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TMI Blog2016 (11) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... law: "(i) Whether ITAT were justified in holding that certain provisions of building bye laws framed by J.D.A in Jan, 1996 were to apply retrospectively for Wealth Tax assessment on valuation date 31.3.1987. (ii) Whether ITAT were justified in holding that a certain provision of bye laws of J.D.A of Jan, 1996 were to apply in the case of Assessee when this bye laws has itself excluded case of properties like that of Assessee where construction according to sanctioned plan has already been made." 4. In remaining appeals, i.e W.T.A Nos. 292 of 2012, 295 of 2012, 294 of 2012, 241 of 2012, 169 of 2005, 395 of 2012 and 194 of 2006 substantial questions of law are similar above questions but differently worded and read as under: "1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that since the regulations of J.D.A were to be operative retrospectively, the assessee was justified in claiming that in view of the Explanation to Rule 6 read with the relevant J.D.A Regulation, the specified area was to be worked out and as such Rule 8(b) read with Rule 20 shall not be applicable? 2. Whether on the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27,424 Sq.Mtr. 7. For the assessment year 1987-88, legal heir of Assessee filed return of Wealth Tax on 16.7.1997 declaring total net wealth at Rs. 2,62,180/-. The return did not include value of Jaipur House (hereinafter referred to as 'disputed property'). The Assessment was completed under section 16(3) of Act, 1957 vide Assessment order dated 30.09.1988 at Rs. 3,00,700/- 8. Assessing Officer (hereinafter referred to as 'A.O.') subsequently received information that in Wealth Tax return, value of disputed property was not disclosed. Notices were issued to family members to ascertain ownership of the said house. Assessee thereafter suo-motu filed revised return of Wealth Tax, dated 26.3.1998, wherein disputed property was included in the net wealth of Assessee. A.O treated this "revised return" as nonest since regular proceedings were already completed. Consequently notice u/s 17 of Act, 1957 was issued in reply whereto Assessee submitted that "revised return" filed on 26.3.1998 itself be treated as reply in response to the said notice. In the revised return of Wealth Tax, Assessee had shown value of disputed property at Rs. 26,77,995/-, based upon valuation rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified Area" has to be worked out as per aforesaid Regulations read with Rule 6, Schedule III of Act, 1957. 13. Tribunal also said that in view of answers to the aforesaid grounds, a fourth ground that CWT(A) was not justified in upholding increase of value of land in dispute by 29% was not necessary for decision. 14. Counsel for appellant contended that Regulations, 1996, came into force on 25.6.1996/28.6.1996, will have no application for valuation of disputed property on the date i.e. 31.3.1987. The said Regulations, 1996 would have no application to a period prior to its enactment. He also said that purpose of Regulations, 1996 was to regulate future construction and not for assessment of existing one, which was already raised/existed. At that time there was no occasion to raise construction in conformity with Regulations, 1996. 15. Learned counsel for respondent on the contrary sought to advance his submissions to support the view taken by Tribunal and we shall discuss the same in detail while considering issues on merits. 16. Tribunal has held that in view of Rule 6 Explanation (b) (iii), Proviso, to Schedule III of Act, 1957, since a minimum area is required to be kept op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be included in a notice under sub-section (2) of section14, and may proceed to assess or reassess such net wealth, and the provisions of this Act shall, so far as may be, apply as if the notice has issued under that sub - section." (emphasis added) 19. Section 17(1) provide that A.O, if has reason to believe that true and full material facts necessary for assessment of net wealth of Assessee for any assessment year etc. have not been disclosed, he will be required to provide such material facts and then A.O. would proceed for assessment or re-assessment for such net wealth. In the present case, this net wealth which according to A.O. has escaped assessment or in respect whereof material facts were not disclosed consisted of disputed property. Hence, its value had to be assessed. For the purpose of assessment of value of a property, a mechanism has been provided in the Act, 1957 itself and that leads us to Section 7 thereof. 20. Since in the present appeals, we are concerned with assessment years 1987-88 to 2001-02, we find that Section 7 in between the aforesaid period of assessments has undergone amendment and therefore, the earlier provision as well as subsequently amende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o in that sub-section. (4) Notwithstanding anything contained in sub-section (1),the value of a house belonging to the assessee exclusively used by him for residential purposes throughout the period of twelve months immediately preceding the valuation date may, at the option of the assessee, be taken to be the price which, in the opinion of the Assessing Officer, it would fetch if sold in the open market on the valuation date next following the date on which he became owner of the house, or on the valuation date relevant to the assessment year commencing on the 1st day of April, 1971, whichever valuation date is later: Provided that where more than one house belonging to the assessee is exclusively used by him for residential purposes, the provisions of this sub-section shall apply only in respect of one of such houses which the assessee may, at his option, specify in this behalf in the return of net wealth. Explanation- For the purposes of this sub-section,- (i) where the house has been constructed by the assessee he shall be deemed to have become the owner thereof on the date on which the construction of such house was completed; (ii)"house", includes a part of a h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1989. 