Section 8A of Wealth Tax Act

Section 8A of Wealth Tax Act 1957 states that only Engineering graduates are eligible for entering into the Field of Valuation of Immovable properties viz., Plant and Machinery and Land and Building.

AICTE rules clearly state that only Science stream students are eligible to enter into to pursue Engineering or Architecture or Planning courses at Under Graduation level. As a corollary to this rule, only those who completed B Tech are eligible to do Masters in Engineering or Technology. Same is the case for “post graduation course in Real Estate” as referred to in the Wealth Tax act.

M Sc valuation course

And M Sc valuation course which consists of engineering subjects like, Building Technology, Estimation of Engineering works/assets, Building Drawing, Field Surveying, etc., in its curriculum in itself is obviously an Engineering course. To label it as a Science stream is misleading. The course cannot call itself as Science course because it teaches engineering subjects.

And AICTE in its eligibility criteria, for doing engineering studies, says that students with the back ground of science stream only can do Engineering studies.

Obviously AICTE bars non-technical and non-science people entering into engineering studies. So students with Arts background are neither eligible nor competent to study Engineering subjects taught in M Sc valuation or M Com valuation courses as per AICTE norms.

And our Wealth Tax act., section 8A states that only Engineering graduates are eligible for entering into the Field of Valuation of Immovable properties viz., Plant and Machinery and Land and Building.

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Let us know that science is a body of knowledge of physical and chemical properties of materials. Engineering is application of the scientific principles to make tools and machines for the betterment of the society. Technology is defined as improvement to the existing engineering skills. Can a layman understand why only steel rods are used as reinforcement in a Concrete? Why not plastic or bamboo rods used in concrete? Cement Concrete is good in taking compressive loads whereas Steel rods are good in taking tensile forces. And engineering structure is designed to take both Compressive and Tensile forces without yielding to the forces. To serve the purpose that material should be homogeneous. And through scientific study it is discovered that coefficients of expansion for both steel and concrete are same. That means Concrete and steel expand in while heated uniformly. And they do stick to each other without breaking. So they make a good combination materials for the present day Civil engineering structures like residential buildings, industrial structures etc. Non engineering people who or ordinary laymen as far as engineering field is concerned cannot understand these principles. Life of a Civil Engineering structure depends of the quality of construction of the structure. Who can assess the quality of the building without knowing the materials used and what purpose those materials serve in the structure?

And an engineer is taught to do estimate the cost of construction of civil structures – Buildings, Bridges, Ports, Roads, Airports etc. To do an estimate an engineer works out what are the materials used and how much labour is required etc and then cost of the project is arrived at by the engineer.

So it is obvious that Valuation of Immovable properties is exclusive domain of Civil engineering professionals.

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(But things did not go like that. A Writ Petition was filed vide, W.P. No. 7273 of 1998 by the Chairman, Institution of Valuers, Tamil Nadu Zone represented by  Dr. vs  Shanmughavel in Madras High Court contending that Valuer is not a Consulting engineer and hence his profession does not invite Service tax.  Judgment was issued on 30.04.2001. This Judgment stated that Valuers of Land and Building are Engineers and hence liable to pay Service Tax.

And Gujarat chapter of Institution of Valuers filed a case against Union of India, again on the same contention that Valuers are not Engineers. Judgment was issued on 27 April, 2012.

This Judgment stated that Valuers are not consulting engineers and not liable to pay service tax. This observation of Gujarat High Court Judgment had emboldened some people to hatch a plan to GRAB the engineer valuer profession from Engineers and fill the profession with non-technical people.

But by God’s grace Supreme court Judgment dt 3.11.17 gave a respite to engineers. This SC judgment set aside previous judgments made in various HIgh Courts and also some Supreme court judgments. And this Judgment categorically nullifed all engineering degrees awarded through correspondence courses and also gave teeth to AICTE by declaring it as a governing body of technical education in India.)

So, there is a lot of confusion among our engineer Valuers fraternity as to why Income Tax department is prescribing qualification of “post-graduate in valuation of real estate from a recognized university” as another qualification for becoming Wealth tax valuer. How it is superior to Engineering degree. Because an engineering degree holder needs to put up 10 years experience to become a Regd Valuer. Whereas it is sufficient to put up 2 years experience after doing a post graduate degree in Real estate. And why Retired Govt officials are eligible for becoming Land and Building and P and M valuers.

Based on this some people are arguing that this L and B and P and M valuation field is not reserved for Engineers and hence, it is open profession for all. Let us discuss these things at length.

