These six appeals by revenue relating to two assessees i.e., M/s. Rajendra Lal & Sons (HUF), Shamli and M/s. Narendra al Shadi Lal (HUF), Muzaffarnagar, pertaining to assessment years 1989-90 to 1991-92 against t w o combined orders of Commissioner of Wealth-tax (Appeals), Muzaffarnagar in case of each of assessee relating to aforesaid three assessment years, along with cross objections of two assesses for each assessment year, are being decided by common order for sake of convenience. 2. Shri Ashok Mittal, learned Sr. DR appeared for revenue whereas S/Shri Ajay Vohra, K.L. Aneja & Sachit Jolly, Advocates appeared for assessees. 3. In appeals, revenue has taken identical grounds in die case of both assessees for all three years. 4. First ground challenges order of learned CWT(A) in directing Assessing Officer to value share of assessee in property as per provisions of Rule 3 of Schedule III of Wealth-tax Act as against order of Assessing Officer who determined value of property by applying Rule 8(b) of Schedule III of Wealth-tax Act, 1957. second ground of appeal has been taken in support of Ground No. 1 and is as under: "2. On facts and circumstances of case, Ld. CWT(A) erred i n holding that area on which construction was not permissible in view of restrictions placed under die provisions contained in Urban Land (Ceiling and Regulation) Act, 1976 as well as restrictions put in respect of properties falling under Lutyens Bungalow Zone dated 8-2-1988, unbuilt land on which construction was possible had to be excluded from purview of total area for working out specified area for purpose of valuation of property as per provisions of Wealth Tax Act, 1957." third ground of appeal is general in nature. 5. In cross objections, assessees have taken various grounds but these grounds are mainly taken for supporting orders of learned first appellate authority. WTA Nos. 90 to 92/Delhi/2006 6. We consider it proper to take up appeals relating to assessee namely M/s. Rajendra Lal & Sons (HUF), Shamli for assessment year 1989- 90 to 1991-92. 7. facts have been narrated by learned CWT(A) in para 2 of his order winch are summarized as under: (1)The assessee was co-owner along with M/s. Narendra Lal Shadi Lal (HUF) of House No. 2, Bhagwan Dass Road, New Delhi. This property was leased property. lease was granted in favour of Late Shri Shadi Lal in year 1922. properties were inherited by co-owners as right of partition effected in family. (2)The valuation of aforesaid property for purpose of wealth-tax was subject matter of dispute with Wealth-tax authorities. For assessment years 1969-70 to 1973-74 matter was decided by ITAT vide order dated 7-3- 1981. In said order Tribunal had directed that property should be valued on rental basis and value should be suitably enhanced to cover estimated value for un-built portion. (3)For assessment years 1974-75 to 1978-79 ITAT vide order dated 23-4-1981 held that property should be valued on basis of Rule 1BB of Wealth-tax Rules, inserted with effect from 1-4-1979. (4)The orders of ITAT in aforementioned years were not challenged and became final. (5)For assessment years 1979-80 to 1988-89 assessee filed returns on basis of Rule 1BB and returns were accepted by WTO. (6)In 1984 competent authority under Urban Land (Ceiling & Regulations) Act, 1976 declared area of 67740.8 sq. meters as excess vacant land. This order of Competent Authority has not been disturbed or modified. (7)The assessee entered into agreement dated 18-5-1989 to sell property to Embassy of USSR at Rs. 375 crores. share of each owner being R s . 1.875 crores. For assessment year 1989-90 on basis of this agreement, assessee originally filed wealth-tax return showing value of its share in property at Rs. 1.875 crore on basis of agreement. However, agreement could not be executed. assessee therefore, revised its return of wealth-tax and for valuation of its share placed reliance on Rule 3 of Schedule III of Wealth-tax Rules which was inserted with effect from 1- 4-1979. assessment for assessment year 1989-90 was completed by Assessing Officer accepting valuation of aforesaid property. learned Commissioner of Wealth-tax (Appeals) invoked power under section 25(2) of Wealth-tax Act and set aside assessment. He took view that since un-built area of property exceeded specified area by more than 20 per cent of aggregate area, rental basis specified in Rule 3 could not be adopted for valuation. 