25. Since Section 7 now contemplates assessment/determination of value in the manner laid down in Schedule III to Act, 1957, we find that this Schedule III was also inserted by Direct Tax Laws (Amendment) Act, 1989 with effect from 1.4.1989. It contain rules for determining value of assets having several parts but we are concerned only with Part A and B thereof. Part A basically contains Rule 2 defining several words for the purpose of Schedule III and the relevant provisions i.e 3 to 8 for valuation of immovable property are in Part B. For our purposes, Rules 3, 6 & 8 are relevant and the same are reproduced as under: "3. Subject to the provisions of rules 4, 5, 6, 7 and 8, for the purposes of sub-section (1) of section 7, the value of any immovable property, being building or land appurtenant thereto, or part thereof, shall be the amount arrived at by multiplying the net maintainable rent by the figure 12.5 : Provided that in relation to any such property which is constructed on leasehold land, this rule shall have effect as if for the figure 12.5, :─ (a) Where the unexpired period of the lease of such land is fifty years or more, the figure 10.0 had been sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted and the unbuilt area; (b) " specified area", in relation to the plot of land on which the property in constructed, means ─ (i) Where the property is situate at Bombay, Calcutta, Delhi or Madras, sixty percent of aggregate area; (ii)Where the property is situate at Agra, Ahmedabad, Allahabad, Amritsar, Bangalore, Bhopal, Cochin, Hyderabad, Indore, Jabalpur, Jamshedpur, Kanpur, Lucknow, Ludhiana, Madurai, Nagpur, Patna, Pune, Salem, Sholapur, Surat, Tiruchirapalli, Trivandrum, Vadodara (Baroda) or Varanasi (Benaras), Sixty-five percent of the aggregate area; and (iii) where the property is situate at any other place, seventy percent of the aggregate area: Provided that where, under any law for the time being in force, the minimum area of the plot of land required to be kept as open space for the enjoyment of the property exceeds the specified area, such minimum area shall be deemed to be the specified area: (c) "unbuilt area", in relation to the aggregate area of the plot of land on which the property is constructed, means that part of such aggregate area on which no building has been erected. 8. Nothing contained in rule 3 shall apply ─ (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riting to that effect and send a copy of his order to the Wealth Tax Officer and to the assessee. (4) Where the Valuation Officer is of opinion that the value of the asset is higher than the value declared in the return made by the assessee under section 14 or, section 15, or where the asset is not disclosed or the value of the asset is not declared in such return or where no such return has been made, the Valuation Officer shall serve a notice on the assessee intimating the value which he proposes to estimate and giving the assessee an opportunity to state, on a date to be specified int he notice, his objections either in person or in writing before the Valuation Officer and to produce or cause to be produced on that date such evidence as the assessee may rely in support of his objections. (5) On the date specified in the notice under sub-section (4), or as soon thereafter as may be, after hearing such evidence as the assessee may produce and after considering such evidence as the Valuation officer may require on any specified points and after taking into account all relevant material which he has gathered, the Valuation Officer shall, by order in writing, estimate the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 107. Court held that Section 3 of Act, 1957 is a charging section but for the purpose of computing net wealth, the machinery is provided in Section 7 of Act 1957. Pursuant thereto, Rule 1BB which was inserted with effect from 1.4.1979 in the Rules, 1957 provided a formula for determination of fair market value of a house used wholly or mainly for the purpose of residence. The necessity to provide such formula was realized by the authorities concerned so that determination of market value of a house may not take a longer time and there should be some uniformity in such determination which will help in speedy disposal of the matters involving question of valuation of asset and also there will be lesser scope of variation in such assessment. When a rule sets out a method or formula for determining market value of any particular asset, Court held that it can be said to be a procedural provision and not substantive one. Such rule does not have the effect of impairing or creating any obligation and therefore, it is not substantive in character. 32. This decision was followed by Gujrat High Court in CWT v. Niranjan Narottam (1988) 173 ITR 693. Similar view was taken by Karnataka Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedural in nature. This aspect would require an indepth scrutiny of Regulations, 1996. 36. The said Regulations have been framed in exercise of power under section 16(P) read with Sections 96, 32(3) and, 68 of Jaipur Development Authority Act 1982 (hereinafter referred to as 'JDA Act, 1982'). Section 96 of JDA Act, 1982 confers power to frame Regulations. Section 68 authorizes Development Authority to charge fee for license or permission need be given under the Act or for the purposes of the Act. Section 32 authorizes Development Authority to remove an unauthorized development and lays down procedure which had to be followed before such removal. 