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TMI Blog2002 (8) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... llant's contention that their case was governed by third proviso to the said r. 3. (5) It is prayed that the appellant's case is covered by the exception provided in proviso 3 of the r. 3 of the Sch. III of WT Act and as such the valuation of property as adopted by them at Rs. 87,178 ought to be accepted. 2. Shri Manish J. Shah, learned advocate appeared on behalf of the assessee. He explained that the assessee sold his residential house on 29th July, 1988, and purchased another residential property on the same date viz., 29th July, 1988, for Rs. 13,00,000. The assessee declared the value of this property as per Sch. III at Rs. 87,178. Such value so declared by the assessee at Rs. 87,178 has been accepted by the Department in all subsequent years except in the year under consideration on the ground that the value of the said residential house property will have to be determined at cost in view of second proviso to r. 3 contained in Sch. III of WT Act, 1957. Shri Shah submitted that the assessee's case should be governed by third proviso to r. 3 of Sch. III which provides that the second proviso shall not apply for determining the value of one house belonging to the assessee, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case was Rs. 13,00,000) in the year of acquisition and in all subsequent years it will be valued as per r. 3 of Sch. III on rental method, which in the present case comes to Rs. 87,178. The third proviso to r. 3 of Sch. III carves out an exception where second proviso could not be applied. The assessee's case is squarely covered by the third proviso. The requirement of exclusive user by the assessee of the new building for his own residence throughout the period of 12 months immediately preceding the valuation date, cannot be fulfilled for the simple reason that the house was purchased on 29th July, 1988, i.e., during the currency of the previous year under consideration. The benefit granted under the third proviso in respect of one house exclusively used by the assessee for his own residence cannot be denied on account of this reason. 2.2. The learned counsel relied upon various judgments to support his contention that literal interpretation which leads to absurd results should be avoided. A gist of various decisions relied upon by the learned counsel was also furnished. He particularly invited our attention to the following observations made by the Hon'ble apex Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the case may be, the cost of construction, as so increased, shall be taken to be the value of the property under this rule: Provided also that the provisions of the second proviso shall not apply for determining the value of one house belonging to the assessee, where such house is acquired or the construction whereof is completed after the 31st March, 1974, and the house is exclusively used by the assessee for his own residential purposes throughout the period of twelve months immediately preceding the valuation date and the cost of acquisition, or, as the case may be, the cost of construction, as increased, in either case, by the cost of any improvement to the house, does not exceed,— (a) if the house is situate at Bombay, Calcutta, Delhi or Madras, fifty lakh rupees; (b) if the house is situate at any other place, twenty-five lakh rupees: Provided also that where more than one house belonging to the assessee is exclusively used by him for residential purposes, the provisions of the third proviso shall apply only in respect of one of such houses which the assessee may, at his option, specify in this behalf." 5. The value of residential property in question arrived at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rices, especially in metropolitan cities. That is why the third proviso has been made applicable in cases where the cost of purchase and/or the cost of construction of property does not exceed Rs. 50 lakhs where house is situated at Bombay, Calcutta, Delhi or Madras and Rs. 25 lakhs where house is situated at any other place. The intention of this proviso is very clear that such a benefit as envisaged in third proviso should be conferred upon those taxpayers who acquire one house property for its exclusive user by them for their own residence. The proviso cannot be interpreted in such a way that this clearly intended objective is frustrated, as has been done by the AO in the present case. In a case where the assessee has acquired a property after 31st March, 1974, and the house is exclusively used by him for his own residential purposes throughout the previous year ever since the purchase of house property in question and continue to use that house for his own residence throughout the period of 12 months in succeeding previous years, there is no reason to deny him the benefit provided in third proviso to r. 3 in the year of its purchase and determine the value of self-occupied prop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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