Amrit Banaspati Co. Ltd. v. Commissioner of Wealth-tax
[Citation -2014-LL-0630-137]

Citation 2014-LL-0630-137
Appellant Name Amrit Banaspati Co. Ltd.
Respondent Name Commissioner of Wealth-tax
Court SUPREME COURT
Relevant Act Wealth-tax
Date of Order 30/06/2014
Judgment View Judgment
Keyword Tags gross maintainable rent • determination of value • levy of municipal tax • cost of construction • cost of acquisition • discretionary power • immovable property • fair market value • preference shares • registered valuer • valuation officer • land appurtenant • self-assessment • advance payment • local authority • wealth-tax act • valuation date • house property • leasehold land • life interest • annual value • ultra vires • actual rent • annual rent • net wealth • net value
Bot Summary: Simultaneously, rule 1BB of the Wealth-tax Rules, 1957, was deleted by the Wealth-tax Rules, 1989, with effect from April 1, 1989. As there is a dispute as to whether rule 3 is applicable or rule 8, it is also desirable to notice rule 20 and section 16A of the Act. Rule 8(a) carves out an exception to rule 3 that while the Assessing Officer, with the previous approval of the Joint Commissioner is of opinion that it is not practicable to apply rule 3 to a particular case, then rule 3 shall not be made applicable. While rule 1BB was omitted by the Wealth-tax Rules, 1989, with effect from April 1, 1989, but simultaneously rule 8 was inserted, vide Schedule III. Therefore, it cannot be said that after the insertion of Schedule III to the Act the value on which the wealth-tax is payable has no relevance in determining the fair market value of the asset or the price which the asset would fetch if sold in the open market on the valuation date. A conjoint reading of the various provisions reproduced above makes it clear that the Legislature has not laid down a rigid directive on the Assessing Officer that the valuation of an asset is mandatorily required to be made by applying rule 3; the Assessing Officer has the discretionary power to determine whether rule 3 or rule 8 is applicable in a particular case. If the Assessing Officer is of the opinion that it is not practicable to apply rule 3, the Assessing Officer can apply rule 8 and value of the asset can be determined in the manner laid down in rule 20 or section 16A. The word practicable is defined in Black's Law Dictionary, Eighth Edition, page 1210 as follows: Practicable, adj reasonably capable of being accomplished; feasible. In the present context if in the opinion of the Assessing Officer, if the value determined by the taxpayer on the basis of rules 3 to 7 is absurd or has no correlation to the fair market value or otherwise not practicable, in such a case, it is open to the Assessing Officer to invoke rule 8 of Schedule III and determine the value of the asset either under rule 20 or refer under section 16A, for determination of the valuation of the asset.


JUDGMENT judgment of court was delivered by Sudhansu Jyoti Mukhopadhaya J.-This appeal is directed against judgment dated March 8, 2002, passed by High Court of Judicature at Allahabad in Wealth Tax Appeal No. 374 of 2000 filed by appellantassessee. By impugned judgment, High Court upheld order dated June 12, 2000, passed by Income-tax Appellate Tribunal, New Delhi (hereinafter referred to as "ITAT"). dispute relates to wealth-tax return of appellant-assessee for assessment year 1993-94. assessee filed its return of taxable wealth at Rs. 1,31,76,000 against which assessment was completed at net wealth of Rs. 3,90,93,800. dispute is about valuation of property in question being residential flat situated in Worli, Bombay, which is owned by assessee and used as guest house. immovable property was acquired by assessee before April 1, 1974, and assessee filed return on self-assessment as per rules 3 to 7 of Schedule III to Wealth-tax Act, 1957 (hereinafter referred to as the, "Act"). In course of assessment proceedings, Assessing Officer (for short, "AO") was of opinion that value of said flat as disclosed in return (as Rs. 1,55,139) did not appear to be in consonance with market value for similar size flat in Mumbai and referred matter to Departmental Valuation Officer under rule 20 of Schedule III who valued flat at Rs. 2,60,73,000. Assessing Officer also relied upon agreement to sell of said flat dated September 15, 1995, entered by assessee with its vendor. In said agreement, price of flat was shown at Rs. 10,26,000. Assessing Officer was of opinion that due to wide variation between alleged market value as determined by Departmental Valuation Officer and value as disclosed by assessee, it was not practicable to value property as per rules 3 to 7 hence rule 