Retired Govt officials

Is it true that, any non-technical retired Govt officials are eligible for becoming Valuers of Immovable properties ( L and B and P and M valuers ) under Wealth tax act? 

Section 8A of Wealth tax act

Let us read the following lines from Rule 8A carefully: (One must,)

     (C)  possess a qualification recognized by the Central Government for recruitment to superior services or posts under the Central Government in the field of civil engineering, architecture or town planning;

and]

        (ii)   (A)  he must be a person formerly employed—

      (a)  in a post under Government as a gazetted officer;

or

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      (b)  in a post under any other employer carrying a remuneration of not less than Rs. 2,000 per month,

            and, in either case, must have retired or resigned from such employment after having rendered service for not less than ten years as a valuer, architect or town planner, or in the field of construction of buildings, designing of structures, or development of land;

or

      (c)  as a professor, reader or lecturer in a university, college or any other institution preparing students for a degree in civil engineering, architecture or town planning, or for any qualification referred to in clause (i), and must have retired or resigned from such employment after having taught for not less than ten years any of the subjects of valuation, quantity surveying, building construction, architecture, or town planning;

It is categorically stated in the above rule that IN EITHER CASE a retired Govt official even if he is a Gezetted officer or not, he must have worked in the field of Engineering and not otherwise. So it is scandalous to interpret that non engineering retired officers are eligible to become Regd. Valuers with Income Tax dept under Wealth tax act.

M Sc REAL ESTATE courses:

In the same way it is also wrong to interpret that these rules permit non-technical people with BA, B Com And B Sc. background to become Land and Building Valuers with post-graduation degree in Real Estate. In fact AICTE will not allow these BA, B Com and B Sc people to pursue any post graduate course per se.  

Intention of the Rule of “Post Graduation in Real estate” to become Valuer of Land and Buildings should be read in consonance with the related provisions made the same rule. As per Section 8A of Wealth Tax Act a graduate in Engineering has to put up 10 years’ experience to apply for registration as Valuer of Immovable properties. Whereas it is envisaged that a person who has done “post-Graduation in Real Estate from a recognized University” gets 6 years exemption in this 10 years’ experience. It is sufficient for those who did POST GRADUATION in Real Estate to have 2 years’ experience to apply for practicing as a Valuer under Wealth Tax act. This exemption is in fact is awarded to a post graduate who had already spent 2 years while doing an M Tech or M E Real Estate. This provision should be understood as an incentive for post graduates in engineering to join Valuation Field. So we have to understand that the rule 8A of wealth tax act treats post-graduation in real estate as an engineering master’s degree only. But not as Masters degree in arts or science. So enrolling Arts or Science graduates under the GARB of Master of Science course and teaching Engineering subjects is a fraud on the existing rules of laws envisaged in the Wealth Tax act and AICTE stipulations.

And if we look at the syllabus of the M Sc or M Com Valuation courses it is evident that the students are taught engineering subjects like – Surveying, Engineering Drawing, Building technology, valuation, town and country planning, maintenance and repairs of buildings, real estate management, estimating, mensuration and trigonometry,  etc. These are all civil engineering subjects per se. So the M Sc Valuation course is Engineering course conducted by these universities under the GARB of Science course in order to escape from the scrutiny of AICTE only.

Now we have to answer two more questions. What is the fate of the engineers who already did M Sc valuation course during the last few years. Actually they need not worry. Because as per our argument engineers only should be eligible to do M Sc valuation or M Com valuation as additional degree in their field of work to enhance their professional skills.

But it is obvious that this course should not be mandatory for renewal of Valuers licenses for the existing valuers. That is why some Banks after insisting on Master in Real estate as a compulsory qualification for some time, changed their stance and changed the wording to “preferably” now. Because any rule cannot be implemented retrospectively but prospectively only. And also because after the Supreme Court Judgment of 2017 the M Sc course streams have fallen into jeopardy.

And with regard to Part time M Sc Valuation courses, it is a fact that after 2017 any engineering courses done via distance mode are invalid as per Supreme Court judgment. M Sc valuation course being an engineering course in disguise becomes invalid for it has no sanction of AICTE as per Supreme Court judgment of 2017.

