CONTROLLER OF ESTATE DUTY Vs. KANTILAL CHIMANLAL

JUDGEMENT

(1.) . At the instance of the Controller of Estate Duty, Gujarat-II, Ahmedabad, the Income Tax Appellate Tribunal, Ahmedabad Bench "C" has referred the following question of law for opinion of the High Court :-

(2.) . Smt. Kanchanben Sarabhai died on January 4, 1968. The deceased owned residential property at Navrangpura known as `Srikunj'. The accountable person had disclosed the value of the said property at Rs.1,21,260.00 as per the valuation report of the registered valuer. However, the Assistant Controller of Estate Duty determined the value of the residential property at Navrangpura at Rs.1,76,000/after giving exemption under Section 33(1)(a) of the Estate Duty Act. While determining the value of the property, the Assistant Controller of Estate Duty observed that the valuation was made on rental method and the valuation report of the registered valuer was not acceptable. Feeling aggrieved, the accountable person carried the matter in appeal before the Controller of Estate Duty (Appeals) and contended that as the value of the said property was adopted to be Rs.1,21,360.00 in wealth-tax proceedings, the property could not have been valued at Rs.1,76,000.00 after giving exemption under Section 31(1)(a) of the Estate Duty Act. The contention raised by the accountable person that the value of the property adopted for the purpose of wealth-tax should be adopted for the purpose of estate duty was negatived by the Controller of Estate Duty (Appeals) holding that such an argument militates against express provisions of section 36 of the Estate Duty Act but the Appellate Authority placing reliance on decision of Mysore High Court in case of CED vs. J.K. Krishnamurthy,. accepted the submission made on behalf of the accountable person that the valuation should be done in accordance with Rule 1-BB of the Wealth Tax Rules and accordingly determined the value of the property at Rs.1,39,000.00. Being aggrieved, the revenue preferred an appeal before the Income-tax Appellate Tribunal, Ahmedabad Bench "C" and contended that Rule 1-BB of the Wealth Tax Rules was brought into force with effect from April 1, 1979 and, therefore, principle laid down therein could not have been made applicable retrospectively to the facts of the present case when death of Smt. Kanchanben had occurred in the year 1968. It was pleaded that the valuation of the building as determined by the Estate Officer should be restored. The Tribunal held that Rule 1-BB of the Wealth-tax Rules is retrospective in operation and, therefore, the grievance made by the revenue has no substance. In that view of the conclusion, the Tribunal dismissed the appeal and at the instance of the Controller of Estate Duty, the Tribunal has referred the question of law quoted above for our opinion.

(3.) . Mr Akil Kureshi, learned counsel for the revenue pleaded that the basis of valuation provided under Wealth Tax Rules in the case of a residential property should not be adopted to arrive at the market value of the same under the Estate Duty Act. The learned counsel referred to section 36(1) & (2) of the Estate Duty Act, 1953 and in the alternative submitted that Section 36(3) of the Estate Duty Act was brought into force with effect from March 1, 1981 which is prospective in operation and, therefore, in cases where the death took place prior to March 1, 1981 the Assistant Controller of Estate Duty was within his rights in adopting any appropriate method for valuing the property without being tied down by the valuation of the same property made under the Wealth-tax Act.