8. order of Ld. CWT(A) passed under section 25(2) of Wealth- tax Act was set aside by ITAT F Bench Delhi vide their order dated 9-10-2002 and matter was restored to WTO who was directed to examine facts for deciding issue as to whether Rule 3 or Rule 8(b) is applicable. WTO passed order on 18-11-2003 for assessment year 1989-90 and held that Rule 3 of Schedule III of Wealth-tax Rules is not applicable in this case. He applied rule 20 of Wealth-tax Rules and framed assessment accordingly by determining net wealth of assessee at Rs. 1,71,25,700. 9. assessee challenged order of W.T.O. before learned CWT(A). For doing so assessee submitted following arguments: "(i)The Property in question lies in Lutyens Bungalow Zone and is meant for educational and research institutions. (Page 22 of Paper book). There are restrictions on new construction in Lutyens Bungalow Zone contained in Circular dated 8-2-1988 issued by Ministry of Urban Development. (Refer pages 134- 137 of Paper Book). In terms of aforesaid circular issued by Ministry of Urban Development, it was not permissible for appellants to raise any new construction on land, which was in excess of plinth area covered by existing structure. existing structure on plot admittedly admeasured 1138 sq. mtr. Thus in situation where appellants would have demolished and constructed new building, maximum, area which could have been covered, could not have exceeded 1138 sq. mtrs. Without prejudice, even if provisions of Circular are to be interpreted in manner that appellants were entitled to construct additional area equivalent to area of existing structure, appellants could not have, even in that situation, covered in aggregate more than 2276 sq. mtrs. Assuming that appellants were entitled to cover upto 25 per cent of area of plot in terms of general guidelines applicable for construction of plots, in terms of aforesaid circular, only area of 2630 sq. Mtrs. Could have been covered by appellant. Rule 6 of Schedule III of Wealth tax defines meaning of "specified area" for purpose of valuation of unmovable property, which means 60 per cent of aggregate area. Provided mat where, under any law for time being in force, minimum area of plot of land required top be kept as open space for enjoyment of property exceeds specified area, such minimum area shall be deemed to be specified area". [Emphasis supplied]. It would be pertinent to note that in terms of proviso to clause (b) of Explanation to rule 6, where any portion of land, which is required to be kept as open space under any law, exceeds percentage of aggregate area which has been specified for various locations, such area which to be kept open would be substituted in place of area calculated as per specified percentages. It would thus be relevant to seem, whether, after taking into account area on winch construction was not permitted in case of appellant, unbuilt area exceeded specified area by more than 20 per cent of aggregate area in order to attract provisions of Rule 8(b) of Schedule II. (ii)The workings of specified area in percentage and in sq. Mtrs. under above three alternatives is enclosed. It would be evident from calculations enclosed that ill none of alternatives unbuilt area exceeds specified area by more than 20 per cent of aggregate area. (iii)In view of above, rule 8(b) of Schedule II of Wealth Tax Act is not applicable to aforesaid property and valuation was required to be done only in terms of rule 3 of Schedule in, as returned by appellant and accepted by Assessing Officer." 