Law: Wealth Tax Act, 1957

Section: 7(1)

Law: Wealth Tax Rules, 1957

Section: 1D

Section 7 of the Wealth-tax Act, 1957 - Valuation of asset - Immovable property - Question for consideration before court was whether probable estate duty payable on death of life-tenant has to be taken into account and value of property will be diminished by that for charge of wealth-tax in hands of remainder man - Whether in view of conflicting decisions by two Benches of Supreme Court matter was to be placed before Chief Justice for appropriate orders - Held, yes FACTS The issue for consideration in instant appeal was whether the probable estate duty payable on the death of the life-tenant has to be taken into account and the value of the property will be diminished by that for charge of wealth-tax in the hands of the remainder man. HELD The Supreme Court in Bharat Hari Singhania v. CWT [1994] Supp. (3) SCC 46 has in specific terms laid down the principle that in cases where the statute creates a legal fiction for determination of market value, no amount like provision for taxation, provident fund and gratuity, etc., can be deducted from the market value of the estate while evaluating the estate for the levy of wealth-tax. If this be the correct principle in law, then it would not be possible for the assessee to contend that the value of the estate duty payable, if any, should be deducted from the market value of the estate while determining the wealth-tax. If the principle enunciated in the Bharat Hari Singhania's case (supra ) is correct, then the same runs counter to the earlier decisions of the Supreme Court in the case of CWT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust [1977] 108 ITR 555. Both s being s of a Bench of three Judges, it is appropriate that the instant issue should be settled by a larger Bench. Therefore, the papers of the appeals and connected matters were directed to be placed before the Chief Justice of India for appropriate orders. CASES REFERRED TO Bharat Hari Singhania v. CWT 1994 Supp. (3) SCC 46 and CWT v. Trustee of H.E.H. Nizam's Family (Remainder Wealth) Trust [1977] 108 ITR 555 (SC). ORDER The primary question which arises for our consideration in these appeals is whether the probable estate duty payable on the…

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