Commissioner of Wealth Tax, (Central), Kanpur vs D.P. Kanodia (HUF)

R.K. Agrawal, J.—The income tax Appellate Tribunal, Allahabad has referred the following question of law u/s 27(1) of the Wealth-tax Act, 1957, hereinafter referred to as "the Act" for opinion to this Court Whether on the facts and circumstances of the case the ITAT was correct in holding that the question of valuation was not referred to; proper valuer and directing the WTO to refer the valuation again to the competent valuer, to determine the assessee''s share in the firm and not to go by valuation made by the Valuation Officer who had valued the assets of the firm.

The present Reference relates to the Assessment year 1982-83.

Briefly stated the facts giving rise to the present references are as follows:

The assessment was completed on a total wealth of Rs. 7,79,400 for the year under consideration u/s 16(3) of the Act. During the course of assessment proceedings, the Wealth-tax Officer noticed that the assessee is a partner in the firm M/s. Sadi Ram Ganga Prasad in which his share of income is 1/4th. The Wealth-tax Officer, therefore, considered the value of assessee''s interest in the above firm and found that the valuation of assets of the firm (land building and machinery) as shown by the assessee, to be on the lower side. The Wealth-tax Officer further noticed that the value of land, building, plant and machinery belonging to the above firm, as per balance sheet of the firm, was much lower than its fair market value. He, accordingly, made a reference to the Departmental Valuation Officer u/s 16-A of the Act to determine the fair market value of land, building, plant and machinery owned by the above firm. After obtaining the relevant valuation report, the Wealth-tax Officer included proportionate appreciated value in the net wealth of the assessee equal to the 1/4th share of fair market value of the land, building, plant and machinery in accordance with the valuation report as the value of interest in the firm aforesaid firm.

Being aggrieved by the decision of the Wealth-tax Officer, the assessee went in appeal before the Appellate Assistant Commissioner, set aside the assessment directing the Wealth-tax Officer to frame the assessment afresh after referring the valuation of the assessee''s share in the partnership firm to the authorised Valuation Officer having jurisdiction for this purpose.

Aggrieved by the said decision of the Appellate Assistant Commissioner the Revenue took up the matter in appeal before the Tribunal. The appeal filed by die Department was dismissed by the Tribunal holding as under:

We have considered the submissions of the parties and have gone through the orders of the authorities below as also the decision of the Tribunal dated 15-9-1987. In our opinion, the issue in controversy is squarely covered by the aforesaid decision against the department. Respectfully following the aforesaid decision, we are of the opinion that there is no force in the appeal field by the department.

We have heard Sri R.K. Upadhyay, learned counsel appearing for the Revenue and Sri R.S. Agrawal, learned counsel has filed his appearance on behalf of the respondent-assessee.

It has been stated that Sri R.K. Upadhyay that this Court in C.W.T. v. S.P. Kanodia, [WT Reference No. 8 of 1993, dated 7-9-2006], had answered a similar question of law in favour of the assessee and against the Revenue. Respectfully following the aforesaid decision, we answer the question referred to us in the affirmative i.e., in favour of the assessee and against the Revenue. There shall be no order us to costs.