1. By these applications moved under Section 27(1) of the Wealth-tax Act, 1957 ('the Act'), the Commissioner has sought the following common question, said to be questions of law, arising out of the order passed in WT Appeal Nos. 129 to 132 (Asr.) of 1982 for the assessment years 1972-73 to 1975-76 to be referred to their Lordships of the Punjab and Haryana High Court at Chandigarh for their opinion. The questions are as under: 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that value of the assessee's residential house should be computed in accordance with Rule 1BB of the Wealth-tax Rules, which was not in existence on the relevant valuation date? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that Rule 1BB inserted with effect from 1-4-1978 was operative retrospectively 2. Facts which have given rise to these questions are that the assessee held a property at 2, Maqbool Road, Amritsar. She returned the value of this property at Rs. 3,49,910 in her wealth-tax returns. She had valued the land at Rs. 1,23,575 and the building at Rs. 2,26,335. The WTO was not satisfied and valued the property at Rs. 8,25,450 for the assessment year 1972-73. He took the value of the land at Rs. 2,05,450 and assessed the value of the building at Rs. 6,20,000. The WTO similarly regarded the value returned for other years in the neighbourhood of Rs. 4 lakhs and took the value of Rs. 8 lakhs for each of these four years. The assessee assailed the finding before the AAC Moved by her plea the AAC set aside the assessment so that the WTO may make the assessment de novo. The assessee had submitted that the valuation to be made for these years should be restricted to the valuation adopted for the assessment year 1971-72 on the basis of the provision contained in Section 7(4) of the Act. The AAC had not agreed to the valuation but he directed the WTO to proceed to make the assessment de novo. The WTO made the valuation on the basis of valuation returned by the assessee. The assessee again impugned the assessment before the AAC and contended that the valuation should be made according to Rule 1BB of the Wealth-tax Rules, 1957 ('the rules').
The AAC appreciated the grievance and caused the assessments to be set aside. He directed the WTO to value the property applying Rule 1BB for the assessment years in appeal. The revenue felt aggrieved by this finding and came up in appeal before the Tribunal. According to the revenue, Rule 1BB had come into effect with effect from 1-4-1979 and, therefore, this rule was not applicable for valuing the aforesaid property for the assessment years in appeal. The Tribunal after a consideration of the Special Bench decision in the case of Biju Patnaik v. WTO  1 SOT 623 (Delhi) overruled the plea of the revenue.
According to its finding, Rule 1BB being a procedural provision was retrospective in effect. It is the settled law that the procedural provision takes effect in respect of pending proceedings for whatever years. Taking this view the Tribunal dismissed the plea of the revenue and also its appeals for these years.
3. ft has been contended by the learned departmental representative that similar question has been referred already by this Bench as there is no doubt that the questions proposed by the Commissioner are questions of law. There is a doubt, however, whether Rule 1BB is a procedural provision or not. On the other hand, the learned counsel for the assessee resisted that such a question of law whose answer was self-evident should be referred. According to him, there would be no doubt or misgiving that Rule 1BB was a procedural provision. This Bench already in WT Appeal No. 297 (Asr.) of 1982 took this view that the aforesaid rule was a procedural provision. Being a procedural provision, it was the settled law that it was retrospective in effect.
It was not required further in law to provide for its retrospectivity.
4. On a careful consideration, we are unable to ignore the plea of the learned counsel for the assessee that the questions sought by the Commissioner are ineligible for referring to their Lordships. The Allahabad High Court had looked upon the provision contained in Section 7 as a procedural provision. This has been the view of the Allahabad High Court as brought out in Madan Gopal Redhylal v. CWT  68 ITR 735, where provisions contained in Section 7(1) and 7(2) were referred to to contain two procedures for valuing the assets. This also is the view of the Bombay High Court as brought out in Smt. Kusumben D.Muhadevia v. N.C. Uppadhya  124 ITR 799. Their Lordships observed: Section 7 of the Wealth-tax Act, 1957, is a machinery provision which requires the WTO to assume that there is an open market and the property can be sold in such market and it is on that basis that the value of the asset has to be determined for the purposes of computation of the net wealth of the assessee. When Section 7(1) opens with the words 'subject to any rules made in this behalf' the rules contemplated are rules which would enable the WTO to determine the price. In other words, any rules made must be for the purpose of carrying out the object of Section 7, the object being to determine the market value as contemplated by Section 7(1)....
