Case Law Details
Learned counsel for the appellants has submitted that in the event there are more than one methods of valuation of an asset of an assessee, the method under which the valuation is in favour of assessee has to be accepted. He has relied on the judgment of this Court in The Commissioner of Income Tax, West Bengal, Calcutta vs. M/s. Vegetables Products Ltd., (1973) 1 SCC 442. This Court in paragraph 6 of the judgment has laid down the following:
“6. There is no doubt that the acceptance of one or the other interpretation sought to be placed on Section 271(1)(a)(i) by the parties would lead to some inconvenient result, but the duty of the court is to read the section, understand its language and give effect to the same. If the language is plain, the fact that the consequence of giving effect to it may lead to some absurd result is not a factor to be taken into account in interpreting a provision. It is for the Legislature to step in and remove the absurdity. On the other hand, if two reasonable constructions of a taxing provision are possible that construction which favors the assessee must be adopted. This is a well accepted rule of construction recognized by this Court in several of its decisions. Hence all that we have to see is, what is the true effect of the language employed in Section 271(1)(a)(i). If we find that language to be ambiguous or capable of more meanings than one, then we have to adopt that interpretation which favors the assessee, more particularly so because the provision relates to imposition of penalty.”
The proposition which was laid down by this Court was that if two reasonable constructions of taxing statute are possible, that construction which favors the assessee must be adopted. The above proposition cannot be read to mean that under two methods of valuation if the value which is favorable to assessee should be adopted.Here in the present case, the provisions of Section 7 are neither unambiguous nor lead to two constructions. The construction of Section 7 is clear as has already been elaborately considered by this Court in the judgment of this Court in Juggilal Kamlapat Bankers.
Full Text of the Supreme Court Judgment / Order is as follows:-
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. & 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.
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