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TMI Blog1988 (5) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... als read as under : "1. Rule IBB being procedural is retrospective in operation; 2. Property at Plot No. 614-B, being residential property should be valued as per Rule IBB; 3. Deduction under section 5(1)(iv) be given. 4. Value of shares be computed as per Rule 1D as interpreted by the Gujarat High Court in the case of CWT v. Ashok K. Parikh [1981] 129 ITR 46." Since ground Nos. 1 to 3 are inter-related and involve common facts they are being considered together as hereunder :- At the well-known 'Ellise Bridge' of Ahmedabad there lies the popularly called 'Panchvati Gulbai Tekra Area' falling in T. P. S. Nos. 3 & 20. This area is inhabitated by persons belonging to upper middle class and all civic amenities like schools, hospitals, offices, markets, cinemas, etc., are available to them nearby. A.M. T. A. buses and auto rikshaws provide means of surface communication. In this 'Panchavati' area there situates a residential building popularly known as 'Ram Niwas', on the 80 or 100 wide TPS Road Called Sheth Chimanlal Girdhan Dass Road. We were informed at the time of hearing that this 'Ram Niwas' belongs to the brother of the Karta of the assessee-HUF and the karta as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on raised in sufficient detail allowed the assessee to take up additional ground and finally accepted its claim in that behalf. She accordingly directed the WTO to value this property as per Rule 1BB. That part of her order makes the subject matter of ground Nos. 1 to 3 of revenue's appeal before us. 6. We heard the parties at sufficient length and went through the record as was placed before us. 7. No doubt the learned Dr vehemently urged that Rule 1BB was brought on the Statute Book w.e.f. 1-4-1979 and therefore should not be deemed to apply to cases involving periods prior to that in so far as we are concerned the point in issue stands concluded in assessee's favour not only by special Bench decision in the case of Biju Patnaik v. WTO [1982] 1 SOT 623 (Delhi) but also by Gujarat high court decision in the case of CWT v. Shri Kasturbhai Mayabhai [1987] 164 ITR 107 wherein it has been held that the said rule being procedural in nature was mandatory in character and retrospective in effect covering the cease pertaining up to A. Y. 1965-66. We therefore find no merits in ground No. 1 and reject it. 8. Now coming to ground No. 2 we find that it is not being challenged by Revenue t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee's household goods and for residence of its servants. No such facts are obtainable from the order of the Tribunal dated 16-10-70. since facts materially differ the said order of the Tribunal does not come in our way. We hold that the assessee has rightly been declared entitled to exemption u/s 5(1) (iv) by the learned CWT (A) and dismiss this ground as well. 11. Incidentally, ground No. 1 in assessee's cross objection relates to the points discussed hereinabove. In view.of out above conclusions assessees' apprehension of withholding applicability of the provisions of Rule 1BB to the valuation of this property becomes unrealistic and unfounded. that ground becomes infructuous and shall be deemed to have been dismissed as such. 12. coming now to the last ground i.e. No. 4 relating to the valuation of unquoted equity shares of certain private companies we are of the opinion that the learned CWT (A) has committed no wrong in directing the WTO to value such shares as per principles laid down by Gujarat High court in the case of CWT v. Ashok K. Parikh [1981] 129 ITR 46. We dismiss this ground also. 13. Assessee's cross objections. As stated above ground No. 1, common to al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; " 50 " 45 31-3-67 82,440 " 40 " 1,51,100 " 55 " 50 31-3-68 1,01,000 " 60 " 1,64,900 " 40 " 55 31-3-69 1,01,000 " 65 " 1,78,600 " 40 " 60 ----------------------------------------------------------------------------------------------- It was vehemently submitted by Mr. Talati that this property is admittedly very disadvantageously situated as by virtue of its situation it was neither having any direct ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tage is also there. But we find that all these aspects have been fully taken into consideration by the learned CWT (A) and the value has been appreciably lowered down. We further find that in her detailed discussion over the valuation of this property the learned CWT (A) elaborately dealt with various contentions and objections advanced on behalf of the assessee. The sales instances relied upon by the parties were considered and appreciated by her. We ourselves have gone through the valuation report of the A. V. O. and find that it proceeds on good footing and meets out the objections of the Registered valuer. The sales-instances relied upon by the A. V. O. were certainly indicative of fair market value of the property in question as such sales instances not only related to the relevant periods under consideration but also they were obtained from the office of the sub-registrar. After all, sale instances are only indicative of thereat of land in a particular locality at a particular point of time. Properties not equally situated cannot be treated equally in the matter of valuation and each case shall have to be considered on its individual merits and demerits. It is the estimated v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, this contention is rejected." 4. The property in question consists of a plot of land measuring 1434 sq. yards and the structure in question is located right at the entry to the plot. It consists of a ground floor and first floor with a total plinth area of 220.80 sq. mt. (about 265 sw. yards). This comes to around 18 per cent of the total area of the plot. 5. The report of the D.V.O. (page 26 of the paper book] shoes that the construction took place in 1936 and some addition was effected in 1970 (36 sq. yards). In other words the property for the assessment years under appeal (1965-66 to 1969-70) was the same as dealt with by the tribunal in A. Y. 1964-65. Even otherwise there is no factual finding by the ITO or by the CIT (Appeals) as to any additional construction coming up from 1936 onwards up to the assessment years under consideration. 6. At this stage it would be relevant to reproduce some of the extracts from the objecting raised by the assessee's approved valuer in response to the report of the D. V. O. "Before I state my objections, I think, it will be useful to know the correct configuration and situation of the assessee's property under valuation as also the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... small frontage of only 54 ft. which is available to this property". "the assessee's valuer has made the correct application of the land and Building method in hits particular case by estimating the market value of the land for each of the assessment year under reference on the basis of the instances of sales of comparable lands in the locality (Refer schedule 'A' and plant No. 2. ) and adding to it the value of materials on demolition of the structure as the small out dated structure like this is worth value of materials on demolition in view of its condition, incomefetching capacity and even the very orientation wherein the very small available frontage of only 54 Ft, is blocked by the said awkward orientation." 