G.E. Veerabhadrappa, A.M. - (1.) ALL these appeals are by two assessees and arise out of the orders of the CWT(Appeals) passed in each of these cases for the assessment years 1986-87 to 1990-91.
(2.) The common dispute in all these appeals relate to the valuation of the assessees' shares in the partnership firms in which they are partners. These two individuals are partners in firms known by the name, M/s. Sivaram Tea Industry, M/s. Maniklal Tea Factory and M/s. Sivaram Plywoods. The firms owned factories and are engaged in their respective businesses. In the course of the assessments under the Wealth-tax Act for each of these years it was found by the Assessing Officer that the for each of these years it was found by the Assessing Officer that the assessee's interest in partnership firms was not taken in accordance with the provisions and therefore the assessee was given an opportunity to get the valuation of all the assets of the firm done to arrive at the correct share income. The assessees got the valuation done by an approved valuer and filed revised returns in all the years based on the valuation report on 6-3-1991. The returns were again revised withdrawing the revision made in the matter relating to the valuation of the assessee's interests in the firms. According to the assessees, the valuation method should be with reference to Schedule III of the W.T. Act and in accordance with the valuer's report. The Assessing Officer applied rules 15 and 16 of the said Schedule III and determined the interest of the assessees in the partnership firms on the basis of the valuation report submitted by them. The assessee disputed the valuation before the CWT(Appeals). The CWT(Appeals) upheld the order of the Assessing Officer on the reasoning that the firms in which the assessees were partner were having the factories and it was not possible to value the buildings comprised therein on the basis of the rent capitalisation method. According to him, the Panchayat valuation reflects only the rateable value and not the fair rental value of the respective building. According to the CWT(A), it was not possible and practicable to assume the standard or fair rent for different commercial or industrial buildings like tea factories, plywood factories, etc. According to him, the valuation of the factory buildings should only be done in accordance with rule 20 of the Schedule III which is the market value based on rent and building method. The assessees are aggrieved.
(3.) THE learned counsel for the assessees argued before us that in accordance with the provisions of section 7(1) of the Wealth-tax Act the value of an asset other than cash for the purpose of wealth-tax shall be its value as on the valuation date determined in the manner laid down in Schedule-III to the Act. THE learned counsel submitted that although the Schedule-III came into the statutory book with effect from 1-4-1989, nonetheless they should be applied for the purpose of valuation of the assets in respect of assessments that are finalised after 1-4-1989. According to him, in all these cases assessments were finalised after this date and therefore the valuation should be done in accordance with Schedule-III. THE learned counsel pointed out that the rules pertaining to valuation are procedural in nature and therefore should be applied to all the pending proceedings. Our attention was drawn to the decision of the Ahmedabad Bench of the Tribunal in the case of Kishandas Govindadas Parikh v. WTO and also the decision of the Supreme Court in CWT v. Sharvan Kumar Swarup & Sons [1994] 210 ITR 886 and also the decision of the Gujarat High Court in CWT v. Shri Kasturbhai Mayabhai [1987] 164 ITR 107. According to the learned counsel the valuation of the interest in the firms should be determined in accordance with rules 15 and 16 of the Schedule-III. According to him, the starting point would be to determine the net wealth of the firm on the valuation date shall first be determined as if the firm were the assessee. He further pointed out that for the purpose of determining the global valuation of the assets of the business in accordance with rule 14(1)(b), such value will have to be first determined in accordance with rule 3 which deals with the valuation of immovable property. According to him, the provisions of rules 3, 4, 5, 6 and 7 should have been applied for the purpose of arriving at the value which should be substituted for the book value while arriving at the global valuation of the business. According to the learned counsel, the CWT(A) was not justified in arriving at the value of the asset in accordance with rule 20 to the Schedule III without first getting itself excluded under the rules 3 to 7 of the same Schedule. According to him, the action of the CWT(Appeals) tantamounts to putting the horse before the cart, and, therefore, it was vehemently argued that the valuation should be in accordance with the rules 3 to 7 of the Schedule III instead of one based on rule 20.;