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Commissioner of Wealth-tax Vs. Smt. Ballabh Kumari - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtRajasthan High Court
Decided On
Case NumberD.B. Wealth-tax Reference Application No. 130 of 1981
Judge
Reported in(1986)51CTR(Raj)210; [1986]160ITR945(Raj)
ActsWealth-tax Act, 1957 - Sections 27(3); Urban Land (Ceiling and Regulation) Act, 1976 - Sections 11 and 27(1)
AppellantCommissioner of Wealth-tax
RespondentSmt. Ballabh Kumari
Excerpt:
.....force - juvenile act, of 2000 has been given retrospective effect by rule 12 of juvenile justice rule, 2007 - as such, accused has to be treated as juvenile under the said act. - 6. we are of the view that the question sought to be referred should be refrained in order to bring out clearly the question which requires to be decided by this court......in excess of 2,000 sq. metres land which she was permitted to keep under the provisions of the land ceiling act. in respect of the excess 16,000 sq. metres land, the assessee submitted that the value should be computed at the rate of rs. 5 per sq. metre, as provided in section 11(b)(ii) of the urban land ceiling act, although, in respect of the 2,000 sq. metres land, the value was computed at the rate of rs. 18 per sq. metre. thus, the total value of the vacant land held by the assessee was said to be rs. 1,16,000. the wealth-tax officer did not accept the contention advanced by the assessee and valued the land at rs. 2,98,000 as was done in the assessment year 1975-76. however, on appeal, the income-tax appellate tribunal, bombay bench (b), accepted the contention of the assessee.....
Judgment:

1. The application for making a reference under Section 27(3) of the Wealth-tax Act, 1957, has been made by the Commissioner of Wealth-tax, Rajasthan, Jaipur, praying that the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, be directed to draw up a statement of the case and, refer the following questions arising out of its order dated July 17, 1980, to this court for its opinion :

'(1) Whether, on the facts and in the circumstances of the present case, the Tribunal was justified in holding that the provisions of the Urban Land (Ceiling and Regulation) Act, 1976, are applicable for determining the market value of the plot for the purposes of wealth-tax on the relevant valuation date ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal's finding that the assessee was quite correct in valuing the excess land of 16,000 sq. metres at the rate of Rs. 5 per sq. metre in view of the provisions of the Urban Land (Ceiling and Regulation) Act, 1976, is perverse and contrary to the material on record? '

2. In respect of the assessment year 1977-78, the assessee, Smt. Ballabh Kumari of Bagsuri, Ajmer, filed the return of wealth-tax declaring the value of land held by her at Ajmer at Rs. 1,16,000. In respect of the assessment year 1975-76, the Wealth-tax Officer had valued the land at Rs. 2,98,000. The assessee's case was that the Urban Land (Ceiling and Regulation) Act, 1976, came into force with effect from February 17, 1976, and as a result of the enforcement of the said Act, there was no market value for the land in question. It was submitted on behalf of the assessee that she had vacant land to the extent of 16,000 sq. metres in excess of 2,000 sq. metres land which she was permitted to keep under the provisions of the Land Ceiling Act. In respect of the excess 16,000 sq. metres land, the assessee submitted that the value should be computed at the rate of Rs. 5 per sq. metre, as provided in Section 11(b)(ii) of the Urban Land Ceiling Act, although, in respect of the 2,000 sq. metres land, the value was computed at the rate of Rs. 18 per sq. metre. Thus, the total value of the vacant land held by the assessee was said to be Rs. 1,16,000. The Wealth-tax Officer did not accept the contention advanced by the assessee and valued the land at Rs. 2,98,000 as was done in the assessment year 1975-76. However, on appeal, the Income-tax Appellate Tribunal, Bombay Bench (B), accepted the contention of the assessee and held that in view of the fact that the Urban Land Ceiling Act came into force with effect from March 9, 1976, the value of open land exceeding 2,000 sq. metres, should be computed at the rate of Rs. 5 per sq. metre, as provided under Section 11(b)(ii) of the Land Ceiling Act. The Tribunal observed that in respect of the excess land, the assessee was only entitled to receive compensation at the rate of Rs. 5 per sq. metre in accordance with the provisions of the Land Ceiling Act and, as such, the value of such excess land could not be assessed at more than the amount of compensation which was receivable in respect thereof by the assessee.