8(a) is attracted. Assessing Officer further observed that as assessee had taken plea that it was paying rent at Rs. 500 per month prior to purchase of flat and incurred expenditure on improvement of said flat, it was difficult for Assessing Officer to ascertain price and, therefore, it would be impracticable to apply rule 3. Amrit Banaspati Co. Ltd. v. CIT [2002] 256 ITR 337 (All). On appeal, preferred by assessee, Commissioner of Wealth-tax (Appeals) dismissed appeal, vide order dated December 31, 1996. appellate order was confirmed by Income-tax Appellate Tribunal, vide order dated June 12, 2000. Thereafter, assessee preferred miscellaneous application under section 35 of Act seeking rectification of mistakes of fact and law apparent from Tribunal's order. It was rejected by Income-tax Appellate Tribunal by its order dated July 11, 2001. Finally, by impugned judgment High Court also affirmed view taken by Revenue. According to learned counsel for assessee provisions of rule 3 is applicable on facts of case. On other hand, according to learned counsel for Revenue it is not practicable to apply rule 3 and hence rule 8(a) was rightly applied by Revenue. In order to appreciate submission made by parties it may be just and necessary to notice relevant provisions. Section 7 of Act deals with "method of determination of value of assets". Prior to amendment made by Direct Tax Laws (Amendment) Act, 1989, value of any asset was to be estimated to be price which in opinion of Assessing Officer, it would fetch if sold in open market on valuation date. method of determination of value of assets under section 7 was amended by Direct Tax Laws (Amendment) Act, 1989, with effect from April 1, 1989. Schedule III was incorporated in Act by said Direct Tax Laws (Amendment) Act, 1989, with effect from April 1, 1989, providing rules for determining value of assets. Simultaneously, rule 1BB of Wealth-tax Rules, 1957, was deleted by Wealth-tax (Second Amendment) Rules, 1989, with effect from April 1, 1989. As dispute relates to assessment year 1993-94, amended section 7 is applicable in present case, which is as follows: "7. Value of assets how to be determined.-(1) Subject to provisions of sub-section (2), value of any asset, other than cash, for purposes of this Act shall be its value as on valuation date determined in manner laid down in Schedule III. (2) value of house belonging to assessee and exclusively used by him for residential purposes throughout period of twelve months immediately preceding valuation date, may, at option of assessee, be taken to be value determined in manner laid down in Schedule III as on valuation date next following date on which he became owner of house or valuation date relevant to assessment year commencing on 1st day of April, 1971, whichever valuation date is later. Explanation.-For purposes of this sub-section,- (i) where house has been constructed by assessee, he shall be deemed to have become owner thereof on date on which construction of such house was completed; (ii)'house' includes part of house being independent residential unit." Rules 3 to 8 of Schedule III lay down rules for valuation of immovable property whether let out or self-occupied. Rule 3 relates to valuation of immovable property as under: "3. Valuation of immovable property.-Subject to provisions of rules 4, 5, 6, 7 and 8 for purposes of sub-section (1) of section 7, value of any immovable property, being building or land appurtenant thereto, or part thereof, shall be amount arrived at by multiplying net maintainable rent by figure 12.5: Provided that in relation to any such property which is constructed on lease hold land, this rule shall have effect as if for figure 12.5,- (a) where unexpired period of lease of such land is fifty years or more, figure 10.0 had been substituted; and (b) where unexpired period of lease of such land is less than fifty years, figure 8.0 had been substituted: Provided further that where such property is acquired or construction of which is completed after 31st day of March, 1974, if value so arrived at is lower than cost of acquisition or cost of construction, as increased, in either case, by cost of any improvement to property, cost of acquisition or, as case may be, cost of construction, as so increased, shall be taken to be value of property under this rule: Provided also that provisions of second proviso shall not apply for determining value of one house belonging to assessee, where such house is acquired or construction whereof is completed after 31st day of March, 1974, and house is exclusively used by assessee for his own residential purposes throughout period of twelve months immediately preceding valuation date and cost of acquisition or, as case may be, cost of construction, as increased, in either case, by cost of any improvement to house, does not exceed,- (a) if house is situate at Bombay, Calcutta, Delhi or Madras, fifty lakh rupees; (b) if house is situate at any other place, twenty-five lakh rupees: Provided also that where more than one house belonging to assessee is exclusively used by him for residential purposes, provisions of third proviso shall apply only in respect of one of such houses which assessee may, at his option, specify in this behalf." Rule 4 deals with computation of net maintainable rent which is follows: "4. Net maintainable rent how to be computed.