ASHOK BHUSHAN,J. - (1.) All these appeals raising common questions of law have been heard together and are being decided by this common judgment. The High Court vide its separate judgments dated 21.10.2005 decided six Wealth Tax References aggrieved by which, the assessees have come up in the appeal. All the assessees are partners in a firm M/s. G.D. and Sons. One of the assets of the partnership Firm is a Cinema building known as "Alpana Cinema" situate at Model Town, New Delhi. The question which was referred to the High Court for answer relates to the correct method of the valuation of the property that is Alpana Cinema for assessment under Wealth Tax Act. Reference of facts and proceedings in C.A. NO.3836 of 2011 shall be sufficient to decide all these appeals.
(2.) M/s. G.D. and Sons of which firm the appellants are partners, purchased land and building in semi-constructed condition on 04.06.1965 for a sum of Rs. 8,00,000/-. The construction was completed and Cinema Theatre, Alpana started running in the premises. The Alpana Cinema property was valued by assessment books of accounts. On pending assessment of Wealth Tax of one of the partners, the Wealth Tax Officer made a reference for valuation of the Alpana Cinema to Department Valuation Officer, New Delhi by Reference dated 29.04.1976. Valuation Officer after inspecting the site submitted its report dated 26.04.1977 valuing the property for assessment year 1970-71, 1971-72, 1972-73, 1973-74 and 1974-75. Notices under Section 17 of the Wealth Tax Act, 1957 were issued to the appellants on 30.03.1979. Assessees got the property valued by an approved Valuer adopting income capitalisation method. The assessment order was passed by the Wealth Tax Officer in March, 1983 making assessment for the period from 1970-71 to 1974-75. The assessment was completed as per percentage of the right of different assessees which they have in the Firm. The Assessing Officer relied on the Valuation Report submitted by the Departmental Valuer. The assessee aggrieved by the assessment order filed appeal before the Appellate Assistant Commissioner of Wealth Tax. The Appellate Authority by its detailed order dated 23.01.1986 affirmed the assessment made by the Assessing Officer on the basis of valuation by land and building method. The income capitalisation method as was relied on by the assessee was not approved.
(3.) The aggrieved by the different assessment orders the assessees filed Wealth Tax Appeal before the Income Tax Appellate Tribunal (ITAT), Delhi Bench, Delhi. The ITAT accepted the case of the assessee to the effect that the proper basis for valuing the Cinema building would be capitalisation of the income. The ITAT held that since the building could be used only for film exhibition and it cannot be used for any other purpose the method of its valuation has to be necessarily different from the one normally adopted in the case of buildings which are capable of being used as commercial buildings. The Revenue aggrieved by the Tribunal's order filed reference application through Department. Although, initially the same was rejected by the Tribunal, on the direction of the High Court following two questions were referred to the High Court for decision: "1. Whether on the facts and in the circumstances of the case the Income-tax Appellate Tribunal was right in law for the purpose of Section 7(1) of the Wealth Tax Act in determining the assessee's interest in the partnership firm by adopting the fair market value of the assets in question namely, the cinema building on the income mobilization basis instead of land and building method adopted by Wealth Tax Officer? 2. If the answer to the above question is in the negative and against the assessee then what ought to be the correct fair market value of assets in question?" ;