According to their Lordships, the entire provision contained in Section 7 being of the nature of procedural provision, rules made to give effect to could not be treated otherwise as non-procedural provisions.
It was acting on this view, the Special Bench in the case of Biju Patnaik (supra) held that Rule 1BB was to be given retrospective effect. We reproduce a part of the finding contained in WT Appeal No.207 (Asr.) of 1982 where this Bench had taken this view that Rule 1BB being a procedural provision was retrospective: If the Special Bench had decided that Wealth-tax Rule 1BB was procedural and mandatory and apply to the proceedings pending on 1-4-1979, it was not open to the AAC, Wealth-tax, to take a different view in the matter. He had not applied his mind to the issue at all. A procedural provision whenever brought into effect will always be retrospective provision. It is only in the case of a.
substantive provision that retrospectivity has to be provided by a statute. If there is no retrospectivity provided, it will be considered that the provision being substantive is prospective only but that question does not arise in the case of a procedural provision which is always retrospective. The fact that a similar question was allowed to be referred in an uncontested case will not debar the consideration where the application by revenue is contested on a place that Wealth-tax Rule 1BB is a procedural provision." Therefore, we have no hesitation in dismissing the plea of the revenue that there is any misgiving or doubt whether Rule 1BB was a procedural provision or not. In our view, there is no such misgiving or doubt that Rule 1BB is a procedural provision. It is the settled law which the revenue has not disputed that a procedural provision was to be held retrospective. Since, in our view, there is no doubt that Rule 1BB is a procedural provision, it was to be regarded retrospective. Questions proposed by the Commissioner, although questions of law, cannot be referred to as their replies are self-evident according to the undisputed position in law. It is only on that consideration the Tribunal reached a finding to uphold the finding of the Commissioner that Rule 1BB was applicable and, accordingly, dismissed the appeal of the revenue. There is no need to refer such questions to their Lordships for opinion. Accordingly, we have no hesitation for treating the proposed questions as ineligible for being referred to their Lordships for their opinion and in dismissing the application moved by the Commissioner.
1. I am unable to agree with the Judicial Member about dismissing four reference applications of the revenue. In my view, the two questions proposed by the Commissioner, which are quoted below, are fit questions of law to be referred to the Punjab and Haryana High Court for all the four assessment years 1972-73 to 1975-76 for the reasons stated hereunder: 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that value of assessee's residential house should be computed in accordance with Rule 1BB of the Wealth-tax Rules, which rule was not in existence on the relevant valuation date 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that Rule 1BB (inserted with effect from 1-4-1979) was operative retrospectively 2. The revenue is disputing the applicability of Rule 1BB which was inserted with effect from 1-4-1979 after being published in the Gazette of India on 30-3-1979, to any assessment years prior to the assessment year 1979-80. The Special Bench of the Tribunal in the case of Biju Patnaik (supra) held that it is a rule of procedure, which is retrospective in operation and applies to all pending proceedings after rejecting the contention of the revenue that the rule was a substantive one. The argument urged by the revenue was based on support taken from certain observations in the Supreme Court judgment in Izhar Ahmed Khan v. Union of India AIR 1962 SC 1052. Certain other arguments were also taken by the revenue in that case and revenue continues to raise objections to the view taken by the Special Bench in several cases. In fact, may colleague, the Judicial Member, had a difference of opinion about the nature and applicability of a similarly amended provision of the Act being Section 7(4), which was amended with effect from 1-4-1976, with my predecessor Accountant Member in the case of Smt.
