HARISHCHANDRA DEVENDRA KUMAR BADER (HUF) v. INSPECTING ASSISTANT COMMISSIONER
[Citation -1986-LL-0819-2]

Citation 1986-LL-0819-2
Appellant Name HARISHCHANDRA DEVENDRA KUMAR BADER (HUF)
Respondent Name INSPECTING ASSISTANT COMMISSIONER
Court ITAT
Relevant Act Income-tax
Date of Order 19/08/1986
Assessment Year 1977-78
Judgment View Judgment
Keyword Tags valuation officer • valuation date • value of house • karta
Bot Summary: H.S. AHLUWALIA, J.M. A very ticklish issue is involved in these appeals namely, the assessees claim for freezing of the value of flat owned by it Bombay under s, 7(4) of the WT Act. The assessee is an HUF and the WTO denied this claim on the ground that in the IT return, filed by the assessee, it had been mentioned that the said flat was used for business visits of the members of the assessee family. The assessee has come up in second appeals before us. On behalf of the assessee it was contended that there was absolutely no scope for any further enquiry in the matter because the value of the buildings as on 1st April, 1972 had to be taken for all subsequent years. Lastly the income tax assessment order for the year 1977-78 was produced, where the SOP value of the flat had been added to the IT assessment of the assessee. Secondly, as the address of the assessee in all the assessment orders produced by the assessee and the disputed assessments mentioned is M/s Harishchand Devendra Kumar. The cl.4 of s.7 is an abnormal provision of law giving an artificial value to t h e properties held by the assessees which they exclusively used for their residential purposes throughout the period of 12 months preceding the valuation date.


H.S. AHLUWALIA, J.M. very ticklish issue is involved in these appeals namely, assessees claim for freezing of value of flat owned by it Bombay under s, 7(4) of WT Act. assessee is HUF and WTO denied this claim on ground that in IT return, filed by assessee, it had been mentioned that said flat was used for business visits of members of assessee family. It, therefore, meant that this flat was never exclusively used by assessee for residential purposes for previous year. Therefore, provisions of s. 7(4) could not apply and its value could not be restricted to value taken on 1st April, 1972. Relying on report of Valuation Officer of IT Department, he took value at Rs. 1,86,500 in first year and Rs. 2,06,600 in second year. On appeal, CIT(A) restored matter back to IAC for fresh decision after getting report from Valuation Officer qua both years in question. assessee has come up in second appeals before us. We have heard representatives of parties at length in these appeals. On behalf of assessee it was contended that there was absolutely no scope for any further enquiry in matter because value of buildings as on 1st April, 1972 had to be taken for all subsequent years. In this behalf our attention was drawn to assessment order for year 1976-77 where value of building had been taken at Rs. 81,000 only. Next consequential order in relation to assessment of this year was shown to us which probably was meant for purpose that SOP value of this house had been added in IT assessment of assessee. Reference was next made to appellate order for year 1977-78, in which AAC has observed that SOP income of property will be added to income of assessee by restricting it to 10 per cent. IT assessment order for year 1979-80 was produced before us to show that some expenses incurred on this flat were added back and SOP of this flat was included in IT assessment. appellate order for this year was again produced to show that assessee s claim for exemption under s. 5(1) (iv) was allowed for year 1979- 80 on gound that property was noted to be self occupied by valuation Officer. Another order produced was WT assessment order in relation to year 1980-81 where value of this flat was taken at Rs. 85,000 and held to be exempt. So was position for assessment for year 1981-82. Lastly income tax assessment order for year 1977-78 was produced, where SOP value of flat had been added to IT assessment of assessee. After carefully going through these documents, we are afraid we are not wholly inclined to accept assessee s contention. fact that assessee has not let out this house to anybody and assessee s claim for exemption under s. 5(1)(Iv) of WT Act has been allowed by WT authorities or that SOP value of flat has been included in IT assessments of assessee would be of absolutely no consideration so far as determination of claim of assessee for freezing value under s. 7(4) is concerned. relevant provision reads as under: (4) Notwithstanding anything contained in sub-s. (1) value of house belonging to assessee and exclusively used by him for residential purposes throughout period of twelve months immediately preceding valuation date may, at option of assessee be taken to be price which, in opinion of WTO, it would fetch if sold in open market on valuation date next following date on which he became owner of house, or on valuation date relevant to assessment year commencing on 1st day of April, 1971, whichever valuation date is later: Provided that where more than one house belonging to assessee is exclusively used by him for residential purposes, provision of this sub-section shall apply only in respect of one of such houses which assessee may at his option, specify in this behalf in return of net wealth. Explanation For purposes of this sub-section (i) where house has been constructed by assessee, he shall be deemed to have become owner thereof on date on which construction of such house was completed. (Ii) "house" includes part of house, being independent residential unit. Now, firstly, word used in line 2 underlined above is "him, from which it prima facie follows that this section was not intended to cover case of assessee other than individuals. Secondly, as address of assessee in all assessment orders produced by assessee and disputed assessments mentioned is M/s Harishchand Devendra Kumar. What we mean to say is that atleast Karta of assessee family is ordinarily residing at Jaipur. cl.4 of s.7 is abnormal provision of law giving artificial value to t h e properties held by assessees which they exclusively used for their residential purposes throughout period of 12 months preceding valuation date. If members of assessee are having their own house elsewhere and are residing in them, they would naturally be entitled to claim benefit of this section in relation to those houses wherein they are residing. It would be then strange proposition of law that HUF resides at one place and members at other places and residential houses occupied by members as well as by HUFs are separately entitled to benefit of cl 4 of s. 7 of WT Act. This would be introducing anomaly which was never contemplated by framers of WT Act. We are, therefore, of opinion that before this matter is finally decided, it should be found out as matter of fact as to who are members of assessee family, where they actually reside in 12 months immediately preceding relevant valuation dates, and whether they or any of them claimed benefit of this sub-section in respect of those residential premises. It is only after these facts are found that question of allowing any benefit of this sub- section would arise. Since CWT has already restored this matter, back to file of WTO, for determining value of house afresh, we further direct that he shall also decide assessee s claim for exemption in light of our aforesaid discussions. In result , for statistical purposes, appeals shall be deemed to have been partly allowed as such. *** HARISHCHANDRA DEVENDRA KUMAR BADER (HUF) v. INSPECTING ASSISTANT COMMISSIONER
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