Law: Wealth Tax Act, 1957

Section: 27(1),25(2)

Wealth tax----- Valuation of assets----Revision---Powers of Commissioner---Valuation of properties on the basis of average of cost of construction and rent capitalisation method---Orders erroneous and prejudicial to interests of Revenue---Commissioner adopting valuation on rental income basis--­Commissioner justified in exercising revisionary powers---Indian Wealth Tax Act, 1957, Ss.7 & 25. For the assessment year 1975-76, valuation of the properties was done on the basis of average of land and construction method and rental method. The Commissioner was of the view that the valuation should have been done only on the rental income basis and not on the basis of average of the two, i.e., cost of construction and, rent capitalisation method, and accordingly exercising his revisionary powers he set aside the wealth tax assessment and directed the Wealth Tax Officer to make fresh assessment after taking into consideration the departmental valuation and giving opportunity to the assessees. On appeal, the Tribunal set aside the Commissioner's order. On a reference: Held, that in the orders passed by the Commissioner it was held that the Wealth Tax Officer should have valued the property on the basis of rental income only and not on the basis of the average of the two and the Tribunal's order was erroneous to that extent. The Wealth Tax Officer's calculation relying on the registered valuer's report which proceeded on the basis of the average between the two methods was also unsustainable. Accordingly, the Tribunal was not justified in setting aside the Commissioner's order, passed under section 25(2) of the Wealth Tax Act, 1957. Malabar Industrial Co. Ltd. v. C.I.T. (2000) 243 ITR 83 (SC); State of Kerala v. Hassan Koya (P.P.) AIR 1968 SC 1201 and Tribeni Devi (Smt.) v. Collector AIR 1972 SC 1417 ref. JUDGMENT ARIJIT PASAYAT, C.J.---As the point of dispute involved in these three reference applications is the same, they are disposed of by this common judgment. Accepting a prayer for reference made by the Revenue under section 27(1) of the Wealth Tax Act, 1957, the Income-tax Appellate Tribunal, Delhi Bench "B" (in short the "Tribunal"); has referred the following…

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