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C.I.T. Allahabad v. Sri Bankey Lal - INCOME TAX REFERENCE No. 62 of 1996 [2005] RD-AH 5106 (28 October 2005)


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Income Tax Reference No.62 of 1996

The Commissioner of Income Tax, Allahabad v.

Sri Bankey Lal, HUF, Jaunpur

Hon'ble R.K.Agrawal, J.

Hon'ble Rajes Kumar, J.

(Delivered by R.K.Agrawal, J.)

The Income Tax Appellate Tribunal, Allahabad has referred the following question of law under Section 27(1) of the Wealth Tax Act, 1957 (hereinafter referred to as "the Act") for opinion to this Court:-

"1. Whether on the facts and in the circumstances of the case, the Tribunal was justified in applying the income capitalisation method on average profit for three years, in valuing the Cold Storage in dispute, and also holding that book value of the assets is to be taken into consideration and capital in the firm is not to be added back separately?"

The reference relates to the Assessment Year 1979-80.

Briefly stated, the facts giving rise to the present reference are as follows:-

The respondent assessee filed its return of wealth for the assessment year 1979-80 disclosing his interest in the firm M/s Vishwanath Cold Storage and Industries, Jaunpur by taking three years' average profit and applying the income capitalisation method. The Assessing Officer had determined the interest separately by adopting the land and building method. However, in appeals, the Commissioner of Income Tax (Appeals) directed to determine the interest of the assessee by adopting the value of the Cold Storage on the basis of income capitalisation method. The appeal of the Revenue before the Tribunal has failed.

We have heard Sri R.K.Upadhaya, learned Standing Counsel for the Revenue. No body has appeared on behalf of the respondent assessee.  

We find that this Court in Wealth Tax Reference No.39 of 1985, Commissioner of Wealth Tax (Central), Kanpur v. Bankey Lal and others, decided on 21.10.2005, has held that the Tribunal was not correct in applying income capitalisation method on average profit of three years in valuing the Cold Storage and instead determined the value on the basis of the land and building method which ought to have been adopted, as had been done by the Assessing Officer. This Court has answered the similar question in the negative, i.e. in favour of the Revenue and against the assessee.

Respectfully following the aforesaid decision, we answer the first question referred to us in the negative, i.e., in favour of the Revenue and against the assessee. There shall be no order as to costs.

October 28, 2005



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