TMI Blog2004 (9) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... the filing of appeals before us. Property situated at Jubilee Hills: 3. The assessee owned a plot bearing Municipal No. 8-2-293/82/A/1014 at Jubilee Hills, Hyderabad. The plot was purchased in the year 1987 and construction of three storeyed building was commenced in the year 1995. Assessee invested a sum of Rs. 8 lakhs on the said property. The property was sold on 24-11-2000 for a total consideration of Rs. 38 lakhs to two parties i.e., Sri E.V.V. Satyanarayana and Smt. E. Saraswathi. As per the sale deed, the property consisted of ground, first and second floor unfinished. The Assessing Officer observed that the construction of the building was not complete at the time of sale and it was not in a habitable condition. Therefore, Assessing Officer denied the claim of exemption under section 5(1)(vi) of the Act. The Assessing Officer appears to have called for the evidence of payment of municipal taxes to support the claim that the building was actually completed and habitable. Except producing the electricity bills for the months of February and March 1998, the assessee could not furnish any evidence to prove that the building was in a habitable condition. Thus, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 1998. Even otherwise, electricity connection does not mean that it was for day to day use of persons living in such a property since the electricity is required for construction of the property, lifting of water through pipes and lighting to the premises etc.; in fact the consumption of the electricity is meagre for two months. Therefore, the learned CIT(A) observed that the bills were raised for only minimum prescribed charges though no one lived there. It was also observed that the claim of the assessee that his son obtained passport by giving the address of the property at Jubilee Hills does not establish that he was living in the property at that time. Even as per the assessee's own admission, the property was constructed during the period from 1-4-1995 to 31-3-1996 for which expenditure of Rs. 8,13,526 was incurred and there was no construction activity from 1-4-1996 onwards. The expenditure incurred on construction per sq. ft, works out to Rs. 155 which also indicates that the three storeyed building is not in a habitable condition. The site is 1189 sq. yards whereas the area occupied for construction was 344 sq. yards, which works out to 28% of the plot. Though the word ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the construction of the house also indicate that the construction of the property commenced in the year 1995 and construction of two floors was complete; merely because second floor was unfinished, it cannot be said that the building is not in a habitable condition. Learned counsel submitted that in the light of the decision of the ITAT, Hyderabad Benches in the case of WTO v. Mootha Gopalakrishna [1987] 20 ITD 199, any property with four walls and roof would fall within the meaning of the term 'house' and it is not necessary that it should have all the modern facilities for comfortable living. It was thus contended that the assessee is entitled to exemption under section 5(1)(vi) of the Act. In the alternative, it was contended that if the constructed portion is not treated as a 'house' or a 'building' it would have to be considered as an incomplete building in which event it cannot be considered as an 'asset' within the meaning of section 2(ea) of the Act inasmuch as the definition covers either 'building' or an 'urban land' but not a land covered by a 'building under construction'. In other words, the moment construction is commenced on an open land, it looses the character o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned DR referred to the order of the CIT(A) to submit that the electricity bills were only for two months and that too showing minimum bill which indicate that the electricity was not used for living in the house but for only construction of the house. Similarly, Municipal Number can be allotted even to a vacant plot and thus it cannot be said that the allotment of municipal number is a criterion to consider that the unfinished building is fit for human habitation. Similarly, in the passport issued, it was mentioned as plot No. 1014, but in one passport, Road No. 46 was mentioned whereas on the other, Road No. 45 was mentioned, which indicate that no verification was done by the passport authorities as to whether the persons concerned have actually lived there or not. Learned DR relied upon the following decisions in support of his contention that the property at Jubilee Hills cannot be considered as a house for the purposes of availing exemption under section 5(1)(vi) of the Act: - (i) Shiv Narain Chandhari's case (ii) K.B. Pradhan's case (iii) CWT v. Prem Nath Motors (P.) Ltd. [1999] 238 ITR 414 (Delhi). He also strongly submitted that the valuation adopted by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition by him;". One more exception has been provided in the Finance Act, 1993, which reads as under: - "or any land held by the assessee as stock-in-trade for period of three years from the date of its acquisition by him". Period of holding was subsequently increased from three years to five years and then to ten years. But for these changes, there is no major change in the definition of 'urban land'. However, the definition of 'asset' in section 2(ea)(i) has undergone several changes to bring it in tune with the intention of the Legislature, i.e. to tax any unproductive asset. By the Finance (No. 2) Act, 1996, with effect from 1-4-1997, the said clause was substituted as under: - "(i) any building or land appurtenant thereto (hereinafter referred to as "house"), whether used for residential or commercial purposes or for the purpose of maintaining a guest house or otherwise including a farm house situated within twenty-five kilometres from local limits of any municipality (whether known as Municipality, Municipal Corporation or by any other name) or a Cantonment Board, but does not include- (1) A house meant exclusively for residential purposes and which is allotted by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression may encompass or include the other expression. For example, a 'house' may be a property but every property may not be called a 'house'. The term 'property' may encompass 'house', 'building' or urban land etc. Similarly, every 'house' may qualify to be considered as building, but every building may not fall within the expression 'house', e.g., factory building, cinema hall etc. Under the A.P. Urban Area (Development) Act, 1975, 'building' has been defined as under: - " 'building' includes - a house, outhouse, stable, latrine, godown, shed, hut, wall (other than a boundary wall) and any other structure whether of masonry, bricks, mud, wood, metal or any other material whatsoever." Section 2(ea) uses the expression 'building' whereas section 5(1)(vi) uses the expression 'house', which has a narrow connotation. The term 'building' is not defined under the Wealth-tax Act and hence one has to gather the meaning of this term by looking into other enactments. As could be seen from the definition given in the A.P. Urban Areas (Development) Act, 1975, even a wall could fall within the meaning of the term 'building'. In the case before us, the ground and first floor portions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to expect all modern amenities that are required for posh and luxurious living. The commonly accepted meaning of the term 'house', looking from the view-point of a majority of the population, is a room covered by walls and a roof. Applying this criterion, it has to be accepted that in the instant case, construction of ground floor and first floor having been completed to a large extent, the assessee is justified in claiming exemption under section 5(1)(vi) of the Act. 14. The claim of the assessee that there was electricity connection and Shri Manoj Kumar Kanodia and Smt. Namita Kanodia lived in that house, based on the address given in their respective passports, is contrary to the facts admitted by the assessee. Though the plot was purchased in the year 1987, as per the assessee's own admission, the construction the three-storeyed building was commenced in the year 1995 whereas the passports issued on 29-9-1994 and 7-9-1994 mention the impugned property as the permanent address of the parties which indicates that the passport authorities had no occasion to cross-verify the facts stated by the assessee with regard to permanent address. At any rate, in view of the assessee's adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also submitted that the assessee is entitled to exemption by treating the land as an agricultural land. On the other hand, the learned departmental representative strongly supported the orders of the tax authorities. 18. We have carefully considered the rival submissions and perused the record. There is no evidence on record to suggest that the piece of land purchased by the assessee is an agricultural land. On the other hand, there is sufficient evidence to indicate that it is a non-agricultural land. Therefore, we reject the contention of the assessee that the value of the land is exempt. 19. With regard to the value adopted by the AO, the case of the assessee is that the legal disputes with regard to the title of the property, were not taken into consideration while arriving at the market value and that whenever the value returned by the assessee is less than its fair market value, in the opinion of the AO, the matter of valuation has to be referred to the Valuation Officer, whereas in the instant case, the AO failed to refer the matter to the Valuation Officer. In this regard, reliance was placed upon the decision of the Hon'ble Punjab and Haryana High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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