Income Tax Appellate Tribunal - Jaipur
Wealth Tax Officer vs N.N. Atal on 20 May, 1997
Equivalent citations: (1998)61TTJ(JP)496
ORDER
PRADEEP PARMH, A.M.:
These appeals by the Department and the cross-objections by the assessee arise from the combined order of the learned CIT(A), dt. 10th March, 1992 in respect of asst. yrs. 1981-82 to 1989-90. However, the present appeals and cross-objections relate to asst. yr. 1981-82 and 1982-83 only. In both the appeals as well as the cross-objections, there is only one issue relating to the valuation of immovable property known as 'Atal Ban' at Jaipur. Hence, they are being disposed of by this common order for the sake of convenience.
2. The assessee returned a net wealth of Rs. 7,36,000 for asst, yr, 1981-82 and of Rs. 8,06,724 for asst. yr. 1982-83. In the total wealth declared by the assessee was included the value of a building known as 'Atal Ban' along with open land admeasuring 9,736 sq, metres situated at Station Road, Jaipur, The assesses had disclosed the value of this property at Rs, 3,18,000 for asst, yr. 1981-82 and at Re, 3,86,000 for aset, yr, 1982-83, Considering the valuation of the impugned property to be low, the AO, while framing the assessment for seat. yr, 1981-82, referred the matter to the DVO, The DVO, vide his report dt, 19th March, 1986, valued the property at Re, 16,95,000 an on 31ot March, 1981. After confronting the assessee with this report, the AO observed that the main objection was with regard to the valuation of the open land. In his opinion, the valuation taken by the DVO at Ra. 160 per sq. mtr. For apot. yr. 1981-62 was reasonable and accordingly adopted the valuation of Rs. 16,95,000 as determined by the DVO, similarly for asst. yr. 1982-83, the DVQ initially valued the property at Re. 25,70,000 as on 31st March, 1982, but later, after taking into consideration the objections of the assessee, reduced it to Rs. 18,53,000 by taking the rate at Rs. 165 per sq. mtr. The AO adopted this value in the assessment.
3. In the first appeal, the CWT(A) observed that in the case of R.K Atal, the brother of the assessee, under similar circumstances the value of open land was taken at Rs. 50 per sq. mtr. Accordingly, in the assessee's case also he directed the AO to adopt the rate of Rs. 50 sq. mtr. for asst. yr. 1981-82 and 1982-83 in place of Rs. 150 and Rs. 165 per sq. mtr. respectively. It is against this direction, the Department is aggrieved and is in appeal before us. On the other hand, the assessee's cross- objections are to the effect that the CWT(A) erred in upholding that only 600 sq. mtrs. can be considered as land appurtenant, and further that as the assess'ee had exercised option under s. 7(4) of the WT Act, 1957 (the Act), the value of the land should have been taken at Rs. 27.50 per sq. mtr. which was the value as on 19th April, 1971.
4. The issue before us for consideration, therefore, are : (a) Howmuch of the open land should be considered as land appurtenant-, (b) Did the assessee exercise the option under s. 7(4), and if yes, was there any justification to change the valuation; (c) if there was justification to change the valuation, which would be the proper rate to be adopted, namely, Rs. 150 and Rs. 165 per sq, mtr. for the two assessment years respectively, or Rs. 50 per sq. mtr. for both the assessment years as directed by the CWT(A) or Rs. 27.50 per sq. mtr. for both the years as contended by the assessee in his cross-objections. Of the three issues, we take the first one regarding land appurtenant.
5. In this connection, the learned Departmental Representative first referred to the various valuation reports submitted by various authorities and which were on record. First such valuation referred to was that done by the Executive Engineer, Delhi at the instance of the CBDT. This was done in 1973 for asst. yr. 1971-72, in which the rate was taken at Rs. 23 per sq. yard and after ignoring the sold portion, the assessee's property admeasuring 12,840 sq. yards was valued at Rs. 3,10,020 including the salvage value of Rs. 14,700 for the guest house (pp. 19-20 of the paper-book). The next valuation was by the registered valuer, engaged by the assessee, as a part of the objection of the assessee against the valuation made by the DVO. The registered valuer took the total plot area at 10,335 sq. rntrs, and valued 2,16,500 (p, 44 of the paper-book). Finally, after considering the objections of the assessee, the DVO valued the property at Rs, 16,95,000 and Rs, 18,53,000 (p, 46 of the paper-book). In this valuation, the DVO referred 600 sq. mtrs as appurtenant land and valued it at Rs. 27.50 per sq, mtr, whereas the land other than appurtenant land was valued at Re, 160 and Rs. 105 per sq. mtr respectively.
6. After taking us through the above facts, the learned Departmental Reprenentative took ' un through the alte plan of the property: It was pointed out by him that on one aide wan the houve of the aeflanaeo and on the other aide wan a terinifi court, orchard, otai Theae two portion he submitted were divided by a fifteen feet wide common road. Thun it wan contended that when the, land was divided by a common road, how could the land on the other aide of the said common road be consideted an appurtenant land. It wan further submitted that when the valuation was done for asst. yr. 1971-72, the question of appurtenance was not considered, nor was the issue ever decided at the lower levels.