37. JDA Act, 1982 was enacted by State Legislature of Rajasthan for establishment an Authority for the purposes of planning, co-ordinating and supervising the proper, orderly and rapid development of Jaipur Region, and, for executing plans, projects and schemes for such development and to provide for connected matters. 38. Section 21 talks of a "Master Development Plan" for Jaipur Region. It is supposed to define quality of life that a citizen of Jaipur Region could desirably be expected to lead in medium range perspective of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... competent authorities in different Sectors. Regulation 7 specifies special powers and Regulation 8 prohibits that standards for building construction, internal facilities and design and other safety measures shall be such as provided in Regulations 9 to 12. Thereafter Regulations 9 and 10 prohibits different standards for the purposes of constructions of buildings externally and internally, including designs, safety measures etc. Regulation 13 says that for the purpose of permission of competent authority, written application would be required. Regulation 14 provides procedure for permission. Regulation 15 lays down certain procedure to be observed by the person concerned who undertakes construction as per permission granted or in accordance with the standards set out in Regulations 1996. Regulation 16 talks of domicile certificate and Regulation 17 is a penal provision. Regulation 18 talks of regularization in respect to certain alternatives not consistent with standards set out in Regulations 9 to 10 but may be compounded in certain circumstances. Regulation 20 repeals earlier Regulations i.e JDA (Building Regulations) 1989, as amended from time to time. 42. Regulations 1996, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48. Thus we have to examine whether the words " the law for the time being in force" mentioned in Rule 6 Explanation (b) (iii) of Schedule III would cover any provision or law irrespective of its purpose and object or it has some specific application and meaning. 49. We have no manner of doubt that the real intention of legislature has to be considered in the context of the purpose a provision has been made. In wider sense, the phrase " law for the time being in force" mentioned in Rule 6 Explanation (b) (iii) proviso to Schedule III may include Regulations 1996 within its ambit, provided activities of construction of building would have been governed or required to conform with the standards etc. set out in Regulations 1996. That is not the claim of Assessee at all. It is not stated before us also that Regulations 1996 had to be complied with by Assessee for the purposes of designing, constructions, security and safety arrangement etc. of disputed property. It is also not disputed that any further development would have to conform with Regulations framed under JDA Act 1982 in respect to disputed property, if proposed by Assessee but the existing property, in the manner it was on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in nature. But this does not apply to Regulations, 1996. 53. However, when Rule 6 talks of "any law for the time being in force" which provide that a minimum area of plot of land must be maintained as open space exceeding the specified area, particular area of open space then for the purpose of Rule 6 Explanation (b)(iii), instead of 70% of aggregate area, such minimum area as specified in such law for the time being in force, shall be deemed to be the specified area, the "Specified Area" obviously refers to a substantive provision of law regulating construction, development etc. and will bring within its ambit Regulations 1986 but mere reference to such Regulations will not make Regulations 1996, rules of evidence and procedural in nature for the reason that these Regulations on their own, substantive provisions. Regulations did neither affected existing rights of any person nor created an obligations which one has to observe, if it opts to proceed for development by way of construction of a building in the area where Regulations 1996 are applicable. For mere reference in Rule 6, Regulations 1996 which are otherwise substantive, cannot be taken to be procedural in nature and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known. Broadly stated, whereas substantive law defines and provides for rights, duties and liabilities, it is the function of the procedural law to deal with the application of substantive law to particular cases and it goes without saying that the Law of Evidence is a part of the law of procedure." 57. It is also well established that procedural law, generally speaking, is applicable to pending cases, since no suitor can be said to have a vested right in procedure. There may be a provision which can be partly substantive and partly procedural but the factum that a particular provision, if substantive, if referred in another law, the referred law will not ipso facto become procedural but will have to be examined on its own whether it is a substantive or procedural law. 58. In the matter of taxation, unless things are is very clear, no attempt shall be made to make a provision retrospective, if it is otherwise. Regulations 1996 neither explanatory nor clarificatory nor provides any machinery for assessment or valuation etc. but containing a substantive provisions made by delegated legislation under J.D.A. Act, 1982 to regulate construction and development activities in Jaipur Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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