3. An application filed under Section 27(1) of the Wealth-tax Act was rejected by the Appellate Tribunal by its order dated February 24, 1981, on the ground that the Tribunal had recorded a factual finding that the value of the excess land could not have been more than the amount of compensation payable to the assessee under the provisions of the Land Ceiling Act and that no question of law arose out of the order passed by the Tribunal. Hence, this application has been made on behalf of the Revenue under Section 27(3) of the Wealth-tax Act.

4. It was submitted before us by learned counsel for the Revenue that the provisions of Section 11(b)(ii) would be applicable only when the vacant land in question is deemed to have been acquired by the State Government under Sub-section (3) of Section 10 of the Land Ceiling Act, But as no notification has been published under Section 10(3) of that Act, the stage of the said vacant land vesting in the State Government had not been reached. It was submitted by the learned counsel that the mere fact that the assessee has been prohibited from transferring the land in question has not, in any manner, diminished the value thereof.

5. It may be observed that for the purpose of the Wealth-tax Act, the value of the assets is to be determined in accordance with the provisions of Section 7 thereof and for the purposes of that Act, the value of a specified asset would be estimated to be the price which it would fetch if sold in the open market on the valuation date. Whether the enforcement of the Land Ceiling Act would automatically have the effect of diminishing the value of the vacant land held by the assessee in excess of 2,000 square metres is essentially a question of law and the provisions of the Land Ceiling Act have to be taken into consideration for the determination of this question. Under Section 6 of the Land Ceiling Act, the person holding vacant land in excess of the ceiling limit is required to file a statement of the vacant lands held by him, specifying the vacant land within the ceiling limit which he desires to retain. Thereafter, a draft statement is prepared under Section 8 as regards the vacant land held by the person concerned in excess of the ceiling limit, inviting objections in respect thereof. After considering the objections received to the draft statement, the competent authority under the Land Ceiling Act has to issue a final statement under Section 9 and when that statement is served upon the person concerned, the competent authority is entitled to issue a notification under Section 10 declaring the excess land held by such person. Section 10(3) of the Land Ceiling Act provides that at any time after the publication of the notification under Sub-section (1) of Section 10, the competent authority may, by a notification published in the Official Gazette of the State, declare the excess vacant land referred to in that notification, to be deemed to have been acquired by the State Government with effect from such date as may be specified in the declaration and upon the publication of such declaration, the excess land shall be deemed to have been vested in the State Government free from all encumbrances. Section 11 specifically refers to the acquisition by the State Government of such vacant land under Section 10(3) and at that point of time, the vacant land will be deemed to have been acquired, when the declaration under Section 10(3) is made by the competent authority. After the excess land is deemed to have been acquired by the State Government, the compensation in accordance with the provisions of Section 11(b)(ii) would be payable to the person having any interest in such land. Thus, whether merely because the provisions of the Land Ceiling Act contain a prohibition against the transfer of land held by the assesses in excess of the ceiling limit would have the effect of reducing the market value of such excess land to the extent of compensation receivable by the assessee under Section 11(b)(ii), is a matter which requires to be considered and, in our view, it certainly raises a question of law. The first question which is sought to be referred, therefore, ought to have been referred by the Tribunal to this court. However, the second question is essentially one of fact, because if the value of the excess land is to be determined in accordance with the provisions of the Land Ceiling Act, then the computation of valuation thereof in accordance with Section 11(b)(ii), at the rate of Rs. 5 per square metre, does not involve any question of law.

6. We are of the view that the question sought to be referred should be refrained in order to bring out clearly the question which requires to be decided by this court. We, therefore, direct the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, to state the case and refer the following question of law, arising out of its order dated July 17, 1980, to this court for its opinion :

' Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that for the purposes of determining the market value of the vacant land held by the assessee in excess of the ceiling limit, the provisions of the Urban Land (Ceiling and Regulation) Act, 1976, and particularly Section 11(b)(ii) thereof, would be applicable in the present case '


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