COMMISSIONER OF WEALTH TAX vs. LALJIBHAI BHAGWANBHAI KHARAWLA

WTR/50/1987HC GujaratGJHC24012226198723 October 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
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What did the High Court hold?

The High Court held that the reversionary value of the land should not be added when the property is valued on the rental method. The Court agreed with the Calcutta High Court's reasoning in CIT vs. Smt. Ashima Sinha, 116 ITR 26, which stated that the rental method yields the value of the land and building taken together. Adding the reversionary value of the land again would amount to valuing the land twice. The Court found the Valuation Officer's approach to be erroneous. Consequently, the High Court answered the reference in the negative, in favour of the assessee and against the revenue. The reference was disposed of with no order as to costs.

What were the facts?

The Commissioner of Wealth Tax (Appeals) and the Income-tax Appellate Tribunal (ITAT) allowed the appeal of the assessee, Laljibhai Bhagwanbhai Kharawla, for the assessment year 1969-70. The dispute concerned the valuation of two immovable properties, specifically property No. 1355 at Jamalpur. The Valuation Officer had valued the property using the rental method and also added the reversionary value of the land. The assessee contended that adding the reversionary value of the land was incorrect when the property was valued on a rental basis. The ITAT confirmed the appellate order, relying on a Calcutta High Court decision.

What were the issues?

1. Whether, in law and on facts, the reversionary value of the land was to be added while working out the value of the property, considering the property was valued on a rental basis? (Question of law and fact, turning on the principles of property valuation under the Wealth-tax Act, 1957). Assessee's contention: The assessee argued that when a property is valued on the rental method, the reversionary value of the land should not be added again, as the rental method already accounts for the value of the land and building together. The assessee relied on the decision in Devi Prasad Poddar vs. CWT, 109 ITR 760. Revenue's contention: The revenue's stance is implied by their reference to the High Court, challenging the ITAT's decision. The judgment does not explicitly record the revenue's arguments before the High Court, other than their role in initiating the reference.

Which sections of the Income-tax Act were involved?

Section 27

AI-generated summary — verify with the full judgment below

)) IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

WEALTH TAX REFERENCE No 50 of 1987

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA

============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements?

2.

To be referred to the Reporter or not? : YES

3.

Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO

The order continues below.

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