COMMISSIONER OF WEALTH TAX Vs. MASOOD HALIM

JUDGEMENT

(1.) The Income-tax Appellate Tribunal, Allahabad, has referred the following questions of law under Section 27(1) of the Wealth-tax Act, 1957 (hereinafter referred to as "the Act"), for the opinion of this court :

(2.) Briefly stated, the facts giving rise to the present reference are as follows:

(3.) The proceedings relate to the assessment year 1976-77. The respondent-assessee owns half share in the house property known as Bashir Lodge, situated at 7/190, Swaroop Nagar, Kanpur. It is used for residential purpose. During the course of assessment for the assessment year 1976-77, a question arose as to what value should be taken for the property. It was contended for the respondent that in accordance with the provisions of Section 7(4) of the Act, the same value should be taken as had been taken for the assessment year 1971-72 in which the Wealth-tax Officer had adopted the value of the respondent's half share in the property at Rs. 4,57,600. The Wealth-tax Officer had accepted the plea taken by the respondent and had valued the share at Rs. 4,57,600. The Commissioner of Wealth-tax was of the view that the provisions of Section 7(4) of the Act which provided for freezing of the option of the assessee on the value of house used for residential purpose of the assessee would not become applicable to the entire property in question. According to him, the area of the land in which the house stood, was very large compared to the plinth area of the house. The area was 22,238 sq. yds. whereas the plinth area of the house was 3053 sq. yds. According to him, by no reasonable standard, it can be said that the entire piece of the land could be considered as forming part of the house and the "house" used in Section 7(4) should be understood to mean the construction and only that area of land which could be regarded as appurtenant to the house. The Commissioner of Wealth-tax was of the opinion that such land which was in excess of the area as appurtenant land, could not be considered to comprise in the house and concessional valuation provided under Section 7(4) of the Act could not be made available to the surplus land. According to him, for deciding the question as to how much land was to be regarded as being appurtenant to the house, the assistance of other laws, like the Urban Land (Ceiling and Regulation) Act, 1976, could be taken and on that basis land appurtenant to the house should be taken to be 500 sq. metres. The Commissioner of Wealth-tax directed the Wealth-tax Officer to pass a fresh assessment in the light of the observation made by him in his order passed under Section 25(2) of the Act. Feeling aggrieved, the respondent preferred an appeal before the Tribunal. The Tribunal did not agree with view of the Commissioner of Wealth-tax that the term "house" used in Section 7(4) was to include only such land which can be regarded as appurtenant to it and not the entire land which has all along been used as lawns, garden, etc., of the house. The Tribunal, therefore, cancelled the order of the Commissioner of Wealth-tax.