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Allahabad High Court · body

2006 DIGILAW 43 (ALL)

Commissioner of Wealth Tax v. Bansi Lal Agarwal

2006-01-04

A.K.YOG, PRAKASH KRISHNA

body2006
( 1 ) THE Tribunal, Allahabad Bench, Allahabad, has referred following question of law for the opinion of this Court under Section 27 (1) of the WT Act: whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the house property at K 46/188, Bishesharganj, Varanasi, where 267 sq. ft. out of the total floor area of 13,250 sq. ft. was used by the partnership firm M/s Agro Dairy Products, while the balance was used by the assessee for its own residence, can be said to have been used by the assessee-family exclusively for its own residence and in that view directing that the value of the property should be determined by applying the provisions of Sub-section (4) of Section 7 of the wt Act, 1957? ( 2 ) THE dispute relates to the asst yr. 1975-76. The assessee is a specified HUF. Besides other property, he owned property at K 46/188, Bishesharganj, Varanasi. The area of the said house property is 13,260 sq. ft. out of which 267 sq. ft. was occupied by M/s Agro Dairy Products, a partnership firm in which the members of the assessee-HUF were partners, while the balance was occupied by the assessee for his residence. Before the WTO, the assessee filed report of the approved valuer who estimated the value of the aforesaid property at Rs. 77,500. It was also claimed that since the property was used exclusively by the assessee for his own residence, the value of the property should be determined keeping in view the provisions of Section 7 (4) of the wt Act. ( 3 ) THE said claim was not accepted by the WTO. The assessee was also unsuccessful before the first appellate authority. However, the assessee filed an appeal before the Tribunal. The Tribunal accepted the said claim. Relevant portion of the order of the Tribunal is quoted below: we have carefully examined the rival submissions and the facts on record. From the orders of the authorities below it is clear that the floor area in the said building is 13,250 sq. ft. In about 13,000 sq. ft. the assessee himself resides in it and it is only in respect of 267 sq. ft. that the assessee is having an office of a firm in which he is a partner for which he charges no rent. ft. In about 13,000 sq. ft. the assessee himself resides in it and it is only in respect of 267 sq. ft. that the assessee is having an office of a firm in which he is a partner for which he charges no rent. To say therefore, that the aforesaid building is not being used exclusively for residence would, in our opinion, be not correct. The mere fact that one of the rooms on the ground floor is being used as an office would not cloud the fact that in 13,000 sq. ft. area of the said building the assessee and the members of his family are residing. It would, in our opinion, therefore be correct to regard this property as one which belongs to the assessee and which is exclusively used by him for his residential purpose. The benefit of Sub-section (4) of Section 7 would therefore be correct to freeze the value of the said property at which it was assessed for the asst. yr. 1971-72. The wto will verify from his record as to what was the value of the said property for the said year and he will substitute this value for the value which has been directed to be adopted by the AAC. The various contentions raised by either side on account of the value of the land, etc. are of no consequence in view of the provisions of Sub-section (4) of Section 7 and, therefore, it is not necessary for the decision of this point to adjudicate as to what would be the correct price of land in the area. ( 4 ) HEARD Sri R. K. Upadhayay, learned standing counsel for the Department and Sri Subham agrawal, learned Counsel for the assessee. ( 5 ) LEARNED Counsel for the Department submitted that since there is office over an area of 267 sq. ft. , therefore, the Tribunal was not legally correct to invoke the provisions of Section 7 (4) of the WT Act, Elaborating his argument it was submitted that area of 267 sq. ft. is admittedly in possession of the firm, namely, M/s Agro Dairy Products. Indisputably, M/s Agro Dairy products is a partnership firm in which the assessee is one of the partners. ft. is admittedly in possession of the firm, namely, M/s Agro Dairy Products. Indisputably, M/s Agro Dairy products is a partnership firm in which the assessee is one of the partners. The Tribunal has also found that the assessee is not charging any rent from the said firm and the said firm is using the said area for office purposes. The argument of the Department is that in view of Section 7 (4) of the WT Act, it cannot be said that the property is being used exclusively for residential purposes. ( 6 ) LEARNED Counsel for the assessee has placed reliance upon the judgment of Gujarat High court in the case of CWT v. S. D. Jadeja (2005) 199 CTR (Guj) 503 in support of his submission. In the aforesaid case, the property known as queen Villa was used for residential purposes wherein certain portion was also used for office purposes. The Division Bench, relying upon the decisions in the cases of CWT v. W. Doraisamy [1995] 215 ITR 853 (Mad ), CWT v. B. M. Bhandari [1980] 123 ITR 554 (AP), CWT v. Mrs. Avtar Mohan Singh (1972) 83 ITR 52 (Del), Shiv Narain Chaudhari v. CWT [1977] 108 ITR 104 (All ) and CWT v. Smt. Muthu Zulaikha (2000) 164 ctr (Mad) (FB) 613 held: the legal position is, therefore, settled and there is a consensus of opinion amongst various High courts as to the meaning to be assigned to the expression "exclusively used by him for residential purposes" to mean the property should not be put to any non-residential use. In other words, the property should not be exploited to generate income therefrom. In the present case, admittedly that is not even the case of the Revenue, that Queen Villa which is used by the assessee for office purposes is put to any commercial use to earn income. ( 7 ) WE are in full agreement with the aforesaid observation of Gujarat High Court. In this case we also find that the assessee was a partner in the said firm and no rent was charged from the said firm. ( 8 ) LEARNED Counsel for the Department submits that the aforesaid matter is under consideration before the Supreme Court as reported in (1991) 189 ITR (St) 114. We find that the question involved before the Supreme Court is quite different. ( 8 ) LEARNED Counsel for the Department submits that the aforesaid matter is under consideration before the Supreme Court as reported in (1991) 189 ITR (St) 114. We find that the question involved before the Supreme Court is quite different. In the case in hand, the question of applicability of Section 7 (4) of the WT Act has not been referred for consideration, therefore, the reliance placed by the learned standing counsel is misplaced. ( 9 ) IN view of the above discussion, we answer the question in affirmative i. e. , in favour of the assessee and against Department. No order as to costs. . .