S.B. Sinha, J. - (1.) Noticing a purported conflict in the decisions of this Court in Bharat Hari Singhania and Ors. v. Commissioner of Wealth Tax (Central) and Ors. (1994)207 ITR 1(SC) and The Commissioner of Wealth Tax, Andhra Pradesh, Hyderabad v. Trustees of H.E.H. Nizams Family (Remainder Wealth Trust), Hyderabad (1977)108 ITR 555(SC) , a Division Bench of this Court by an order dated 1.11.2002 referred this matter this Bench observing:"We do see some force in the arguments of the learned counsel for the respondent that on facts it could be said that the decision in Nizams Family Trust case (supra) is more akin the facts of the appeals before us now. But then we do not agree with the learned counsel for the respondent that what is stated in Hari Singhanias case (supra) is only an obiter of an issue decided on facts. A perusal of the judgment extracted hereinabove clearly shows that this Court in Hari Singhanias case (supra) has in specific terms laid down the principle that in cases where the statute creates a legal fiction for determination of market value, no amount like provision for taxation, PF and gratuity etc. can be deducted from the market value of the estate while evaluating the estate for the levy of wealth-tax. If this be the correct principle in law then it will not be possible for the respondents contend that the value of the estate duty payable, if any, should be deducted from the market value of the estate while determining the wealth-tax. If the principle what we have undersod it be, enunciated in the Hari Singhanias case (supra) is correct then the same, in our opinion, runs counter the earlier decisions of this Court in the case of Nizams Family Trust (supra) and both judgments being judgments of a Bench of three Judges, we think it appropriate that this issue should be settled by a larger Bench. Therefore, we direct that the papers for these appeals and connected matters be placed before the Hon. C.J.I. for appropriate orders."
(2.) The fact of the matter as noticed by the High Court is as under:- The assesses are all beneficiaries of a Trust called H.E.H. the Nizam Jewellery Trust. They returned the value of their interest in the Trust properties on the basis of the valuers report. The Wealth Tax Officer accepted the returns. In some cases, the Commissioner of Wealth Tax considered such assessments be erroneous and prejudicial the Revenue. In other case, the Wealth Tax Officer, himself reopened the assessments. The view of the Department was that the valuation made by the assessees valuer was incorrect for three reasons, namely, (i) that the Estate Duty payable on the death of the life tenant was wrongly deducted, (ii) that no adjustment has been made for appreciation in the value of the property; and (iii) that the interest rate was wrongly taken at 6 1/2 per cent or the purpose of actual valuation. The Tribunal rejected these three grounds on finding that the accepted method of valuing the remaindermens interest included a deduction of the Estate Duty, that the value had been taken on the basis of the Department, valuers report and so did not call for appreciation and that the interest rate adopted was given in the table annexed Wealth-tax rules itself.
(3.) The Tribunal made a reference the High Court, inter alia, on the following question: "1. Whether on the facts and in the circumstances of the case, the ITAT is correct in law in holding that the probable Estate Duty payable on the death of the life tenant has be taken in account and the value of the property will be diminished by that for charge of W.T. in the hands of the remaindermen - ;