COMMISSIONER OF WEALTH TAX Vs. KASTURBHAI MAYABHAI SHRI

JUDGEMENT

(1.) THE WT Act, 1957 (hereinafter called "the Act"), was enacted to provide for the levy of wealth tax and came into force w.e.f. 1st April, 1957. The charging provision, S. 3, provides for the levy of wealth tax in respect of the net wealth of every individual, HUF and company at the specified rates. The expression "net wealth" is defined in S. 2(m) as the amount by which the aggregate value computed in accordance with the provisions of the Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under the Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than debts exempted by S. 6, debts which are in the nature of encumbrances on any property which is not chargeable under the Act or the amount of tax, penalty or interest payable pursuant to an order passed under the Act or any other law relating to taxation. Sec. 4 enumerates the assets to be included in computing the net wealth. Secs. 5 and 6 exempt certain assets in India and outside India from being included in computing the net wealth of the taxpayer. The value of assets is to be determined in accordance with S. 7, sub s. (1) whereof reads as under :

(2.) THE words "subject to any rules made in this behalf" were substituted by the WT (Amendment) Act, 1964, w.e.f. 1st April, 1965. Sub ss. (2), (3) and (4) of S. 7 are in the nature of exceptions to sub s. (1) and each one of them begins with a non obstante clause, viz., notwithstanding anything contained in Sub S. (1). Sub s. (2) deals with the manner in which the assets of an assessee carrying on business in respect whereof regular accounts are maintained or a non resident company are to be computed. We are not concerned with this sub section but sub ss. (3) and (4) of S. 7 are relevant for our purpose and may, therefore, be reproduced :

(3.) THE rule making power is contained in S. 46. Sec. 46(1) is the repository of the rule making power to be exercised for carrying out the purposes of the Act whereas Sub S. (2) thereof catalogues a few specified subjects in respect whereof the powers may be exercised, one such subject being "the manner in which the market value of any asset may be determined". Sub s. (3) of S. 46 provides that the power to make rules conferred by this section shall include the power to give retrospective effect, from a date not earlier than the date of commencement of the Act, to the rules or any of them and, unless the contrary is permitted (whether expressly or by necessary implication), no retrospective effect shall be given to any rule so as to prejudicially affect the interests of assessees. Sub s. (3) of S. 46 in its present form came to be substituted by the Direct Taxes (Amendment) Act, 1974, w.e.f. 18th Aug., 1974. Prior thereto, the sub section read that the power to make rules shall on the first occasion of the exercise thereof include the power to give retrospective effect to the rules or any of them before a date not earlier than the date of commencement of the Act. In pursuance of the rule making power conferred by S. 46, the Central Board of Revenue made rules called "The WT Rules, 1957" (hereinafter called "the Rules) and brought them into force w.e.f. 1st April, 1957. These rules have been amended from time to time. Rule 1BB came to be inserted by the WT (Amendment) Rules, 1979, w.e.f. 1st April, 1979. The relevant part of this rule with which we are concerned, reads as under: "1BB. (1) For the purposes of Sub S. (1) of S. 7, the value of a house which is wholly or mainly used for residential purposes shall be the aggregate of the following amounts, namely : (a) the amount arrived at by multiplying the net maintainable rent in respect of the part of the house used for residential purposes by the fraction 100/8 ; and (b) the amount arrived at by multiplying the net maintainable rent in respect of the remaining part of the house, if any, by the fraction 100/9: Provided that in relation to a house which is built on leasehold land, this sub rule shall have effect as if for the fraction 100/8 in cl. (a) or, as the case may be, the fraction of 100/9 in cl. (b), the fractions 100/9 and 100/10, respectively, had been substituted."