-For purposes of rule 3,'net maintainable rent' in relation to immovable property referred to in that rule, shall be amount of gross maintainable rent as reduced by,- (i) amount of taxes levied by any local authority, in respect of property; and (ii) sum equal to fifteen per cent., of gross maintainable rent." Rule 5 deals with computation of gross maintainable rent in following manner: "5. Gross maintainable rent how to be computed.-For purposes of rule 4,'gross maintainable rent', in relation to any immovable property referred to in rule 3, means- (i) where property is let, amount received or receivable by owner as annual rent or annual value assessed by local authority in whose area property is situated for purposes of levy of property tax or any other tax on basis of such assessment, whichever is higher; (ii) where property is not let, amount of annual rent assessed by local authority in whose area property is situated for purpose of levy of property tax or any other tax on basis of such assessment, or, if there is no such assessment or property is situated outside area of any local authority amount which owner can reasonably be expected to receive as annual rent had such property been let. Explanation.-In this rule,- (1)'annual rent' means- (a) where property is let throughout year ending on valuation date (hereinafter referred to as'previous year'), actual rent received or receivable by owner in respect of such year; (b) where property is let for only part of previous year, amount which bears same proportion to amount of actual rent received or receivable by owner for period for which property is let as period of twelve months bears to number of months (including part of month) during which property is let during previous year: Provided that in following cases, such actual rent under subclauses (a) and (b) shall be increased in manner specified below:- (i) where property is in occupation of tenant and taxes levied by any local authority in respect of property are borne wholly or partly by tenant, by amount of taxes so borne by tenant; (ii) where property is in occupation of tenant and expenditure on repairs in respect of property is borne by tenant, by one-ninth of actual rent; (iii) where owner has accepted any amount as deposit (not being advance payment towards rent for period of three months or less), by amount calculated at rate of 15 per cent., per annum on amount of deposit outstanding from month to month, for number of months (excluding part of month) during which such deposit was held by owner in previous year, and if owner is liable to pay interest on such deposit, increase to be made under this clause shall be limited to sum by which amount calculated as aforesaid exceeds interest actually paid; (iv) where owner has received any amount by way of premium or otherwise as consideration for leasing of property or any modification of terms of lease, by amount obtained by dividing premium or other amount by number of year of period of lease; (v) where owner derives any benefit or perquisite, whether convertible into money or not, as consideration for leasing of property or any modification of terms of lease, by value of such benefit or perquisite; (2)'rent received or receivable' shall include all payments for use of property, by whatever name called, value of all benefits or perquisites whether convertible into money or not, obtained from tenant or occupier of property and any sum paid by tenant or occupier of property in respect of any obligation which, but for such payment, would have been payable by owner." Adjustments to value arrived at under rule 3 for unbuilt area of plot of land to be made as per rule 6 which reads as follows: "6. Adjustments to value arrived at under rule 3, for unbuilt area of plot of land.