(By the way, IBBI certificate Valuation courses conducted by Accountant firms also would become invalid)

Then what happens if M Sc valuation courses are started again in these Universities in a regular basis?! Thing is that they can do so after getting AICTE approval only. And AICTE rules do not allow non-technical or non-science stream people getting into these M Sc courses. If at all they continue the course they have to change the degree name as M Sc (Engg). In that case also only BE or BTech or B Arch people would be eligible to do the new M Sc (Engg) valuation course. Then which engineer would do such course which is not useful. Then the course would become economically not viable with very few students opting for it. So shop will be closed in no time. 

AICTE rules

Pl go through the AICTE rules given below and get the true picture of what is technical education and how it is regulated by the Rules in India. And also I have given Wealth tax 8A rules after this. Pl go through them also.

Section 8A of Wealth Tax Act

Topic : Qualifications of registered valuers under Wealth-Tax Rules, 1957

(1) For the purposes of sub-section (2) of section 34AB, the qualifications for registration as valuers of different classes of asset shall be as specified in sub-rules (2) to (11).

(2) A valuer of immovable property (other than agricultural lands, plantations, forests, mines and quarries) shall have the following qualifications, namely :—

(i)  he must—

     (A)  be a graduate in civil engineering, architecture or town planning of a recognized university;

or

     (B)  be a post-graduate in valuation of real estate from a recognized university;

or

     (C)  possess a qualification recognized by the Central Government for recruitment to superior services or posts under the Central Government in the field of civil engineering, architecture or town planning;

and]

        (ii)   (A)  he must be a person formerly employed—

      (a)  in a post under Government as a gazetted officer;

or

      (b)  in a post under any other employer carrying a remuneration of not less than Rs. 2,000 per month,

            and, in either case, must have retired or resigned from such employment after having rendered service for not less than ten years as a valuer, architect or town planner, or in the field of construction of buildings, designing of structures, or development of land; or

      (c)  as a professor, reader or lecturer in a university, college or any other institution preparing students for a degree in civil engineering, architecture or town planning, or for any qualification referred to in clause (i), and must have retired or resigned from such employment after having taught for not less than ten years any of the subjects of valuation, quantity surveying, building construction, architecture, or town planning;

               OR

     (B)  he must have been in practice as a consulting engineer, valuer of  real estate, surveyor or architect for a period of not less than ten years and must have acquired experience in any of the following four fields :—

(a)    valuation of buildings and urban lands; or

(b)    quantity surveying in building construction; or

(c)     architectural or structural designing of buildings or town planning; or

(d)    construction of buildings or development of land;

            and his gross receipts from such practice should not be less than fifty thousand rupees in any three of the five preceding years 

Provided that in the case of a person possessing a post-graduate degree in valuation of real estate from a recognized university, the provisions of this sub-rule shall have effect as if,—

(a)     for the words “ten years”, the words “two years” had been substituted;

(b)    for the words “fifty thousand rupees in any three of five preceding years”, the words “fifty thousand rupees in any one of the two preceding years” had been substituted.

(3) A valuer of agricultural lands [other than plantations referred to in sub-rule (4) shall have the following qualifications, namely :—

(i)     he must be a graduate in agricultural science of a recognised university and must have worked as a farm valuer for a period of not less than five years; or

(ii)    he must be a person formerly employed in a post under Government as a Collector, Deputy Collector, Settlement Officer, Land Valuation Officer, Superintendent of Land Records, Agricultural Officer, Registrar under the Registration Act, 1908 (16 of 1908), or any other officer of equivalent rank performing similar functions and must have retired or resigned from such employment after having rendered service in any one or more of the posts aforesaid for an aggregate period of not less than five years.

(4) A valuer of coffee plantation, tea plantation, rubber plantation or, as the case may be, cardamom plantation shall have the following qualifications, namely :—

(i)     he must have, for a period of not less than five years, owned, or acted as manager of a coffee, tea, rubber or, as the case may be, cardamom plantation having an area under plantation of not less than four hectares in the case of a cardamom plantation or forty hectares in the case of any other plantation; or

(ii)    he must be a person formerly employed in a post under Government as a Collector, Deputy Collector, Settlement Officer, Land Valuation Officer, Superintendent of Land Records, Agricultural Officer, Registrar under the Registration Act, 1908 (16 of 1908), or any other officer of equivalent rank performing similar functions and must have retired or resigned from such employment after having rendered service in any one or more of the posts aforesaid for an aggregate period of not less than five years, out of which not less than three years must have been in areas, wherein coffee, tea, rubber or, as the case may be, cardamom is extensively grown.