10. assessee also placed reliance on decision of Lucknow Bench of ITAT in case of Sir Padampat Singhania v.Dy. CWT [2002] 81 ITD 89 and decision of ITAT Delhi Bench C in case of Smt. Lalita Dalmia v. Dy. CIT [2005] , main contention of assessee before CWT(A) was that since on account of restrictions placed in Lutyens Bungalow Zone contained in Circular dated 8-2-1998 issued by Ministry of Urban Development, it was not permissible to assessee to raise any new construction on land which was in excess of plinth area covered by existing structure, specified area shall be taken accordingly as result of which difference between unbuilt area and specified area shall be less than 20 per cent of aggregate area. assessee also took another plea which was that as per order of Competent Authority passed under Provision of Urban Land (Ceiling and Regulation). Act, area of 6740.8 sq. meters was declared excess vacant land and in view of decision of ITAT Delhi in case of Smt. Lalita Dalmia (supra), excess vacant land on which construction is not permissible under Land Ceiling Act cannot be treated as an asset within meaning of section 2(ea) of Wealth-tax Act. Consequently no construction is permissible on such land by virtue of provisions of Urban Land (Ceiling & Regulation) Act. 11. next plea taken by assessee was that in view of recommendation of New Delhi Development Advisory Committee which was also followed by New Delhi Municipal Committee in sanctioning building plans area of 3772 sq. mtrs. could not be built up. 12. For supporting above pleas with reference to figures of total area, built-up area, unbhuilt area etc. assessee also submitted tables containing relevant details which are as under: Table-A Particulars As As per Restrictions placed in respect of considered properties falling under Lutyens Bungalow Zone by Deptt. If no If If 25% addition is addition coverage is permissible equal to taken existing area is permitted Total Area 10522 10522 10522 10522 Built up 1138 1138 1138 1138 area Unbuilt 9384 9384 9384 9384 Area Specified 60% 89.18% 78.37% 75% Area Specified 6313.2 9384 8246 7891.5 Area Excess of unbuilt Area over 3070.8 0 1138 1492.5 specified Area 20% of 2104.4 2104.4 2104.4 2104.4 aggregate area Percentage 29.18 0.00 10.82 14.18 of excess on aggregate area >29% <20% <20% <20% Calculations in terms of excess vacant land declared un provisions of urban land (ceiling & regulations) Act 1976 as per order passed under said act referred in submissions: Particulars As Resultant of Area considered figures as per by CIT Urban Land Ceiling Act Which call for consideration (for purpose of valuation) Area of 10,522 10,522 Plot Sq. mtrs. Sq. mtrs. "Excess Vacant Land" under Urban Land (C&R) Act Not 6,740.8 1976 considered sq metis Balance Land as such Available for consideration As on 31-3- 10,522 3,7,81.2 1989 Sq. mtrs. Sq. mtrs. Built in 1,138 1,138 Sq. area Sq. mtrs. mtrs. Unbuilt 9,384 2,643.2 area Sq. mtrs. Sq. mtrs. Specified area (60% of total plot 6,313.2 2,268.72 area) Sq. mtrs. Sq. mtrs. Difference between unbuilt Area and 3,070.8 374.48 specified area Sq.mtrs. sq. mtrs. 20% of Aggregate 2,104.4 756.24 area Sq. mtrs. sq. mtrs. In terms of (More percentage than 20 per (Less cent) than 20%). 13. learned CIT(A) on examining issue found force in submissions of assessee and directed Assessing Officer to value under Rule 3 of Wealth-tax rules by observing as under: "From perusal of calculations of total area, built up area, unbuilt area, specified area and restrictions in matter of construction, I am of view that difference between specified area and aggregate area need to be taken as less than 20% and so Rule 3 of Schedule III has to be applied and accordingly Assessing Officer is directed to value property on said basis. Assessing Officers action in valuing property under Rule 8(b) in defiance of mandatory requirements to follow Valuation Officers report under section 16A(5) is hereby not approved. Assessing Officer is directed to value property under Rule 3 and give consequential relief to Appellant." 14. Before us learned DR supported order of Assessing Officer whereas learned counsel for assessee placed reliance on order of learned CWT(A). 15. We have considered entire material on record and rival submissions. main issue to be considered is as to whether on facts and in circumstances of case Rule 3 of Schedule III of Wealth-tax Act is applicable or Rule 8(b) of Schedule III is applicable. 