Law:

Section:

Section 7 of the wealth-tax act, 1957-Valuation of assets-Immovable property-Whether surplus lands of assessee in excess of ceiling fixed under tamil nadu land reforms (fixation of `ceiling on land) act, 1961, should, in view of attendant restrictions, be valued on basis of compensation receivable from government and not on basis of open market value available for lands within such ceiling-Held, on facts, yes Facts The assessees claimed that in relation to the lands held by them in excess of the ceiling fixed under the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961, the valuation should be based on the compensation receivable from the Government. The WTO, however, valued all the lands within the holding of each of the assessees, irrespective of whether these were in excess of the ceiling or not, on the basis of their open market value. The AAC set aside the WTO's orders and fixed the value of the lands rendered surplus by the Ceiling Act as per the rate of compensation given by the Government. The Tribunal upheld the AAC's orders on the ground that in determining the value of farm wealth, the restrictions brought about by the Ceiling Act in relation to excess lands, would have a depressing effect on the marketability of the lands, so that the open market in such a case would have to be judged from the point of view of those buyers who were not hit by the Ceiling Act and who alone would be able to purchase large areas of land as in this case and that, therefore, the market value in case of retained lands could not be equated with the market value of the lands in excess of the ceiling. On reference: Held It could not be disputed that the restrictions and prohibitions would have the effect of depressing the value which the lands would fetch if they were free from the said restrictions and prohibitions. Though one had to assume a market for the lands in determining their market value, the restrictions and prohibitions contained in the Ceiling Act had to be taken note of and the value of the lands with all the restrictions and prohibitions would have to be determined. If they were ignored in valuing the excess land, that would amount to valuing the…

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