(5) A valuer of forest must be a person formerly employed in a post under Government and must have retired or resigned from such employment after having rendered service for not less than five years in a gazetted post requiring specialised knowledge in forestry.

(6) A valuer of mines and quarries shall have the following qualifications, namely:—

(i)  he must be a graduate in mining of a recognised university, or must possess a qualification recognised by the Central Government for recruitment to superior services or posts under the Central Government in the field of mining; and

(ii)    he must be a person formerly employed—

(a)    in a post under Government as a gazetted officer, or

(b)    in a post under any other employer carrying a remuneration of not less than Rs. 2,000 per month,

and, in either case, must have retired or resigned from such employment after having rendered service as a mining engineer for not less than ten years.

(7) A valuer of stocks, shares, debentures, securities, shares in partnership firms and of business assets, including goodwill but excluding those referred to in sub-rules (2) to (6) and (8) to (11), shall have the following qualifications, namely :—

           ( i)  he must be a member of the Institute of Chartered Accountants of India or the Institute of Cost and Works Accountants of India or the Institute of Company Secretaries of India; and

       (ii) (A)  he must have been in practice as a chartered accountant or a cost and works accountant or a company secretary for a period of not less than ten years and his gross receipts from such practice should not be less than fifty thousand rupees in any three of the five preceding years, or

     (B)  he must be a person formerly employed—

      (a)  in a post under Government as a gazetted officer, or

      (b)  in a post under any other employer carrying a remuneration of not less than Rs. 2,000 per month,

            and, in either case, must have retired or resigned from such employment after having rendered service for a period of not less than ten years in the field of audit and accounts or taxation work, or

 (c)  as a Company Secretary or a Deputy Company Secretary or an Assistant Company Secretary in a post carrying a remuneration of not less than Rs.2,000 per month and must have retired or resigned from such employment after having rendered service for a period of not less than ten years.

(8) A valuer of machinery and plant shall have the following qualifications, namely :—

(i)  he must—

     (A)  be a graduate in mechanical or electrical engineering of a recognised university; or

     (B)  possess post-graduate degree in valuation of machinery and plant from a recognised university; or

     (C)  possess a qualification recognised by the Central Government for recruitment to superior services or posts under the Central Government in the field of mechanical or electrical engineering; and]

          (ii) (A)  he must be a person formerly employed—

      (a)  in a post under Government as a gazetted officer; or

      (b)  in a post under any other employer carrying a remuneration of not less than Rs. 2,000 per month,

            and, in either case, must have retired or resigned from such employment after having rendered service as a mechanical or electrical engineer or valuer  of machinery and plant for a period of not less than ten years, or

      (c)  as a professor, reader or lecturer in a university, college or institution preparing students for a degree in mechanical or electrical engineering or for any qualification referred to in clause (i), and must have retired or resigned from such employment after having taught for a period of not less than ten years; or

      (B)  he must have been in practice as a consulting engineer or valuer of machinery and plant for a period of not less than ten years and must have acquired experience in the valuation of machinery and plant and his gross receipts from such practice should not be less than fifty thousand rupees in any three of the five preceding years 

Provided that in the case of a person, possessing a post-graduate degree in valuation of machinery and plant from a recognised university, the provisions of this sub-rule shall have effect as if,—

          (a)  for the words “ten years”, the words “two years” had been substituted;

          (b)  for the words “fifty thousand rupees in any three of five preceding years”, the words “fifty thousand rupees in any one of the two preceding years” had been substituted.

(9) A valuer of jewellery must have been, for a period of not less than five years, a sole proprietor or partner in a partnership firm carrying on jewellery business which has on an average an annual turnover of not less than rupees 15 lakhs or profit (including fees for valuation) of not less than rupees fifty thousand in the last three accounting years immediately preceding the year in which the application for registration as a valuer is made by him.

(10) A valuer of works of art shall have the following qualifications, namely:—

           ( i)  he must have specialised by virtue of his academic and professional pursuits in the particular line of art, for the works of which he seeks to be registered as a valuer, and

          (ii )  he must have served in any one or more of the following capacities, namely:—

      (a)  Director General or Superintending Archaeologist of the Archaeological Survey of India;

      (b)  Director of National Museum, New Delhi, Salar Jung Museum, Hyderabad, Prince  of  Wales Museum, Bombay, Indian Museum, Calcutta, Asutosh Museum, Calcutta, Madras Museum, Madras or Bharat Kala Bhavan, Varanasi;

      (c)  principal of a Government School of Art;

      (d)  member of the Art Purchase Committee of any of the museums referred to in sub-clause (b), or of the Lalit Kala Akademi.

