spb/ 219itxa46-2002.doc IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WEALTH TAX APPEAL NO. 46 OF 2002 Shri Mahendra J. Vora Appellant. V/s. Dy. Commissioner of Wealth-Tax Special Range 52, Mumbai & Ors. Respondents. Mr. Yatin R.Shah, Advocate for Appellant. Mr. Sham Walve, Advocate a/w. Mr. P. A. Narayanan for Respondents. CORAM : UJJAL BHUYAN AND MILIND N. JADHAV,JJ. DATE : JANUARY 30, 2020. PC : 1 Heard learned counsel for parties. 2 This Appeal has been preferred by Assessee under section 27A of Wealth Tax Act, 1957 (briefly Act , hereinafter) against order dated 16.08.2001 passed by Income Tax Appellate Tribunal, Mumbai Bench "WT", Mumbai in Wealth Tax Appeal No. 54/M/1998 for assessment year 1991 92. Digitally signed by Shalikram P. Shalikram Borey P. Borey Date: 2020.02.13 16:37:22 +0530 Borey 1/11 spb/ 219itxa46-2002.doc 3 On 22.07.2004, Appeal was admitted by this court on following substantial question of law : Whether Appellate Tribunal is right in confirming addition made on account of valuation of land made on basis of instance of sale occurred subsequent to date of valuation when impugned land was subject to Urban Land (Ceiling and Regulation) Act, 1976 as on date of valuation ? 4 Though facts are not in dispute, brief recital of same is considered necessary for adjudication of lis. 5 Assessee filed return of wealth for assessment year 1991-92, declaring negative wealth of Rs. 36,428.00. Wealth Tax Officer in assessment proceedings noticed that assessee had indicated in return of income that amount of Rs. 10,34,265.00 was paid in advance in respect of property bearing CTS No. 1288, Mahavir Nagar, Kandivali (West). Wealth Tax Officer found that in respect of said property amount of Rs.43,50,000/- was received as advance from M/s. Renuka Builders & Developers Pvt. Ltd.. notice was issued to assessee to file details regarding value of Borey 2/11 spb/ 219itxa46-2002.doc said property. Assessee responded to notice and matter was heard. By assessment order dated 06.03.1996 issued under section 16(3) read with section 17 of Act, Wealth Tax Officer valued said property at Rs.3,12,20,774.00 and after deducting amount of Rs. 10,34,265.00 shown by assessee as advance paid against said property, difference in value of said property amounting to Rs. 3,01,86,509.00 was added to net wealth of assessee. 6 Aggrieved by above, assessee preferred Appeal before first appellate authority i.e. Commissioner of Income Tax (Appeals)-XVIII, Bombay. By appellate order dated 20.10.1997, first appellate authority held that Wealth Tax Officer had taken correct market value and, therefore, valuation was upheld. Accordingly, Appeal was dismissed. 7 In further appeal by assessee before Tribunal, Tribunal elaborately examined various aspects and vide order dated 16.08.2001 opined that Wealth Tax Officer had rightly assessed value of property in hands of assessee and that no interference was called for in order of first Borey 3/11 spb/ 219itxa46-2002.doc appellate authority. Accordingly, appeal of assessee was dismissed. 8 Hence, present Appeal before us. 9 Learned counsel for Appellant submits that crucial date for valuation of property is valuation date, as defined under section 2(q) of Act. For arriving at proper valuation as on valuation date, Wealth Tax Officer cannot take into consideration value of property post valuation date. Learned counsel has referred to Rule 20 of Schedule III of Act and relies upon decision of Supreme Court in Shri S. N. Wadiyar (dead) through LR vs. Commissioner of Wealth Tax, Karnataka in Civil Appeal Nos. 6873- 6881 of 2005 decided on 21.09.2015 in support of his contention. 10 On other hand, Mr. Sham Walve, learned standing counsel, Revenue for Respondents submits that there is nothing in Act or even in decision of Supreme Court, restricting or confining Wealth Tax Officer for valuation of property on or before valuation date. requirement of law is that Wealth Tax Officer must be satisfied about Borey 4/11 spb/ 219itxa46-2002.doc valuation of property as on date of valuation for which he may take into consideration valuation of similar property immediately preceding valuation date or immediately succeeding valuation date. His further submission is that though property in question was under Urban Land (Ceiling and Regulation) Act, 1976, same was released from land ceiling proceedings and transaction pertaining to land discloses that valuation of property was in no way inhibited or affected by fact that land was under ceiling proceedings. 11 Submissions made by learned counsel for parties have been considered. 12 Section 2(q) of Act defines valuation date to mean last day of previous year as defined in section 3 of Income Tax Act, 1961 in relation to year for which assessment is made under Act if assessment were to be made under that Act for that year. In other words, as per definition, valuation date would mean last date of previous year in respect of assessment year under consideration. Borey 5/11 spb/ 219itxa46-2002.doc 13 Adverting to present case, it is seen that assessment year is 1991-92. Therefore, relevant previous year would be 1990-91. last date of previous year, therefore, would be 31 st March, 1991, which would be valuation date. 14 Though other provisions of Act may not be relevant, we may, however, advert to Schedule III to Act, which is appended to Act as schedule to sub-section (1) of Section 7. Subsection (1) of Section 7 deals with rules for determining value of assets other than cash for purposes of Act. It says that subject to sub-section (2), value of any asset other than cash shall be its value as on valuation date, determined in manner laid down in Schedule III. Sub-section (2) deals with valuation of house belonging to assessee, which is exclusively used by him for residential purposes for period of 12 months immediately preceding valuation report. 