LexBIMAL KISHORE PALIWAL & ORS versus COMMISSIONER OF WEALTH TAX
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[2017) 14 S.C.R. 597 BIMAL KISHORE PALIWAL & ORS. v. COMMISSIONER OF WEALTH TAX (Civil Appeal No.3836 of201 l) OCTOBER 13, 2017 IA. K. SIKRI AND ASHOK BHUSHAN, JJ.] Wealth Tax Act. 195 7 - ss. 7 and 16-A - Valuation of asset - Method of valuation - Assessees-appellants were partners in a firm A B - One of the assets of the partnership firm was a Cinema building - C Assessing officer made a reference u/s. J 6A to the Department Valuation Officer for valuation of Cinema .building - On the basis thereof. Assessing officer assessed the Cinema building adopting the land and building method - Appellate Authority affirmed the assessment made by Assessing Officer - Income Tax Appellate Tribunal (!TAT) accepted the case of the assesses that the proper · D basis for valuing the Cinema building .was income capitalization meth~d - Revenue filed reference application - High Court on reference answered the questions against .the assessees holding that Wealth Tax Officer was justified in adopting the land and building method - Plea of assessees be.fore Supreme Court thats. 7(2)(a) is a E non obstantc clause prescribing the inco_me capitalization method for assessing value of the assets of a running business and thus is to be applied in all cases where assessee is canying 011 a business - Held: Wealth Tax Officer is not obliged to mandatori/y adopt the method provided in s. 7(2)(a) ·in all cases where assessee is carrying 011 a business - s. 7(2}(a) is an enabling provision and resort to it is F discretionary - Such enabling power cannot be held as obligation · or shackles on the right of Assessing Officer to adopt an appropriate method - No error found in the order of Assessing Officer in adopting the land and building method by making a reference to Departmental Valuer to value the property on the said method - G -High Court did not err in interfering with the order of !TAT. Interpretation of Statutes - Taxing Statutes - Plea of assessees that !f there are· more than methods of valuation of an asset . . then the method under which valuation is in favour of assessee must be adopted - Held: Not tenable - In the instant case. the provision,s of 597 H 598 A B c D E SUPREME COURT REPORTS [2017] 14 S.C.R. s. 7 are neither ambiguous nor lead to two constructions - Wealth Tax Act, 1957 - s.7. Dismissing the appeals, the Court HELD: 1.1 The normal rule for valuing an asset for the purposes of Wealth Tax Act, 1957 is the estimated price which in the opinion of Wealth Tax Officer, the asset would fetch if sold in the open market. Sub-section (2) begins with 11011 obsta11te clause. Sub-clause (a) of sub-section (2) provides that-where the assessec is carrying on a business for which accounts arc maintained by him regularly, the Wealth Tax Officer may, instead of determining separatclv the value of each asset held by the assessce in such business, determine the net value of the assets of the business as a whole having regard to the balance-sheet of such business as on the valuation date and making such adjustment therein as may be prescribed. Further sub-section (3) again begins with 11011 obstante clause providing that where the valuation of any asset is referred under Section 16A, the value of such asset shall be estimated to be the price which, in the opinion of the Valuation Officer, it would fetch if sold in the open market. Under Section 16A Wealth Tax Officer can·make a reference to Valuation Officer for any asset for valuation. [Paras 10-12) [604-E-H) l.2 It is true that sub-section (2) of Section 7 begins with 11011 obstlmte clause which enables the Wealth Tax Officer to determine the net value of the assets of the business as a whole instead of determining separately the value of each asset held by the asscssce in such business. The language of sub-section (2) provides overriding power to the Wealth Tax Officer to adopt F and determine the net value of the business having regard to the balance-sheet of such business. The enabling power has been given to Wealth Tax Officer to override the normal rule of valuation of the properties that is the value which it may fetch in open market, Wealth Tax Officer can adopt in a case where he may G think it fit to adopt such methodology. The appellants' submission that the provision of Section 7(2)(a) is a stand alone provision and is to be applied in all cases where assessee is carrying on a business .is not acce
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