-Where unbuilt area of plot of land on which property referred to in rule 3 is constructed exceeds specified area, value arrived at in accordance with provisions of rule 3 shall be increased by amount calculated in following manner, namely:(a) where difference between unbuilt area and specified area exceeds five per cent., but does not exceed ten per cent., of aggregate area, by amount equal to twenty per cent., of such value; (b) where difference between unbuilt area and specified area exceeds ten per cent., but does not exceed fifteen per cent., of aggregate area by amount equal to thirty per cent., of such value; (c) where difference between unbuilt area and specified area exceeds fifteen per cent. but does not exceed twenty per cent., of aggregate area by amount equal to forty per cent., of such value. Explanation.-For purposes of this rule and rule 6,- (a)'aggregate area', in relation to plot of land on which property is constructed, means aggregate of area on which property is constructed and unbuilt area; (b)'specified area', in relation to plot of land on which property is constructed, means- (i) where property is situate at Bombay, Calcutta, Delhi or Madras, sixty per cent., of aggregate area; (ii) where property is situate at Agra, Ahmedabad, Allahabad, Amritsar, Bangalore, Bhopal, Cochin, Hyderabad, Indore, Jabalpur, Jamshedpur, Kanpur, Lucknow, Ludhiana, Madurai, Nagpur, Patna, Pune, Salem, Sholapur, Srinagar, Surat, Tiruchirapalli, Trivandrum, Vadodara (Baroda) or Varanasi (Banaras), sixty-five per cent., of aggregate area; and (iii) where property is situate at any other place, seventy per cent., of aggregate area: Provided that where, under any law for time being in force, minimum area of plot of land required to be kept as open space for enjoyment of property exceeds specified area, such minimum area shall be deemed to be specified area; (c)'unbuilt area', in relation to aggregate area of plot of land on which property is constructed, means that part of such aggregate area on which no building has been erected." Adjustment for unearned increase in value of land prescribed under rule 7 as quoted hereunder: "7. Adjustment for unearned increase in value of land.-Where property is constructed on land obtained on lease from Government, local authority or any authority referred to in clause (20A) of section 10 of Income- tax Act, and Government or any such authority is, under terms of lease, entitled to claim and recover specified part of unearned increase in value of land at time of transfer of property, value of such property as determined under rule 3 shall be reduced by amount so liable to be claimed and recovered or by amount equal to fifty per cent., of value of property as so determined, whichever is less, as if properly had been transferred on valuation date. Explanation.-For purpose of this rule,'unearned increase' means difference between value of such land on valuation dale as determined by Government or such authority for purpose of calculating such increase and amount of premium paid or payable to Government or such authority for lease of land." cases in which rule 3 is not applicable is shown in rule 8 and reads as follows: "8. Rule 3 not to apply in certain cases.-Nothing contained in rule 3 shall apply,- (a) where, having regard to facts and circumstances of case, Assessing Officer, with previous approval of Joint Commissioner, is of opinion that it is not practicable to apply provisions of said rule to such case; or (b) where difference between unbuilt area and specified area exceeds twenty per cent., of aggregate area; or (c) where property is constructed on leasehold land and lease (c) where property is constructed on leasehold land and lease expires within period not exceeding fifteen years from relevant valuation date and deed of lease does not give option to lessee for renewal of lease, and in any case referred to in clause (a) or clause (b) or clause (c), value of property shall be determined in manner laid down in rule 20." It is submitted on behalf of appellant that purpose of amendment of section 7, if read it can be stated that intention of Legislature, behind amendment of section 7(1) and deletion of rule 1BB was to bring in uniformity and provide relief to taxpayers by bringing down litigation. It nowhere provided that levy of wealth-tax after amendment would be based on value that does not have any correlation with fair market value of asset. According to learned counsel for assessee since property in question was acquired prior to April 1, 1974, second proviso to rule 3 is not applicable. However, such submission has been refuted by learned counsel for Revenue. As there is dispute as to whether rule 3 is applicable or rule 8, it is also desirable to notice rule 20 and section 16A of Act. Rule 8(a) carves out exception to rule 3 that while Assessing Officer, with previous approval of Joint Commissioner is of opinion that it is not practicable to apply rule 3 to particular case, then rule 3 shall not be made applicable. In such case, Assessing Officer may invoke rule 8 and determine value of asset in manner laid down in rule 20. Rule 20 deals with valuation of assets in other cases, as follows: "20. Valuation of assets in other cases.