LexAMRIT BANASPATI CO. LTD. versus COMMISSIONER OF WEALTH-TAX, GHAZIABAD
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A B [2014] 8 S.C.R. 46 AMRIT BANASPATI CO. LTD. v. COMMISSIONER OF WEALTH-TAX, GHAZIABAD (Civil Appeal No. 938 of 2003) JUNE 30, 2014 [SUDHANSU JYOTI MUKHOPADHAYA AND KURIAN JOSEPH, JJ.] Wealth Tax Act, 1957 - Schedule Ill, Rules 8, 20, 3 to 7 C - Valuation of residential flat - Wide variation between alleged market value as determined by the Departmental Valuation Officer ulr 20 and the value as disclosed by the assessee in the return filed on self assessment as per Rule 3 to 7 - Assessment Officer holding that due to wide variation, not D practicable to value property as per Rule 3 to 7, hence r. B(a) attracted - Said order upheld by Commissioner of Wealth :r:ax, tribunal as also High Court - On appeal, held: If in the opinion of AO, the value. determined by tax payer on the basis of Rule 3 to 7 is absurd or has no correlation to the fair market value E or otherwise not practicable, it is open to AO to -invoke Rule 8 and determine the value of thEJ asset either under Rule 20 or refer under Section 16A, for determination of the valuation of the asset - Discretion vested in the AO to discard the value determined as per Rule 3 has to be judicially exercised - It is F open to judicial scrutiny- On facts, AO justified in holding that it was not practicable to apply Rule 3 and rightly referred the matter to the Valuation Officer uls 16A for determination of value of the a$set and rightly assessed the wealth tax on the basis of such value. G Words and Phrases: Word 'Practicable - Construction of, in the context of Rule 8 of Schedule Ill of the Wealth-Tax Act, 1957 - Held: Is to be construed widely. Dispute arose with regard to valuation of property, H 46 AMRIT BANASPATI CO. LTD. v. COMMISSIONER OF WEALTH 4 7 TAX, GHAZIABAD residential flat owned by the appellant-assessee. There A w.as wide variation betwee'n the value of the flat as disclosed in the return filed by the assessee on self assessment as per Rule 3 to 7 of Schedule Ill of the Wealth Tax Act, 1957; and that determined by the Departmental Valuation Officer under Rule 20 of B Schedule Ill of the Wealth Tax Act. The Assessment Officer held that it was not practicable to value the property as per Rule 3 to 7, hence, 8(a) was attracted and referred the matter to the Valuation Officer u/s. 16A for determination of value of the asset. The Commissioner C of Wealth Tax upheld the order of the AO. Thereafter, the tribunal as also the High Court upheld the view taken by the respondent-Revenue. Hence, the instant appeal. Dismissing the appeal, the Court D HELD: 1.1. Rule 8(a) of the Schedule Ill of Wealth Tax Act, 1957 carves out an exception to Rule 3 that while the Assessment Officer (AO), with the previous approval of the Joint Commissioner is of opinion that it is not practicable to apply Rule 3 to a particular case, then Rule E 3 shall not be made applicable. In such case, the AO may invoke Rule 8 and determine the value of an asset in the manner laid down in Rule 20. As per Rule 20 the value of any asset shall be estimated to be the price which, in the opinion of the AO would fetch, if sold in the open market F on the date of valuation.[Para 16, 17] [60-C; 61-A] 1.2. While Rule 1 BB was omitted by Wealth-tax (Second Amendment) Rules, 1989 w.e.f. 1.4.1989 but simultaneously Rule 8 was inserted vide Schedule Ill. Therefore, it cannot be said that after insertion of G Schedule Ill to the Act the value on which the wealth tax is payable has no relevance in determining the fair market value of the asset or the price which the asset would fetch if sold in the open market on the valuation date. [Para 22] [65-G-H] H A 48 SUPREME COURT REPORTS [2014] 8 S.C.R. 1.3. A conjoint reading of the various provisions makes it clear that the legislature has not laid down a rigid directive on the AO that the valuation of an asset is mandatorily required to be made by applying Rule 3; the AO has the discretionary power to determine whether B Rule 3 or Rule 8 is applicable in a particular case. If the AO is of the opinion that it is not practicable to apply Rule 3, the AO can apply Rule 8 and value of the asset can be determined in the manner laid down in Rule 2Q or Sec.16A, the value of such asset shall be estimated tO' be C the price which, in the opinion of the Valuation Officer, would fetch if sold in the open market on the date of valuation. Therefore, the word "practicable" is to be constru
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