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2009 DIGILAW 549 (RAJ)

Commissioner of Wealth v. Smt. Rani Roopraj Laxmi

2009-02-19

M.N.BHANDARI, R.C.GANDHI

body2009
JUDGMENT 1. - The Income-tax Appellate Tribunal, Jaipur Bench, Jaipur has referred the following question in R.A. Nos. 227 to 235/JP/87 arising out of W.T.A. Nos. 20 to 28/JP/87 for the assessment years 1972-73 to 1981-82 : "1. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of section 7(4) of the Wealth-tax Act, 1957, were applicable and, therefore, the value of the property 'Samod House' as taken in the assessment year 1971-72, i.e., Rs. 2.5 lakhs should be taken in the year under consideration ?" 2. The brief facts relevant to the case are that property known as "Samod House" was used by the assessee as residential house and accordingly the Wealth-tax Officer valued the said property at a different value for the assessment years 1972-73 to 1981-82. The property was earlier assessed at the value of Rs. 2,50,000 for the assessment year 1971-72 by the Commissioner of Income-tax (Appeals). The assessee claimed that as per the provisions of section 7(4) of the Wealth-tax Act, 1957 (for short "the Act"), the value of the property was required to be freezed at Rs. 2,50,000 and the same value should have been taken for the subsequent assessment years. It is stated that April 1, 1971, is the crucial date as per the provisions of section 7(4) of the Act as the assessee was the owner of the property even prior to 1971. The order passed by the Wealth-tax Officer was challenged by the assessee and the Appellate Assistant Commissioner of Income-tax held that the value of the property as taken in the year 1971-72, i.e., Rs. 2,50,000 should be taken as the value of the property for subsequent assessment years also. The order of the Appellate Assistant Commissioner was challenged before the Tribunal by the Revenue, but the Tribunal confirmed the order of the Appellate Assistant Commissioner. Thus, the Revenue sought reference to the question referred to above. 3. We have heard learned counsel for the Revenue and perused the record. 4. The prime question involved for our consideration is that the interpretation of section 7(4) of the Act. Thus, the Revenue sought reference to the question referred to above. 3. We have heard learned counsel for the Revenue and perused the record. 4. The prime question involved for our consideration is that the interpretation of section 7(4) of the Act. For consideration of the aforesaid provision, it is quoted hereunder : "7.(4) Notwithstanding anything contained in sub-section (1), the value of a house belonging to the assessee and exclusively used by him for residential purposes throughout the period of twelve months immediately preceding the valuation date may, at the option of the assessee, be taken to be the price which, in the opinion of the Wealth-tax Officer, it would fetch if sold in the open market on the valuation date next following the date on which he became the owner of the house, or on the valuation date relevant to the assessment year commencing on the 1st day of April, 1971, whichever valuation date is later : Provided that where more than one house belonging to the asses see is exclusively used by him for residential purposes, the provisions of this sub-section shall apply only in respect of one of such houses which the assessee may, at his option, specify in this behalf in the return of net wealth. Explanation.-For the purposes of this sub-section- (i) where the house has been constructed by the assessee, he shall be deemed to have become the owner thereof on the date on which the construction of such house was completed ; (ii) 'house' includes a part of a house being an independent residential unit." 5. The perusal of the aforesaid provision shows that the value of the house belonging to the assessee, at his option, may be taken to be the price which it will fetch on the valuation date relevant to the assessment year commencing on first day of April, 1971, and in other cases if the ownership of the property comes later on, then the relevant date would be the valuation date following the date on which the assessee becomes the owner of the house. In the present matter, the assessee was the owner of the property much prior to the assessment year 1971-72. Thus, valuation of the property for the assessment year 1971-72 becomes quite relevant. It has come on record that for the assessment year 1971-72, the valuation of the property was made at Rs. In the present matter, the assessee was the owner of the property much prior to the assessment year 1971-72. Thus, valuation of the property for the assessment year 1971-72 becomes quite relevant. It has come on record that for the assessment year 1971-72, the valuation of the property was made at Rs. 2,50,000 by the Commissioner of Income-tax (Appeals) and the said order has attained finality because it was neither challenged by the assessee nor the Revenue. Once the aforesaid value of the house became final, then the same value is required to be freezed for subsequent assessment years. Thus, in view of the provisions of section 7(4) of the Act, the value of the property as taken at Rs. 2,50,000 for the assessment year 1971-72 would be applicable to the subsequent assessment years as the assessment years involved in the present matter are 1972-73 to 1981-82. The reference is accordingly answered against the Revenue and in favour of the assessee. *******