Commissioner of Wealth Tax vs Simpson and General Finance Co. Ltd. (No. 2)

P.D. Dinakaran, J.—The tax case appeals Nos. 1452 to 1455 of 2005 are directed against the order of the Income Tax Appellate Tribunal

in M.P. Nos. 188 to 191/Mds/2004 in W.T.A. Nos. 258 to 261/Mds/96 dated November 5, 2004 for the assessment years 1991-92 to 1994-

95.

The Revenue is the appellant. The assessment years involved are 1991-92 to 1994-95. the assessee filed a return of wealth for the assessment

years 1991-92 to 1994-95. It was found that the value adopted for the property situate at Sembiam and Madhavaram was very low. The values

were obtained from the District Valuation Officer, and the Assessing Officer fixed the value based on the valuation officer''s report.

Aggrieved by the assessment order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of

Income Tax (Appeals) following the Tribunal''s order for earlier years directed the Assessing Officer to redo the assessment as per the Income Tax

Appellate Tribunal''s directions for the earlier years.

On further appeal by the Revenue before the Income Tax Appellate Tribunal, the Tribunal dismissed the appeal holding that the property should

be valued as per the compensation payable under the Tamil Nadu Urban Land (Ceiling and Regulation) Act, as it would come within the purview

of that Act.

Aggrieved against the same, the Revenue has preferred these appeals raising the following substantial question of law:

Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the immovable property subject to urban land ceiling

laws should only be valued as per the compensation payable under the Urban Land Ceiling Act?

The issue in the above question of law was decided against the Revenue by this Court in the case of Commissioner of Wealth-tax, Tamil Nadu-

II, Madras Vs. K.S. Ranganatha Mudaliar and Others, , wherein this Court held that (headnote):

if the restrictions and prohibitions contained in the Ceiling Act were ignored in valuing the excess land, that would amount to valuing the asset

differently in content and quality from that actually owned by the assessees. Consequently, such lands would have to be valued only after taking

note of the restrictions and prohibitions, which would have the effect of depressing its value. Hence, the valuation on the basis of compensation

receivable under the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961, was justified.

In the case of Commissioner of Income Tax Vs. R. Padmavathy Ammal, a Division Bench of this Court following the abovesaid decision held

that (head-note):

When the value of the lands was determined by the Government, the Government heard the claimants and took into account the character of the

land, the value of the land in the nearby vicinity and other advantages and disadvantages with regard to the location of the land, etc. Therefore, it

could not be said that the value determined under the Land Ceiling Act would be something different from the value determined under the Guideline

Valuation in accordance with the Wealth-tax Act, 1957, and Wealth-tax Rules, 1957.

Also, following the ratio laid down in Commissioner of Wealth-tax, Tamil Nadu-II, Madras Vs. K.S. Ranganatha Mudaliar and Others, , the

Gujarat High Court in a case of Commissioner of Income Tax Vs. G.S. Krishnavati Vahuji Maharaj Kalyanraiji Temple, held as under (page 519):

Whenever there is any restriction on the transfer of any land, it is a matter of common knowledge that the value of the property or land, as the case

may be, would be normally reduced. In the instant case, it was not open to the assessee to sell the land and, therefore, the value of the land in

question cannot be more than what the Government was to offer to the assessee under the provisions of the Ceiling Act.

This Court in T.C. (A) Nos. 931 and 932 of 2005, dated October 26, 2005, in Commissioner of Wealth Tax Vs. Simpson and General

Finance Co. Ltd. (No. 1), following the Gujarat High Court decision in Commissioner of Income Tax Vs. G.S. Krishnavati Vahuji Maharaj

Kalyanraiji Temple, held that the immovable property subject to urban land ceiling laws should only be valued as per the compensation payable

under the Urban Land Ceiling Act.

In T.C. Nos. 365 and 366 of 1999, a Division Bench of this Court by judgment dated March 20, 2003 Commissioner of Wealth Tax Vs.

Shardlow India Ltd., following the decision reported in Commissioner of Wealth-tax, Tamil Nadu-II, Madras Vs. K.S. Ranganatha Mudaliar and

Others, dismissed the appeals filed by the Revenue on the very same issue involved in these appeals. It is also relevant to point out that the special

leave petitions filed by the Revenue before the apex court was also dismissed on April 2, 2004, in SLP (C) Nos. 7288-89 of 2004 see (2005)

277 ITR 1 .

In view of the above settled law, we are of the considered view that the Appellate Tribunal was right in holding that the immovable property

subject to urban land ceiling laws should only be valued as per the compensation payable under the Urban Land Ceiling Act. Accordingly, the

question of law referred to above is answered in the affirmative, against the Revenue and in favour of the assessee. The appeals are dismissed. No

costs. Consequently, T.C.M.P. Nos. 1238 to 1240 of 2005 are also dismissed.