KISHORE B SETALVAD Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) This is a reference made by the Income Tax Appellate Tribunal, Ahmedabad under section 27 of the Wealth Tax Act, 1957 ("the Act" for brevity). At the instance of the assessee, the following questions have been referred for our opinion :-

(2.) The assessee is an individual. The assessment year is 1979-80 and the relevant valuation date is 31st March, 1979. The assessee along with his three brothers owned two open plots in New Brahma Kshatriya Cooperative Housing Society Ltd. and one plot in Samasta Brahma Kshatriya Cooperative Housing Society Ltd. by buying qualifying shares of the said societies. Each of the brothers had 1/4th interest in all the three plots of the lands. The total value of all the three plots was assessed at the relevant time at Rs.1,60,500.00 and the assessee's 1/4th interest in the said plots was, therefore, assessed at Rs.40,125.00. The assessee took up the stand that since his valuer had not properly considered various restrictions contained in the byelaws of the two societies, his 1/4th interest valued at Rs.40,125.00 was not proper. According to the assessee, at the highest only the deposits amounting to Rs.20,000/made with the societies could be considered as assets for wealth tax purposes and since the assessee had 1/4th interest in such deposits, only Rs.5000.00 could be included in his net wealth. The Inspecting Assistant Commissioner (Assessments) negatived the assessee's contention on the ground that the approved valuer of the assessee had considered the byelaws of the societies properly. The IAC (Assessments) accordingly determined the net wealth which included Rs.40,125/being the value of 1/4th interest in the plots in question. In appeal, the Commissioner of Wealth Tax (Appeals) upheld the decision of the IAC (Assessments).

(3.) In his appeal before the Tribunal, the assessee raised an additional ground on the basis of the provisions of the Act, more particularly, contending that in view of the provisions of section 4 (1)(b) read with section 4 (7) of the Act, open plots of land belonging to a cooperative housing society and allotted/let out to its members were not includible in the net wealth to be computed for the purposes of levying wealth-tax. The Tribunal dismissed the assessee's appeal after giving a finding that the assessee and his brothers were given leasehold interest in the lands in question for a period of 998 years. The Tribunal held that if a cooperative housing society is having a building then the provisions of section 4(7) of the Act would apply but if a cooperative housing society is having open plots of land, as in the instant case, then such cases would fall under section 4 (1)(b) of the Act. The Tribunal further relied on Rule 2 of the Wealth-tax Rules relating to valuation of the property. The Tribunal also held that since the plots of land in question had been leased out only to the assessee and his brothers, whatever value was determined in the hands of the societies would be the value in the hands of the assessee and his brothers. Since that value was worked out by a technical person i.e. assessee's authorised valuer, the Assessing Officer was justified in relying on the said valuation. The Tribunal also held that approved valuer was conscious of the terms and conditions contained in the byelaws of the Society and the fact that the plots of land in question were leased out to the assessee by the cooperative societies. The Tribunal accordingly dismissed the appeal. After the assessee's appeal was dismissed by the Tribunal by its order dated 14-7-1986, the assessee moved a miscellaneous application contending that certain legal contentions raised by the assessee were not dealt with by the Tribunal. The Tribunal dismissed the miscellaneous application. The assessee preferred the second miscellaneous application which also came to be rejected by the Tribunal. Hence, this reference at the instance of the assessee.