TMI Blog1995 (9) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst which lands, proceedings under the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961 (hereinafter referred to as "the ceiling law"), had been taken and 15 standard acres equivalent to 30 ordinary acres had already been fixed as the ceiling area in respect of the family of the assessee and the balance 594.16 ordinary acres equivalent to 201.406 standard acres had been declared as surplus to become vested with the Government. According to learned counsel for the assessee, the said vesting has not taken place since section 18 notification under the ceiling law is only going to be issued shortly. Admittedly, by an earlier order of the Tribunal dated July 26, 1976, the market value of the abovesaid total lands as on the date of valuation dated March 31, 1973, in relation to the earlier assessment year 1973-74 was fixed at Rs. 10,00,000 under section 7 of the Wealth tax Act, 1957, while computing the net wealth of the assessee in respect of the earlier assessment year 1973-74. But now by the impugned orders of the Tribunal, the earliest of which was passed on September 30, 1981, the said value was fixed at a lower figure, viz., Rs. 5,00,000. The same value of Rs. 5,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the second question referred to us in Tax Case No. 401 of 1986 is also worded. However, it relates to the assessment year 1977-78. We may first of all dispose of the abovesaid second question. Learned counsel for the Revenue himself fairly submits that the valuation of the approved valuer will not take note of the abovesaid ceiling law and that hence, the value of the approved valuer may not be actually relevant to decide the actual question at issue, which hinges only upon the abovereferred to ceiling proceeding. Therefore, strictly speaking the said second question is not justifiably raised before us by the Revenue and that, hence, the said question has to be returned unanswered. Learned counsel for the Revenue laid more emphasis on the abovesaid first question in Tax Cases Nos. 1435 and 1436 of 1985 and 412 and 401 of 1986 and the sole question in Tax Cases Nos. 1133 to 1135 of 1985. We shall now deal with the said question in all the abovesaid tax cases. The main argument of learned counsel for the Revenue is that the Tribunal by its abovereferred to the earlier order dated July 26, 1976, having fixed the value of all the abovesaid lands, as on March 31, 1973 (the valuat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Government pursuant to section 18 of the Act. We also find that in so far as such surplus lands under the ceiling law is concerned, the law is that, for valuation of such lands for the purpose of wealth-tax assessment, restrictions and prohibitions under the land ceiling law should be taken note of. In CWT v. K. S. Ranganatha Mudaliar [1984] 150 ITR 619 (Mad), this court also observed thus : " It cannot be disputed that the restrictions and prohibitions will have the effect of depressing the value which the lands would fetch if they were free from the said restrictions and prohibitions. Though we have to assume a market for the lands, in determining the market value of the lands, the restrictions and prohibitions contained in the Ceiling Act have to be taken note of and the value of the lands with all these restrictions and prohibitions should have to be determined. If we ignore the restrictions and prohibitions contained in the Ceiling Act in valuing the excess lands, then that would be valuing an asset differently in content and quality from that actually owned by the assessees. We are, therefore, of the view that all the lands have to be valued only after taking note of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the liability of certain debts to be deducted from the asset, then that factor which has the effect of diminishing the market value of the asset is a relevant factor to be taken into consideration while estimating the value of the asset in the open market. This observation was made in the context of the Rajasthan Urban Property (Restriction on Transfer) Act, 1973, which placed restrictions on transfer by saying that no person owning urban property in excess of the specified limit shall transfer such property by way of sale, etc., or otherwise. The abovesaid principle was also followed in CWT v. Raj Kumari Bhuvneshwari [1995] 215 ITR 198 (Raj), cited by learned counsel for the Revenue himself. But, what learned counsel for the Revenue submits is that once, taking note of the abovesaid ceiling law of 1961, the Tribunal fixed the abovesaid value of Rs. 10,00,000 as on March 31, 1973, it cannot reduce the same in relation to the subsequent valuation dates. But, this contention cannot be accepted since the abovesaid reduction was made by the Tribunal, because of the subsequent amendment to the abovesaid ceiling law of 1961 by virtue of the abovesaid Ordinance No. 14 of 1978 and the Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the assessment year 1973-74), continued even subsequently for some time till the amending law of 1978 and so at least the valuation on the valuation dates prior to the coming into force of the amending law, cannot be changed by the Tribunal by its subsequent order. But, this contention has no merit. The Tribunal, when it passed the earlier order dated July 26, 1976, knew only about the then existing ceiling law, therefore, it fixed the value at Rs. 10,00,000. But when it passed the subsequent order dated September 30, 1981 (and other subsequent orders), since, it came to know about the subsequent change in the law, consequently, it estimated the reduction in the said value to the abovesaid Rs. 5,00,000 though the assessee worked out the said reduced compensation at Rs. 2,74,355 only. (i.e., Rs. 1,20,000 for lands within the ceiling area and Rs. 1,54,365 for the surplus lands). In such a situation, the only error of law learned counsel for the Revenue could point out is that the Tribunal erred in not differentiating between the abovesaid two categories of lands, viz., the surplus lands and the lands within the ceiling area, under the abovesaid ceiling law. This error is admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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