INCOME TAX

INSTRUCTION NO. 1905/1992

 Dated: December 9, 1992

Section(s) Referred: 7 ,16A

Statute: Wealth Tax Act, 1957

The Direct Tax Laws(Amendment) Act, 1989 has amended section 7 and 16A of the W.T.Act and has introduced Schedule III w.e.f.1-4-89. As per the amended section 6 the value of any asset, other than cash, for the purpose of the W.T.Act shall be its value as on the valuation date determined in the manner laid down in the Schedule III. As per the amended section 16A, the Assessing Officer may refer the valuation of any asset to a Valuation Officer where for the purpose of assessment, the market value of the asset is to be taken into account under the provisions of section 7 read with the Wealth Tax Rules or the rules in schedule III to the Wealth Tax Act.

A combined reading of the two sections shows that a reference to the Valuation Officer u/s.16A can be made only in respect of an asset where in accordance with rules in schedule III, market value is to be considered for making of the assessment. Such reference to Valuation Officer shall be mandatory if the case is covered by section 16A(1) and it will not be open to the assessing officer to decide the question of valuation on his own in such cases.

In case of assets where rules in the schedule III do not require taking of their market value for making of the assessment, there is no question of making of any reference to the Valuation Officer u/s.16A. Their value is to be computed as per the relevant rule in the schedule III.

The above clarification may be kept into consideration while applying para 35 of Board's Circular No.96 dated 25-11-1972 by the officers concerned. These instructions may please be brought to the notice of all concerned officers in your region.