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2014 (7) TMI 543 - SC - Wealth-taxValuation of assets being a residential flat - Rule 3 to 7 of Schedule III of the Wealth-Tax Act, 1957 - scope of the term 'practicable' - wide variation between alleged market value as determined by the Departmental Valuation Officer and the value as disclosed by the assessee - Held that:- the word "practicable" is to be construed widely - if in the opinion of the AO, if the value determined by the tax payer on the basis of Rules 3 to 7 is absurd or has no correlation to the fair market value or otherwise not practicable, in such a case, it is open to the AO to invoke Rule 8 of Schedule III and determine the value of the asset either under Rule 20 or refer under Section 16A, for determination of the valuation of the asset. It is true that the invocation of Rule 8(a) cannot based on ipsi dipsi of the AO. The discretion vested in the AO to discard the value determined as per Rules 3 has to be judicially exercised. It must be reasonable, based on subjective satisfaction; the power must be shown to be objectively exercised and is open to judicial scrutiny. In the present case, the AO refused to accept self assessment for the following reasons: - (i) There is a wide variation between the market value and the valuation done by the assessee as per municipal taxes. - (ii) The property is used as a guest house. - (iii) The value for levy of municipal tax is very low, as the total ratable value of the assessee is done by the municipal authorities @ ₹ 6,573/- per annum. - (iv) The assessee was a tenant of the property @ ₹ 500/- per month. After purchase of the property a lot of expenditure was incurred from time to time on improvement of the property which is very difficult to ascertain. - (v) The value of the building is grossly understated as the assessee himself entered into an agreement to sell the same in the year 1995 for a sum of ₹ 10,26,00,000/-. Considering the above factors, the AO assessed the value of the property at ₹ 2,60,73,000/- as valued by the Departmental Valuation Officer. AO was justified in holding that it was not practicable to apply Rule 3 in the instant case and rightly referred the matter to the Valuation Officer under Section 16A for determination of value of the asset. The AO, thereafter, has rightly assessed the wealth tax on the basis of such value determined by the Valuation Officer. - Decided against the assessee.
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