Patwant Kaur v. WTO WT Appeal Nos. 196 to 198 of 1981 [since reported 14  4 ITD 109 (Asr.) (TM). The Accountant Member in that case was of the view that amended provisions of Section 7(4) could not be invoked for the assessment years 1973-74 to 1975-76 as the amendment was applicable to the assessment years 1976-77 onwards. He was of the view that Section 7 was a technical provision of the statute, which should be considered as substantive law. The Judicial Member, on the other hand, was of the view that Section 7 was a procedural provision, which could not be considered to be a provision lacking in retrospectivity. The difference of opinon was referred to a Third Member. The Third Member, Vice President (N.Z.), after examining the issue was of the opinion that Section 7(4), is a sort of beneficial legislation and in giving effect to the provision, one should not forget that such legislation should be given liberal construction. If that is so, it is quite reasonable to hold that the provision should be applicable for the assessment year 1971-72 and thereafter'. In para 5 of his order, the Third Member observed that 'The argument that Sub-section (4) is procedural and, therefore, it is applicable to all pending proceedings or that it is substantive provision need not detain us because even if it is considered to be substantive, if there is intrinsic evidence in the provision itself that it will be applicable for the assessment year 1971-72, then it will be applied.' The Tribunal passed the final order upholding the conclusion of the Judicial Member about Section 7(4) being applicable to the assessment years prior to 1976-77. The Commissioner suggested the following question for referring to the Punjab and Haryana High Court: Whether, on the facts and in the circumstances of the case, the ITAT is right in law in holding that the provisions of Section 7(4) of the Wealth-tax Act, 1957, are applicable for the purpose of valuation of the assessee's residential house in respect of the assessment years 1973-74, 1974-75 and 1975-76 although the relevant provision came into force from 1-4-1976 and not with retrospective effect ?" This Bench, constituted by both of us, allowed the reference for three assessment years to the revenue and referred the question for the opinion of the Punjab and Haryana High Court. In my opinion, the position in the present case is no different in principle from that obtaining in the case of Smt. Patwant Kaur (supra) and, thus, I am unable to reject the revenue's request for reference.
3. I also find that the present Judicial Member sitting with my predecessor Accountant Member allowed a similar question to be referred to the Punjab and Haryana High Court in the case of CWT v. Hira Lal Mehra [R.A. No. 69 (Asr.) of 1982] arising from WT Appeal No. 123 (Asr.) of 1981, order dated 18-9-1982. This reference application was allowed after the Judicial Member had differed from the Accountant Member in the case of Smt. Patwant Kaur (supra) by an order dated 3-9-1982.
The two questions proposed to be referred by the Commissioner were as under: 1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that Rule 1BB of the Wealth-tax Rules would operate retrospectively so that valuation of the assessee's building as on 31-3-1975 should be made in accordance with the said rule although the said Rule 1BB came into force with effect from 1-4-1979 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in directing the WTO to ascertain the valuation both under Rule 1BB ss well as under Section 7(1) of the Wealth-tax Act and then to call upon the assessee to give his option under Section 7(4) of the Wealth-tax Act Considering question No. 2 above to be repetitive of question No. 1, the following question was referred by the Tribunal: Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that Rule 1BB of the Wealth-tax Rules would operate retrospectively so that valuation of the assessee's building as on 31-1-1975 should be made in accordance with the said rule although the said Rule 1BB came into force with effect from 1-4-1979 ?" The Amritsar Bench, of which one of us was a member, having taken this view in the above referred case, I do not consider it proper to depart from it in the case in hand and reject the reference applications of the revenue. It also appears that Hira Lal Mehra's case (supra) may not be a solitary instance of such a reference allowed.
4. To conclude, in my view, the two questions proposed or one redrafted question avoiding repetitive portion and highlighting the aspects emphasised by the revenue, by framing two questions, deserve to be referred to the Hon'ble High Court after drawing up a statement of the case.
1. The assessee had returned the value of a property at 2, Maqbool Road, Amritsar, at Rs. 3,49,910 for the assessment year 1972-73 but the WTO valued the same at Rs. 8,25,450. Similar enhancement of value of the same property was made by the WTO for the other years under appeal as well. On appeal, the AAC accepted the assessee's plea that the valuation of this house should be made in accordance with rule IBB. The valuation, therefore, was set aside by him v/ith a direction to the WTO to take the value under Rule 1BB. In the appeals of the revenue before the Tribunal the assessee's learned counsel relied on the Special Bench decision of the Tribunal in Biju Patnaik case (supra) decided on 17-2-1981. The Tribunal held that: As far as the retrospectivity of the Rule 1BB is concerned, it has already been established that the rule will have retrospective effect. Besides, the rule contained in Rule 1BB relates to procedure of valuation. There is no presumption against the retrospectivity of a rule or provision relating to procedure. Looked at from this angle, we cannot dispute the right of the assessee to raise the plea that the valuation of the aforesaid property should be made according to the Rule 1BB. A perusal of para 2 of assessment order shows that the WTO himself applied Wealth-tax Rule 1BB. In this background, there is no justification, on the facts of the case, to interfere with the findings of the AAC, which we uphold." 2. The department came up before the Tribunal with applications to refer the following questions of law in R.A. Nos. 94 to 97 (Asr.) of 1983: 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that value of the assessee's residential house should be computed in accordance with Rule 1BB of the Wealth-tax Rules which rule was not in existence on the relevant valuation date? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that Rule 1BB (inserted with effect from 1-4-1979) was operative retrospectively? The learned Judicial Member held that there was no doubt that Rule 1BB is a procedural provision and that being so, it was to be regarded as retrospective. According to him, the questions above mentioned proposed by the Commissioner, although questions of law could not be referred as their replies were self-evident according to the undisputed position in law. He also mentioned that it was on that consideration that the Tribunal itself reached a finding to uphold the Commissioner's finding that Rule 1BB had application. In a differing order, the learned Accountant Member held that a reference should be made. According to him, in another case on the same point in WT Appeal Nos. 196 to 198 (Asr.) of 1981 a question of law was referred to the Hon'ble High Court. The same was the position in RA No. 69 (Asr.) of 1982 dated 18-9-1982 also. Both the Members having differed on the question of reference, the matter is being put up before me for decision.