-(1) value of any asset, other than cash, being asset which is not covered by rules 3 to 19, for purposes of this Act, shall be estimated to be price which, in opinion of Assessing Officer, it would fetch if sold in open market on valuation date. (2) Notwithstanding anything contained in sub-rule (1), where valuation of any asset referred to in that sub-rule is referred by Assessing Officer to Valuation Officer under section 16A, value of such asset shall be estimated to be price which, in opinion of Valuation Officer, it would fetch if sold in open market on valuation date. (3) Where value of any asset cannot be estimated under this rule because it is not saleable in open market, value shall be determined in accordance with such guidelines or principles as may be specified by Board from time to time by general or special order." As per rule 20 value of any asset shall be estimated to be price which, in opinion of Assessing Officer would fetch, if sold in open market on date of valuation. Section 16A is relevant for purposes of rule 8, said provision is extracted below: "16A. Reference to Valuation Officer.-(1) For purpose of making assessment (including assessment in respect of any assessment year commencing before date of coming into force of this section) under this Act, where under provisions of section 7 read with rules made under this Act or, as case may be, rules in Schedule III, market value of any asset is to be taken into account in such assessment, Assessing Officer may refer valuation of any asset to Valuation Officer- (a) in case where value of asset as returned is in accordance with estimate made by registered valuer, if Assessing Officer is of opinion that value so returned is less than its fair market value; (b) in any other case, if Assessing Officer is of opinion- (i) that fair market value or asset exceeds value of asset as returned by more than such percentage of value of asset as returned or by more than such amount as may be prescribed in this behalf; or (ii) that having regard to nature of asset and other relevant circumstances, it is necessary so to do. (2) Fort purpose of estimating value of any asset in pursuance of reference under sub-section (1), Valuation Officer may serve on assessee notice requiring him to produce or cause to be produced on date specified in notice such accounts, records or other documents as Valuation Officer may require. (3) Where Valuation Officer is of opinion that value of asset has been correctly declared in return made by assessee under section 14 or section 15, he shall pass order in writing to that effect and send copy of his order to Assessing Officer and to assessee. (4) Where Valuation Officer is of opinion that value of asset is higher than value declared in return made by assessee under section 14 or section 15, or where asset is not disclosed or value of asset is not declared in such return or where no such return has been made, Valuation Officer shall serve notice on assessee intimating value which he proposes to estimate and giving assessee opportunity to state, on date to be specified in notice, his objections either in person or in writing before Valuation Officer and to produce or cause to be produced on that date such evidence as assessee may rely in support of his objections. (5) On date specified in notice under sub-section (4), or as soon thereafter as may be, after hearing such evidence as assessee may produce and after considering such evidence as Valuation Officer may require on any specified points and after taking into account all relevant material which he has gathered, Valuation Officer shall, by order in writing, estimate value of asset and send copy of his order to Assessing Officer and to assessee. (6) On receipt of order under sub-section (3) or sub-section (5) from Valuation Officer, Assessing Officer shall, so far as valuation of asset in question is concerned, proceed to complete assessment in conformity with estimate of Valuation Officer." Rationale behind Schedule III to Act as has been explained by Central Board of Direct Taxes, vide Circular No. 559, dated May 4, 1990 relevant portion of which reads as follows: "Incorporation of rules for valuation of assets in Wealth-tax Act- Insertion of Schedule III. 18.1 Reasons for incorporating rules for valuation of assets in Wealth- tax Act.