TMI Blog2009 (3) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... . Held that- the Commissioner of Wealth tax (Appeals) ought to have given an opportunity to the assessee to place the materials as required under the Rules and ought to have adjudicated the issue without rejecting it on the premise that it had not been taken before the Assessing Officer. The claim for exemption under section 7(4) had also not been considered. The order of Tribunal was not valid. - 937 to 950 of 2005 and 26 to 39 of 2008 - - - Dated:- 24-3-2009 - RAVIRAJA PANDIAN K., JANARTHANA RAJA P. P. S. JJ JUDGMENT The judgment of the court was delivered by 1. K. Raviraja Pandian J .-These appeals are filed by the assessee in respect of the assessment years 1993-94 to 2001-02 under the Wealth-tax Act by formulating the following substantial questions of law : "1. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in confirming the valuation of properties as per rule 20 instead of rule 3 of Schedule III to the Wealth-tax Act, 1957 without taking into account the land comprised in pathway, sit out, servant quarters, swimming pool, rest rooms, club area, pump house, tennis court, car and scooter shed, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in confirming the levy of wealth-tax on the properties in nature, the commercial establishment which are excluded from the definition of asset under section 2(ea)(i)(5) of the Wealth-tax Act? 11. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in confirming the value of Magadi road property, when the valuation of the said property was remanded to the Assessing Officer for fresh consideration in the earlier assessment years for valuation as per rule 3 of Schedule III to the Wealth-tax Act, 1957?" 2. Though the appeals are in respect of different assessment years, the assets on which tax is leviable, the grounds of attack, the arguments advanced are one and the same. The arguments were heard in common and the appeals are disposed of by this common order, with the consensus of the parties. For the purpose of narration of material facts, the case of the assessee in respect of the assessment year 1993-94 is taken as a typical case. 3. The assessee, a limited company in which the public are substantially interested, carried on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oad, servant quarters, tennis court should be excluded for the purpose of valuation has also been rejected. He further contended that the terminology used in the section "land appurtenant thereto" has not been taken into consideration by the appellate authorities in its proper perspective and as interpreted by the judgments of various High Courts. 7. It was further contended that the Tribunal has also fell in error in accepting the reasons given by the Commissioner (Appeals) that the ground that the properties under consideration were occupied by the employees who were drawing less than Rs. 2 lakh was not taken at the first instance, i.e., before the Assessing Officer and the Tribunal fell in error in not taking into consideration the interpretation of the term "appurtenant land attached to the building" as explained by various judgments of various High Courts. 8. Learned counsel for the Revenue sought to sustain the order of the Tribunal, but however, she was not able to give any sustainable reason for the first contention, i.e., rejection of the ground of occupation of the property by employees, who were drawing less than Rs. 2 lakhs by the Commissioner (Appeals) which was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said by the apex court in relation to the appellate power under the Income-tax Act is equally applicable to the scope of the appellate power under the Wealth-tax Act, as in that Act also, no restriction or limitation has been placed on the appellate power. Section 23, sub-section (5), of the Wealth-tax Act, inter alia, provides that the Commissioner (Appeals) "may pass such order as he thinks fit which may include an order enhancing the assessment or penalty". The proviso thereunder requires the Com-missioner to give reasonable opportunity to the assessee to show cause against any proposed enhancement of the assessment or penalty. There is no other restriction placed upon the powers of the Commissioner (Appeals). The Commissioner (Appeals), when he entertains the appeal under the provisions of the Wealth-tax Act, is, therefore, as competent as the Wealth-tax Officer is, in relation to all matters concerning the assessment which are within the scope of the Wealth-tax Officer while making the assessment. 12. In paragraph 2.2 of the Commissioner of Wealth-tax (Appeals) it is stated as follows: "The counsel submitted before me that the properties under consideration were partly occ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of fact, as held in the case of CIT v. Smt. M. Kalpagam [1997] 227 ITR 733 (Mad) wherein it was held that in order to decide the question whether certain land is appurtenant to the house, the following five tests can be applied to understand the meaning of the words "land appurtenant" more precisely: (1) If the building together with the land is treated as an indivisible unit and enjoyed as such by the persons occupying the building, it is an indication that the entire extent of land is appurtenant to the building; (2) If the building has extensive lands appurtenant thereto and even if the building and the land have been treated as one single unit and enjoyed as such by the occupiers, an enquiry could be made to find out whether any part of the land contiguous to the building can be put to independent user without causing any detriment to the enjoyment of the building as such. Such an enquiry should be conducted not based on any artificial considerations but from the point of view of the persons occupying the building. The number of persons or different branches of families residing in the building, the requirements of persons occupying the building, consistent with their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the event of the assessee having more than one residential house, option is given to the asses-see to specify the house in respect of which he wishes to avail of the benefit under that proviso. Once it is found that the house is in fact a residential house and that the land is being used as the ground attached to the house for the benefit of the residents of the house, it remains a part of the house for the purpose of the proviso to section 7(4). It is not for the authorities to decide for the assessee as to what the size of his house should be or the extent of the garden or other area which the assessee should have for the house in which he lives. Such enquiry is outside the scope of the Wealth-tax Act. If a person had acquired a house for being used as a residential house and that house happened to have a large open space around it for use as gar-den or a play area or other purposes, as long as the house is used solely for residence and the benefit of those grounds is confined to the residents of the house and their visitors, such a house with its grounds would qualify for exemption under section 7(4). Importing individual notions as to what should be the reasonable size of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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