7. The approved valuer has also devoted 5 pages at the end of his objection centrally to the structure in question (pages 78 to 82 of the paper book] The heading of this portion is as under : III : Regarding the value of the small out dated super structure estimated by the learned Asstt. Valuation Officer :" 8. The following observations of the approved valuer are also worth nothing :- "It is worth value of materials on demolition in view of its condition, income-fetc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material on demolition or in other words the 'Scrap value'. 10. It is also an accepted fact that the property was being utilized for storing extra domestic goods and for the use of the servants. The state of the property remained the same right from 1936 onwards till the years under consideration. The D. V. O. in fact inspected the property on 30-8-1976, i.e., after a period of 40 years when it reveled no change at all. We were also informed during the hearing that it ultimately changed hands as a result of a partition in the HUF. 11. Another fact to be noted is that the assessee did not furnish any evidence of the house tax payable on the property to the D. V. O. 12. The discussion in the preceding paras clearly shows that the structure on the plot in question is not a 'house'. the word house has no statutory definition and has to be given a common parlance meaning. The dictionary meaning of the word is 'building for dwelling, a building in general, a dwelling place'. According to me the definition of the word 'House' or 'Part of a house' cannot cover a situation where the premises are not habitable. The concept of habitability is inherent in the word 'house'. I am further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is referred to the Hon'ble President of the Income-tax Appellate Tribunal, under section 24(11) of the WT Act, 1957 read with section 255(4) of the IT Act, 1961 : "Whether property at plot No. 614-B 'Panchvati-Gulbai Tekra area Ahmedabad qualified for exemption under section 5(1)(iv) as also the benefit of valuation under rule 1BB of the WT Rules, 1957 ?" THIRD MEMBER ORDER Per Shri K. C. Srivastava, Vice President - In the above appeals and cross objections there was a difference of opinion and the following point of difference has been referred to me as a Third Member u/s 24(11) of the Wealth tax act areas with section 255(4) of the Income-tax Act : "Whether property at Plot No. 614-B 'Panchvati-Gulbai Tekra Area', Ahmedabad qualified for exemption under section 5(1)(iv) as also the benefit of valuation under rule 1BB of the WT Rules, 1957 ?" 2. The dispute is regarding property known as No. 614-B Panchvati Gulbai Tekra Area, Ahmedabad. The assessee is a Hindu undivided family and up to the asset year 1964-65 the assessment was being made on the bigger HUF which was known as Shri Rohitbhai Chinubhai. As a result of some partial partition some of the properties came to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat exemption u/s 5(1)(iv) was allowable in respect of this property. 5. When the matter came before the Bench the learned Judicial Member held that the property in question was a residential property of the assessee though it was not being used for his own residence and the residence of his family members. According to him, the use by servants as well as storing place for household goods was also used as residential house. 6. The learned Judicial Member further referred to the order of the Tribunal in the case of Biju Patnaik and also the decision of the Gujarat High court in the case of Shri Kasturbhai Mayabhai and held that Rule 1BB being procedural was respective and was applicable for the years under consideration. The learned Judicial Member further held that considering the facts now available it could not be taken as godown or a mere shed but an expansion for the residential accommodation of the assessee. The actual residential house did not belong to the assessee though the members were staying in it till the construction of a house for this HUF. The learned Judicial member also found that the provision of sub-rule (v) of Rule 1BB was satisfied and did not exclude the op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions u/s 5(1) (iv) were not fulfilled as there was no house and the conditiona of residence was also not fulfilled. The claim of the assessee was therefore, rejected by him for both the purposes. 8. The Departmental Representative has strongly relied on the arguments given in the order of the learned Accountant Member. He submitted that there was no change from the asstt. year 1964-65 when the Tribunal had rejected the plea of the assessee u/s 5(1) (iv). It was also submitted that there was no construction or.addition in the year 1965 and the only construction was in 1936 and there had been no material change after that. It was further submitted that there lianas on the decision of Calcutta High Court in Consolidated Tea and Land Co. (India) Ltd.'s case was not appropriate as that decision had been given for deciding a different issue and it was given in a different context. He further contended that admittedly the assessee was not residing in this house and there was no question of it being an out house of the assessee's residential house as there was no residential house as a part of the assessee's wealth. He contended that the requirement of section 5(1)(iv) was that it sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... houses and the valuation of this property should be made under the Rule as the Gujarat High Court has held in Shri Kasturbhai Mayabhai's case that the operation of this rule was retrospective as it was procedural. 10. I have considered the rival submission and perused the orders of the learned Members. There is no statutory definition of the word 'house' and I have to consider it within its common meaning. If a structure is habitable by human beings and is meant for such habitation it can be considered as a house and if human beings actually stay there or can stay there it can be considered as a residential house. As already stated the construction was on two floors having certain rooms some of which were used for keeping household goods and other than for the residence of the servants and their family as they could not be accommodated in the main house where the assessee's family was staying. The assessee has not claimed exemption u/s 5(1) (iv) in respect of any other house. It has not been disputed that the structure has been used for the habitation of the servants and it is being used as an expansion of the residential house. In such circumstances, the plea of the assessee that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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