3. The learned counsel for the assessee has raised an important point on which emphasis has also been placed by the learned Judicial Member, namely, that procedural provisions have retrospective effect is a well settled proposition and it would be not correct to refer such a self-evident question of law. Even so, the other question remains as to whether the finding of the Tribunal that Rule 1BB is a procedural provision which I find, is a question of law to be referred to their Lordships. Apart from the fact that the learned Accountant Member refers to other decisions where a question of law, as suggested in the application itself, has been referred to the Hon'ble High Court, the same question involved in the decision in Biju Patnaik's case (supra) (Special Bench decision) has been referred to the High Court. For these reasons, I agree with the learned Accountant Member that a question of law has to be referred as to the nature of the provisions. Since a reference is already being made, the additional question as to the retrospective operation of the rule being procedural could also be referred, both these being comprehensively covered by a common question as under: Whether, on the facts and in the circumstances of the case, the value of the assessee's residential house should be computed for the purposes of wealth-tax assessments for the assessment years 1972-73, 1973-74, 1974-75 and 1975-76 in accordance with Rule 1BB of the Wealth-tax Rules ?" 4. It requires, however, to be mentioned that in the course of the hearing certain other points came up. Rule 1BB, the applicability of which is in challenge in these references, has been made in exercise of the powers conferred by Section 46 of the Act for the purposes of valuation of a house. In fact Sub-rule (1) of Rule 1BB deals specifically with 'the purposes of Sub-Section (1) of Section 7'.
Section 7(1) stipulates how the value of assets is to be determined.
The basis laid down is 'the price which in the opinion of the WTO it would fetch if sold in the open market on the valuation date'. The valuation as per Section 7(1), however, is to be made 'subject to any rules made in this behalf. Even though the rules made under the rule making powers of statute are deemed to be part of the Act itself having been made under the delegatory powers under the statute, if any rule is repugnant to the section of the Act to which it is relevant, it is likely to be struck down as ultra vires. On the contrary, in applying the rule it has to be read as reconcilable and harmonious with the relevant section. The expression 'subject to any rules made in this behalf could, therefore, only mean rules consistent with the section itself. An authority for this would be the Calcutta High Court decisions in Century Enka Ltd. v. ITO  107 ITR 123 and Century Enka Ltd. v. ITO  107 ITR 909.
5. In the present case, Rule 1BB deals with a valuation of a house and in fact gives a concessionary treatment to the valuation of this asset from the general provisions of Section 7. Being a concession, it will be in the interest of the assessees who may not object to or challenge the same. Had the rule been against the interest of the assessees, certainly it would have been challenged or suitably interpreted for the purposes of a harmonious construction. Since the rule has been made by the Government, as a party, certainly the Government cannot challenge the rule on the ground of ultra vires. In, therefore, reconciling the rule with the section, it automatically follows that the rule cannot be so interpreted as to give a concessional value for valuation purposes after a particular date but not before that date. This is so because whatever rules are made under the rule making power in respect of Section 7 should apply to all except where specific retrospective operation is granted for which specific provision exists in Section 40(3) (sic) of the Act. The retrospective operation of the rule, therefore, is justified on the above ground. This, however, was not the point on which the Tribunal decided the original appeals. The submission by the learned counsel for the assessee, therefore, that the general provision of law which are so obvious in connection with the interpretation would make a reference academic, cannot be accepted.
Hence, I agree with the learned Accountant Member. The matter may go back to the original Bench which heard the case for proper disposal of the reference applications.