(11) A valuer of life interest, reversions and interest in expectancy shall have the following qualifications, namely:—

           ( i)  he must be a graduate of a recognised university; and

         (ii )   (a)  he must have been in practice as an actuary under the Insurance Act, 1938 (4 of 1938), for a period of not less than ten years; or

      (b)  he must have rendered continuous service for a period of not less than ten years as an actuary under Government or in the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956); or

      (c)  he must have practised as an actuary or served as such under Government or in the Life Insurance Corporation of India referred to in sub-clause (b) for an aggregate period of not less than ten years.

(12) No person shall qualify for registration as a valuer, other than as a valuer of works of art, if he is employed under Government or any other employer.

(13) Notwithstanding anything contained in sub-rules (1) to (12), no person shall qualify for registration as a valuer if,—

          (a )  he has been dismissed or removed from Government service; or

          (b )  he has been convicted of an offence connected with any proceeding under the Income-tax Act, 1961 (43 of 1961), or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), or a penalty has been imposed on him under clause (iii) of sub-section (1) of section 271 or clause (i) of section 273 of the Income-tax Act, 1961, or under clause (iii) of sub-section (1) of section 18 of the Wealth-tax Act, 1957, or under clause (iii) of sub-section (1) of section 17 of the Gift-tax Act, 1958; or

          (c )  he is an undischarged insolvent; or

 (d)  he has been convicted of any offence and sentenced to a term of imprisonment; or

          (e )  he has been found guilty of misconduct in his professional capacity,—

       (i)  in a case where he is a member of any association or institution established in India having as its object the control, supervision, regulation or encouragement of the profession of engineering, architecture, accountancy, or company secretaries or such other profession as the Board may specify in this behalf by notification in the Official Gazette, by such association or institution; or

 (ii)  in any other case, by the Chief Commissioner or the Director General in accordance with the procedure laid down in rule 8F and rules 8H to 8K, which in the opinion of the Chief Commissioner  or the Director General, renders him unfit to be registered as a valuer.]]

(13A) Notwithstanding anything contained in sub-rules (2), (6), (7), (8) and (11) as amended by the Wealth-tax (Second Amendment) Rules, 1988, the provisions of the said sub-rules, as they stood immediately before such amendment, shall continue to apply in the case of a person whose name is included in the Register of Valuers immediately before the 1st day of June, 1988, and who makes an application for continuation of his registration as a valuer under sub-section (1) of section 34AE, subject to the modification that in addition to the requirement that such person should have, for a period of not less than five years, rendered service in any capacity or taught any subject or practised any profession, such person should also have an experience of not less than five years as a valuer registered  under section 34AB.

(14) The requirement laid down in any of the foregoing sub-rules that the applicant should have, for a period of not less than ten years or five years, as the case may be,—

           ( i)  rendered service in any capacity, or

          (ii )  taught any subject, or

         (iii )  practised any profession, or

         (iv )  gained experience in any other capacity or field,

as specified therein, shall be deemed to have been fulfilled if the period for which the applicant has rendered such service, taught such subject, practised such profession or otherwise gained experience in such other capacity or field, taken either singly or collectively, is not less than ten years or five years, as the case may be, in the foregoing sub-rules.

Explanation 1.—In this rule, “recognised University” means any of the universities specified below, namely:—

            I.   Indian Universities : Any Indian University incorporated by any law for the time being in force.

           II.   Rangoon University.

          III.   English and Welsh Universities : The Universities of Birmingham, Bristol, Cambridge, Durham, Leeds, Liverpool, London, Manchester, Oxford, Reading, Sheffield and Wales.

         IV.   Scottish Universities : The Universities of Aberdeen, Edinburgh, Glasgow and St. Andrews.

           V.   Irish Universities : The Universities of Dublin (Trinity College), the Queen’s University, Belfast and the National University of Dublin.

         VI.   Pakistan Universities : Any Pakistan university incorporated by any law for the time being in force.

        VII.  Bangladesh Universities : Any Bangladesh University incorporated by any law for the time being in force.

Explanation 2.—Where the membership of any institution is recognised by the Central Government as a qualification for the purpose of recruitment to superior services or posts under the Central Government in any field, such membership shall not be regarded as a requisite qualification for the purposes of this rule, unless the membership has been granted on the basis of passing the examinations conducted by the institution.