1983 (1) TMI 103 - AT - Wealth-tax

Retrospective Application of Wealth-tax Act Section 7(4) | Remand for Reassessment and Review

The Third Member, concurring with the Judicial Member, held that Section 7(4) of the Wealth-tax Act should be applied retrospectively to assessment years ... Assessment Year Issues Involved:1. Applicability of Section 7(4) of the Wealth-tax Act, 1957 for valuation of residential property for assessment years 1973-74, 1974-75, and 1975-76.2. Valuation of the residential property at 696, Model Town, Jullundur.3. Valuation of agricultural lands in villages Khurla and Wadala.4. Valuation of assets inherited by the assessee from her husband.Issue-Wise Detailed Analysis:1. Applicability of Section 7(4) of the Wealth-tax Act, 1957:The primary issue was whether Section 7(4) of the Wealth-tax Act, which came into force on 1-4-1976, could be applied retrospectively to the assessment years 1973-74, 1974-75, and 1975-76. The assessee argued that the value of the self-occupied property should be restricted to the value determined for the assessment year 1971-72, as per Section 7(4). The WTO and AAC held that since Section 7(4) came into effect from 1-4-1976, it could not apply to assessments prior to that date. The Tribunal members were divided on this issue, leading to a reference to the Third Member under Section 255(4) of the 1961 Act.The Third Member, agreeing with the Judicial Member, held that Section 7(4) should be applied retrospectively. The rationale was that the Legislature intended to fix the value of residential property at the value determined for the assessment year 1971-72 to provide relief to assessees from the inflationary increase in property values. The provision was seen as beneficial legislation and should be given a liberal construction. The argument that Section 7(4) is procedural was not detailed, as even if considered substantive, intrinsic evidence suggested it should apply from the assessment year 1971-72 onwards.2. Valuation of the Residential Property at 696, Model Town, Jullundur:The WTO valued the residential property at Rs. 3,00,000, which was reduced by the AAC to Rs. 2,50,000. The assessee contended that the valuation was based on conjectures and should be determined under Section 7(4). The Accountant Member, however, held that Section 7(4) was not applicable to the assessment years in question and that the valuation should be reconsidered. He directed the WTO to re-evaluate the property, possibly referring it to a Valuation Officer, as the initial valuation lacked specific sale instances or detailed reasoning.3. Valuation of Agricultural Lands in Villages Khurla and Wadala:The WTO valued the agricultural lands at Rs. 3,500 per kanal for Khurla and Rs. 3,000 per kanal for Wadala, significantly higher than the assessee's declared values. The assessee argued that the valuation was unjustified and should have been referred to a Valuation Officer. The Accountant Member agreed that the valuation was not properly justified and directed the WTO to re-value the lands after obtaining a report from a Valuation Officer.4. Valuation of Assets Inherited by the Assessee from Her Husband:The value of the inherited assets was taken at Rs. 93,975. The assessee argued that certain deductions should have been considered. The Accountant Member noted that this issue was raised before the AAC but not discussed in the order. He directed the AAC to re-examine the matter, considering the nature of the claims made by the assessee and disposing of each claim separately.Conclusion:The Third Member's decision aligned with the Judicial Member, applying Section 7(4) retrospectively. The valuation of the residential property and agricultural lands was remanded for reconsideration, and the issue of inherited assets was sent back to the AAC for fresh examination. The appeals were allowed for statistical purposes, with directions for re-evaluation and further consideration of specific claims.