-In past one of main areas of litigation under Wealth-tax Act was valuation of assets for purposes of inclusion in net wealth of assessee. Section 7 of Wealthtax Act laid down general principle that for purposes of Act, value of asset shall be taken to be its market value on valuation date, i.e., price it would fetch if sold in open market on date. Since concept of'open market value' led to prolonged litigation on various issues, attempt was made to reduce litigation by prescribing rules of valuation in respect of certain assets. Thus, rules 1B to 1D and 2 to 2I of Wealth-tax Rules, 1957, provided for determination of value of life interest, residential house, unquoted preference shares, unquoted equity shares of companies other than investment companies, interest in partnership or association of persons, determination of net value of assets of business as whole etc. This did not solve problem to any appreciable extent, as determination of value in accordance with these rules was often challenged in courts on ground that such determination See [1990] 184 ITR (St.) 91, 122. did not correspond to market value concept envisaged in Wealth-tax Act and, therefore, rules were ultra vires main provisions of Act. Thus, it was held by several High Courts that rules are not mandatory. [Smt. Kusumben D. Mahadevia v. CWT [1980] 124 ITR 799 (Bom) and K. M. Mammen v. WTO [1983] 139 ITR 357 (Mad) (Appendix)]. Such interpretations made rules for valuation ineffective. Therefore, in order to eliminate litigation on subject and also to make said rules mandatory so that there is certainty and uniformity in matter of valuation of assets, Amending Act, 1989, has incorporated rules for valuation in Wealth-tax Act itself, by inserting new Schedule III in Act. Simultaneously, section 7 has also been suitably amended (refer paras. 14.1 to 14.3 ante.). Rules 1B to 1D and 2 to 2I of Wealth-tax Rules, 1957, have been omitted. 18.2 It may also be pointed out that rules for valuation of assets, as contained in Wealth-tax Rules, 1957, did not provide for valuation of certain categories of assets like commercial house property, quoted equity shares or preference shares of companies, unquoted equity shares of investment companies, jewellery, etc. Therefore, draft rules for valuation of these assets were notified for eliciting public opinion, as Draft Rules, 1986-Notification No. 149(E), dated March 31,1986. These Draft Rules also contained proposals for appropriate amendments in existing rules. After considering comments and suggestions in this respect, these Draft Rules, with necessary modifications, have also been incorporated in said Schedule III to Wealth-tax Act. 18.3.Thus, said Schedule III to Wealth-tax Act, consisting of Parts to H (Rules 1 to 21), provides for method of determining value of each category of assets. provisions of these rules are discussed in detail in following paras." According to counsel for assessee wealth-tax is payable on value of asset as computed in accordance with provisions of Act, i.e., Schedule III to Act, which provides basis for computation of value of asset. value of asset, on which wealth-tax is payable is totally disassociated from fair market value of asset, i.e., value which asset would fetch if sold in open market on valuation date. It is contended that if Legislatures had intended wealthtax to be payable on fair market value of immovable property, being building or land appurtenant thereto, section 2(m), section 7(1) and rules contained in Schedule III to Act would have specifically provided so. For levy of wealth-tax, value of assets exigible to wealth-tax is computed as per relevant rules to Schedule III to Act applicable to such assets. In other words, relevant rules in Schedule III to Act is only basis for determining value of asset on which wealth-tax is payable. But we are not inclined to accept aforesaid submission made by counsel for assessee. Provision similar to rule 8(a) of Schedule III was contained in sub-rule (5) of rule 1BB as under: "(5) Nothing contained in this rule shall apply,- (i) where, having regard to facts and circumstances of case, Wealth-tax Officer, with previous approval of Inspecting Assistant Commissioner, is of opinion that it is not practicable to apply provision of this rule to such case; or (ii) where difference between unbuilt area and specified area exceeds twenty per cent. of aggregate area; or (iii) where house is built on leasehold land lease expires within period not exceeding fifteen years from relevant valuation date and deed of lease does not give option to lessee for renewal of lease: Provided that in case referred to in clause (i) or clause (ii) or clause (iii) valuation of house shall be made by Wealth-tax Officer with prior approval of Inspecting Assistant Commissioner." While rule 