14.1. That brings us to Schedule III of Act. Schedule III provides for Rules for determining value of assets. Part (H) forms residuary provisions. Rule 20 forms part of residuary provisions which deals with valuation of assets in cases not covered by Rules 3 to 19. It says that value of any Borey 6/11 spb/ 219itxa46-2002.doc asset, other than cash and not covered by aforesaid Rules, shall be estimated to be price which in opinion of Assessing Officer would be fetched on its own if sold in open market on valuation date. 15 Therefore, requirement of Rule 20(1) is that value of any asset, other than cash, shall be estimated to be price which, in opinion of Assessing Officer, it would fetch if sold in open market on valuation date. Rule 21 clarifies that while determining market value, restrictive covenants can be ignored. 16 Having noticed legal provisions as above, we may now advert to assessment order. 17 Wealth Tax Officer noted in assessment order that assessee had admitted that advance of Rs. 43,50,000/- in respect of property in question was received by M/s. Jayantilal Investments from M/s. Renuka Builders & Developers Pvt. Ltd., in November, 1990. Assessee (appellant) was partner in M/s. Jayantilal Investments. agreement was entered into on 29.11.1991 between Appellant and 2 others on one hand and M/s. Renuka Builders & Developers Pvt. Ltd., on other. This agreement acknowledged Borey 7/11 spb/ 219itxa46-2002.doc payment of Rs. 43,50,000/- by purchaser to vendor within two days of execution. It further acknowledged receipt of sum of Rs.78,75,300.00 by vendor from purchaser before execution of agreement. Wealth Tax Officer took view that if land was valued at Rs. 10,34,265.00 no one would have advanced Rs.43,50,000/- as that amount was substantially higher than valuation declared by assessee. 18 Wealth Tax Officer found that when land was ultimately sold, share of assessee was Rs. 3,12,774/- which represented market value of his share in land. Therefore, Wealth Tax Officer worked out that market value of land would be Rs. 3,12,20,774.00. 19 In Appeal, first appellate authority considered agreement for sale dated 29.11.1991 and noted that agreement duly took note of fact that land was under ceiling proceedings at time of agreement. By referring to Rule 20 of Schedule III, first appellate authority held that Wealth Tax Officer had rightly taken market value into consideration and valuation was upheld. Borey 8/11 spb/ 219itxa46-2002.doc 20 In further appeal, Tribunal in para 8 held as under : 8. We are of opinion that there would not be better guide for WTO for adopting market value of property than actual sale itself occurred within few months from relevant date of valuation. contention of ld. A.R. regarding valuation as has been done in case of other co-owners, no proof or material has been placed on record. Moreover, it is open to WTO to disregard order passed by another officer if after proper enquiry and investigation it is evident that basis adopted by such officer would not lead to justifiable proper result. ratio laid down in decision of Jaswantrai (supra) and Rajendra Kumar Agarwal (supra) as referred by revenue are also relied upon. We have also taken into account case law of Suumben Jhaveri (supra) as quoted by ld. A.R. and found that facts were not identical, moreover ratio laid down in that case also supports our view that property had to be valued as on date particular day on basis of hypothetical sale and prevailing circumstances which definitely is logical and judicial approach. In view of reasons recorded in aforesaid paras and under totality of circumstances, we are of opinion that W.T.O. has rightly assessed value of impugned property in hands of assessee and no interference is required in order of first appellate authority. Borey 9/11 spb/ 219itxa46-2002.doc 21 Thus, Tribunal observed that there could not have been better guide for Wealth Tax Officer for adopting market value of property in question than actual sale itself which occurred within few months from relevant date of valuation. 22 Insofar present case is concerned though actual sale might have taken place after valuation date, substantial amount of money was paid prior to valuation date as advance consideration. In such circumstances, view taken by Tribunal cannot be faulted. conjoint reading of section 7 and section 2(q) of Act would indicate that requirement of law is that value of any asset for purpose of this Act shall be its value as on valuation date. For determining value of asset as on valuation date there cannot be any embargo on Wealth Tax Officer not to take into consideration valuation of identical assets immediately preceding or succeeding valuation date or that he has to arrive at valuation of asset only as per valuation report. decision of Supreme Court in case of S. N. Wadiyar (cited supra) is not on proposition that valuation of identical asset immediately succeeding valuation date cannot be taken into consideration for determining valuation Borey 10/11 spb/ 219itxa46-2002.doc of asset as on valuation date. In paragraph 22 of said judgment, it is stated that valuation of asset has to be on valuation date which has reference to last day of previous year. In other words, it is 31st March and immediately preceding assessment year. valuation of asset arrived at as on that date is valuation on which wealth tax is assessable. Clarifying matter further Supreme Court held that Wealth Tax Officer has to form opinion about estimated price if assets were to be sold in assumed market and estimated price would be one which assumed willing purchaser would pay for it. 23 Viewed in above context, we do not find any error or infirmity in view taken by Tribunal. Further, there is concurrent finding of two appellate authorities below and we do not find such finding to be vitiated by any material irregularity or perversity, warranting interference in appellate proceeding under Section 27A of Act. 24 No substantial question of law arises in this Appeal. Appeal is accordingly dismissed. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) Borey 11/11 Mahendra J. Vora v. Dy. Commissioner of Wealth-tax, Special Range-52, Mumbai & Or