7. In reply to this, it was submitted by the learned counsel for the assessee that it was a huge plot of land in which the assessee and his two brothers had their own shares. The entire land was surrounded by a boundary wall and within the said boundary wall, the share of each brother was well demarcated. There were no boundaries in between the respective shares and the common road referred to by the learned Departmental Representative was not a public road, but it was a common road for the use of three brothers. It was contended that it was quite common in such houses to have various facilities like a tennis court in the instant case, or a swimming pol and such other facilities for the personal and exclusive use of the owners thereof. Therefore, the lower authorities were not justified in not treating the entire land belonging to the assessee as appurtenant land. Reference was also made to the cases of some erstwhile rules in whose cases, if was submitted that they possessed huge stretches of land and the entire land was treated as appurtenant to the dwelling house. Reliance was also placed on the decision of the Jaipur Bench in the case of WTO vs. Shri Anilkumar Sah (WTA No. 121/Jp/77-78) reported in 3 Tax World 58 and of the Allahabad High Court in Shiv Narian Chaudhari vs. CWT 1977 CTR (All) 149 : (1977) 108 ITR 104 (All).
8. In his counter reply, the Iearnod Departmental submitted that in the case relied upon by the learned counsel, the properties were continuous to each other, whereas in the present case the property was divided by a common road, over which the assessee did not have an exclusive right. The said road could and was used by the other two brothers as well. So fas as the cases of the erstwhile rules were concerned, it was submitted that those cases were in connection with the exemption under s. 5(1)(iii) and ot related to s. 7(4). Thus, the learned Departmental Representative was vehement enough to urge that 600 sq. mtrs. Were reasonably held to be appurtenant land.
9. We, have heard the rival submissions and have duly considered the evidences placed before us. The eighth edition (1980) bf K J. Aiyer's Judicial Dictionary de8oribes:the term "Appurtenant" as follows In, law it denotes an, annexation- which is Of convenience merely and not of necessity, and which may have its origin at any time, in both of which respects it is distinguished from, appondant. In conveyance of lands and houses it is usual to add to the parcels I or-to th6`~habendum" or to both, the phrase, "with the appurtenances" and to make 'sure, to add "or reputed as appurtenant or belonging thereto'. The term is commonly confined in law to the purely incorporeal hereditaments that are commonly annexed to.the lands of houses and may include as well common as any other rights.
(Emphasis, italicised in print, supplied) The first objection of the learned Departmental Representative was that the aspect of appurtenance was never considered while valuing the property for asst. yr. 1971-72. In our opinion, this itself shows that the entire land belonging to the assessee was, never (treated) as anything but appurtenant. For the. first time, DVO the while valuing the property for the years under, consideration considered 600sq mtrs. as appurtenant and the rest as excess land. However, he has not given any reasons for doing so or as to how only 600 sq. mtrs. Is considered as appurtenant and why not the entire land. The learned CWT(A) also, on p. 9 of his order, has merely agreed with the DVO without assigningany reason therefor. The Tribunal in its decision cited supra, while dealing with a case of cinema-hall wherein major portion of the land was not treated as appurtenant, observed that no material worth the name was produced to show that the open land was used by the assessee for any other purpose. Similar is the situation in the instant case. Nothing has been brought on record to show as to why the entire open land cannot be treated as appurtenant land. The only objection raised by the learned Departmental Representative is that it is divided by a common road over which the assessees two brothers also have a ribght. However, the meaning given by the judicial dictionary, as reproduced above and inparticular the portion underlined (italicised in proint) by us, clearly indicates that it includes common rights as well. In the case reported in 1977 CTR (All) 149 : (1977) 108 ITR 104 (All) (supra), two houses were connected by a common passage, yet the Allahabad High Court held them to be one and also held that though they were built in different years, it was not relevant. The assessees case, in our opinion, is on a sunder footing. He has exclusive right over the entire land. He has exclusive right over the tennis court, the orchard, the fountain area and ao on. He also has a right to use the common road to reach to these portions of the open land. There is no one to rob him of him of this rifht and he has been exercising this right for years together. Thus, under facts and circumstances of the case, we hold that the balance land of 9,735 sq. mtrs. Also is an appurtenant land.
10. Now We come to the issue as to whether the benefit of s. 70(4) can be extended to the assessee for the-years under consideration. This issue, as well as the issue of appropriate valuation can be taken up together. In this connection, the learned Departmental Representative tried to meet out with three submissions made on behalf of the assessee before the lower authorities. These were : (a) that it is an agricultural land; (b) that the land cannot be sold; and (C) that the land comes within the purview of Urban Land Ceiling Act (ULC Act).
11. In this connection the learned Departmental Representative submitted that there were contradictions in the submissions of the assessee before the lower authorities. Firstly, if it was agricultural land then it could not come within the purview of ULC Act. Next, the, contention that since,ft was I an agricultural. land, it was not saleable, was not true as the assessee himself had sold a part of land. Thus, the assessees own conduct showed that the land was a commercial plot. Finally, it was submitted that how the CWT(A) has directed to adopt the rate of Rs. 50 on the basis of R. K. Atals case, is not understandable as it is not coming out of any records. The leanred Departmental Representative also brought on record certain evidence that the assessee was residing at Calcutta and hence, the benefit of s. 7(4) could not be given. Finally, it was urged by him that the valuation adopted by the AO was proper and the same be restored.
