Revenue to raise such contentions post-appeal. Consequently, the court found no fault in the Tribunal's reliance on the valuer's report due to the absence of objections during the proceedings.In conclusion, the court provided detailed analyses and responses to the issues raised by the Revenue, clarifying the interplay between rule ID and section 24(6) of the Wealth-tax Act, the Revenue's reliance on rule ID, and the Tribunal's acceptance of the valuer's report. The judgment emphasized adherence to procedural rules and the importance of raising objections in a timely manner during legal proceedings.