CHHAYABEN SUHASHBHAI Vs. COMMISSIONER OF WELATH TAX

JUDGEMENT

(1.) In this Reference at the instance of the assessee, the following questions are referred for our opinion :

(2.) The applicant assessee is assessed to wealth-tax as an individual. The relevant valuation date was 31st March 1978. The applicant had a life interest in Suhasbhai Vadilal Family Trust No.1 and Suhasbhai Vadilal Family Trust No.2. The value of life interest was declared by the applicant on the basis of actuarial valuation report of an approved Actuary. The same was accepted by the Wealth Tax Officer while finalising the assessment order. However, the Commissioner of Wealth Tax exercised his powers under sub-section (2) of Section 25 of the Wealth Tax Act (hereinafter referred to as "the Act") and set aside the order of the Wealth Tax Officer on the ground that value of the life interest should have been determined as provided in Rule 1-B and not on actuarial valuation basis. The Tribunal confirmed the said order of the Commissioner of Wealth Tax and therefore this Reference at the instance of the assessee.

(3.) We have heard Mr. J.P. Shah, learned counsel for the assessee and Mr. Tanvish Bhatt, learned Standing Counsel for the Revenue. Mr. Shah submitted that Rule 1-B of the Wealth Tax Rules prescribing the particular method for valuation of life interest, invoked by the Commissioner of Wealth Tax was only directory in nature and therefore it was open to the assessee to contend that the value of her life interest was rightly accepted by the Wealth Tax Officer on the basis of the actuarial valuation report. It is submitted that actuarial valuation is one of the recognised methods of valuing life interest and therefore the Commissioner of Wealth Tax was not justified in exercising his powers under sub-section (2) of Section 25 of the Act.