12. In reply, the learned counsel took us through the order of the Tehsildar which showed that the impugned land was an agricultural land. Further, it was submitted that in the case of Shri J.K. Atal assessee's brother, the benefit of s. 7(4) has been given throughout and accordingly the present assessee has been discriminated against. As regards the learned Departmental Representative the contention that agricultural land cannot come within the purview of ULC Act, it was stated that such land was covered under ULC Act if the same was within urban agglomeration. Thus, it was strongly urged that the benefit of s. 7(4) be extended to the entire land and accordingly the value of land be taken at Rs. 27.50 per sq. mtr.
13. We have considered the rival submissions and the evidence on record. First and foremost, we are of the firm opinion that open area is necessary for quiet, peaceful and convenient enjoyment of the property, depending upon one's means and taste. Hence, benefit of s. 7(4) has to be extended to the open land which is appurtenant to the house property. This view has been taken by the Madras Bench of the Tribunal in ITO vs. Smt. M Kalpagam (1980) 10 TTJ (Mad) 201, by the Indore Bench in the case of Sohharam Garnbhirmal reported in Taxman Yearly Digest, 1986, at p. 2.275 and by the Allahabad Bench in Masood Hahm vs. WTO (1987) 28 TTJ (All) 101 : (1987) 20 ITD 310 (All).'
14. The DVO valued the self-occupied portion by land and building method. This method was also adopted while valuing the property for asst. yr. 1971-72. But for asst. yrs. 1981-82 and 1982-83, the DVO restricted the benefit of s. 7(4) only for 600 sq. mtrs without giving any reason. Further, it is also well settled that a property which is untenanted is treated as self-occupied, This has been the view of the Jaipur Bench of the Tribunal in WTA No. 157/Jp/88, dt. 14th Sept., 1990 of the Cochin Bench in H.H. Gouri Lakshini Bayj vs. WTO (1984) 7 ITD 548 (Coch) and also of the High Court in CWT vs. W. Doraisarny (1996) 130 CTR (Mad) 157 : (1995) 215 ITR 853 (Mad). Thus, the learned Departmental Representative contention that the assessee is residing at Calcutta will not hold good since there is nothing on record to show that the assessee had created any interest in the said property in favour of any other person. Finally, we hold that the benefit of s. 7(4) has to be extended to the remaining 9,735 mtrs. of land also.
15. Now we come to the valuation aspect. It is true that if the benefit of s. 7(4) is to be extended to the entire land, as held by us above, then apparently, the rate of Rs. 27.50 per sq. mtr, as contended by the learned counsel, would be applicable. The valuation of the property as per the said rate comes to Rs. 3,10,000 which the assessee declared upto asst. yr. 1979-80, and the same was accepted by the Department. In asst. yr. 1980-81, the assessee declared Rs. 3,18,000 which was also accepted by the Department. In asst. yr. 1981-82, the valuation was repeated at Rs. 3,18,000, but in the assessment the same was increased to Rs. 16,95,000 which after appeal effect came down to Rs. 6,20,170 (p. 56 of paper book). However, for the reasons that follow, we are not inclined to peg down the valuation at Rs. 3,18,000 for eternity.
16. We have held that 9,735 sq. mtrs. of land be considered as land appurtenant to the property. We have also held that the benefit of s. 7(4) be extended to the entire land owned by the assessee. However, it may also be noted that the valuation of in-ffnovable property, particularly in urban area, has many aspects. The conditions of Rent Control Act, ULC Act, local municipal laws, etc., have a role to play. Due allowances have to be made for such restrictive legislations. At the same time, it has to be recognised that despite restrictive enactments and divergent factors which affect the market value of the property, inflationary conditions, the notorious fact of generation and investment of unaccounted money, speculative investments, etc., shoot the prices up in the real estate market. Coupled with these factors, with the increase in demand for land, over a period of time the local authorities also have been relaxing the restrictions by increasing the floor space index. The owners of vast land do derive benefit out of this. Thus, considering the imperfections in real estate market, it would be rather fallacious to peg down the valuation at a figure arrived at before twenty or thirty years on the basis of the laws and conditions prevailing at that point of time.
17. We, therefore, direct that in all fairness, it would be just and proper to increase the valuation by 10 per cent every year subsequent to asst. yr. 1980-81. This was also the alternate prayer made by the assessee before the lower authorities (p. 16 of the paper-book). We accept the same and direct accordingly.
18. Hence, for asst. yr. 1981-82 the value of the impugned property shall be Rs. 3,49,800 (Rs. 3,18,000 + 31,800) and for asst. yr. 1982-83, it shall be Rs. 3,84,780 (3,49,800 + 34,980).
19. In the result, both the appeals by the Department are dismissed. The crossobjections of the assessee for both the years are partly allowed.