1BB was omitted by Wealth-tax (Second Amendment) Rules, 1989, with effect from April 1, 1989, but simultaneously rule 8 was inserted, vide Schedule III. Therefore, it cannot be said that after insertion of Schedule III to Act value on which wealth-tax is payable has no relevance in determining fair market value of asset or price which asset would fetch if sold in open market on valuation date. In case, Assessing Officer is of opinion that it is not practicable to apply provisions of rule 3, and said asset is referred to Valuation Officer under section 16A for assessment, value of such asset shall be estimated to be price which, in opinion of Valuation Officer, would fetch if sold in open market on date of valuation. conjoint reading of various provisions reproduced above makes it clear that Legislature has not laid down rigid directive on Assessing Officer that valuation of asset is mandatorily required to be made by applying rule 3; Assessing Officer has discretionary power to determine whether rule 3 or rule 8 is applicable in particular case. If Assessing Officer is of opinion that it is not practicable to apply rule 3, Assessing Officer can apply rule 8 and value of asset can be determined in manner laid down in rule 20 or section 16A. word "practicable" is defined in Black's Law Dictionary, Eighth Edition, page 1210 as follows: "Practicable, adj (of thing) reasonably capable of being accomplished; feasible." ordinary meaning of word "practicable" as defined in Advanced Law Lexicon: 3rd Edition 2005 page 3660 is: "The expression'practicable' means possible or feasible with due diligence... Though word'practicable' has number of significances, yet its meaning depends largely on context. Ordinarily, it means that which may be practiced or performed; capable of being put into practice, done or accomplish. word'such' appearing in section 132(3) refers to money, bullion, etc., mentioned in section 132(1)(c). Therefore, it is only when nature or location of particular asset found on search does not allow, or circumstances of given case do not permit, immediate seizure of same, that provisions of section 132(3) may be resorted to..." Therefore, word "practicable" is to be construed widely. In present context if in opinion of Assessing Officer, if value determined by taxpayer on basis of rules 3 to 7 is absurd or has no correlation to fair market value or otherwise not practicable, in such case, it is open to Assessing Officer to invoke rule 8 of Schedule III and determine value of asset either under rule 20 or refer under section 16A, for determination of valuation of asset. It is true that invocation of rule 8(a) cannot based on ipse dixit of Assessing Officer. discretion vested in Assessing Officer to discard value determined as per rule 3 has to be judicially exercised. It must be reasonable, based on subjective satisfaction; power must be shown to be objectively exercised and is open to judicial scrutiny. In present case, Assessing Officer refused to accept self- assessment for following reasons: (i) There is wide variation between market value and valuation done by assessee as per municipal taxes. (ii) property is used as guest house. (iii) value for levy of municipal tax is very low, as total ratable value of assessee is done by municipal authorities at Rs. 6,573 per annum. (iv) assessee was tenant of property at Rs. 500 per month. After purchase of property lot of expenditure was incurred from time to time on improvement of property which is very difficult to ascertain. (v) value of building is grossly understated as assessee himself entered into agreement to sell same in year 1995 for sum of Rs. 10,26,00,000. Considering above factors, Assessing Officer assessed value of property at Rs. 2,60,73,000 as valued by Departmental Valuation Officer. Commissioner of Wealth-tax held that reference made by Assessing Officer to Departmental Valuation Officer was justified. Income-tax Appellate Tribunal also justified action of Assessing Officer and on appeal, same was affirmed by High Court, vide impugned judgment. After careful consideration of facts and circumstances of case and submission made by learned counsel for parties, we are of opinion that Assessing Officer was justified in holding that it was not practicable to apply rule 3 in instant case and rightly referred matter to Valuation Officer under section 16A for determination of value of asset. Assessing Officer, thereafter, has rightly assessed wealth-tax on basis of such value determined by Valuation Officer. We find no merit in this appeal and same is, accordingly, dismissed. *** Amrit Banaspati Co. Ltd. v. Commissioner of Wealth-tax
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