16. Valuation of immovable property is done under Schedule III of Wealth-tax Act, 1957. As per Rule 3, valuation of immovable property is to be done by rent capitalization method i.e., value shall be amount arrived at by multiplying net maintainable rent by particular figure. Rule 6 provides that where unbuilt area of plot of land on which property is constructed exceeds specified area, value arrived at in accordance with provision of Rule 3 shall be increased by amount calculated in manner provided therein. Explanation to Rule 6 which defines aggregate area and specified area under sub-clauses (a) & (b) reads as under: "(a)"aggregate area", in relation to plot of land on which property is constructed, means aggregate of area on which property is constructed and unbuilt area; (b)"Specified area", in relation to plot of land on which property is constructed, means (i)where property is situated at Bombay, Calcutta, Delhi or Madras, sixty per cent of aggregate area; (ii)where property is situated at Agra, Ahmedabad, Allahabad, m r i t s r , Bangalore, Bhopal, Cochin, Hyderabad, Indore, Jabalpur, Jamshedpur, Kanpur, Lucknow, Ludhiana, Madurai, Nagpur, Patna, Pune, Salem, Sholapur, Srinagar, Surat, Tiruchirappaalli, Trivendrum, Vadodara (Baroda) or Varanasi (Benaras), sixty-five per cent of aggregate area and (iii)where property is situate at any other place, seventy; per cent of aggregate area: Further, there is Proviso attached to this Explanationwhich is as under: Provided that where, under any law for time being in force, minimum, area of plot of land required to be kept as open space for enjoyment of property exceeds specified area, such minimum area shah1 be deemed to be specified area;" In view of above proviso minimum area of plot which is required to be kept as open space for enjoyment of property under any law for time being in force, is to be treated as specified area, Rule 8 provides conditions where Rule 3 would not be applicable. One of conditions incorporated in sub- clause (b) is that where he difference between unbuilt area and specified area exceeds twenty per cent of aggregate area, Rule 3 will not be applied. 17. Assessing Officer had taken view that difference between unbuilt area and specified area exceeds 20% of aggregate area and thus he concluded that rule 3 shall not be applicable in case of assessee. According to him Rule 8 will be applicable. On other hand, after examining Notification of Government regarding restriction placed in Lutyens Bungalow Zone, learned CWT(A) has held that minimum area which is to be kept as open space as per restrictions imposed, is to be treated as specified area. He has accordingly worked out difference between unbuilt area and specified area (minimum area) and has held that specified area does not exceed 20% of aggregate area. department has not disputed figures given in Table A. 18. On examining figures given in table reproduced by learned first appellate authority it is clear that if restrictions placed in respect of properties falling under Lutyens Bungalow Zone are taken into account, then difference between unbuilt and specified area will not exceed 20% of aggregate area. Thus in view of Table-A, thus difference between unbuilt area and specified area does not exceed 20% of aggregate area. Thus is view of Table-A, thus difference between unbuilt area and specified area does not exceed 20% of aggregate area. 19. learned CWT(A) has also considered other methods whereby addition was permissible only equal to existing covered area or upto 25% coverage of plot area. From this method also it is found that percentage of excess on aggregate area does not exceed 20%. 20. learned CWT(A) has also examined issue relating to excess vacant area of land and order of Competent Authority as per which also no construction was permissible on excess vacant land and, thus, if excess vacant land is taken into account, then also difference between unbuilt area and specified area will not exceed 20 per cent of aggregate area. In our view, therefore, learned CWT(A) has adopted correct approach. 21. issue relating to applicability of Building Regulations was considered by Lucknow Bench of ITAT in case of Sir Padampat Singhania (supra). In that case also it was held that building regulations have got force of law and are to be taken into account as per Proviso attached to Rule 6 of Schedule III of Wealth-tax Act. In that case building fell in category of Eco-friendly area and as per regulations of Jaipur Development Authority more than 5 per cent of area was not to be covered under construction. ITAT held that JDA Regulations which are to be treated as part of Rule 6 of Schedule III and which are to be read with Explanation to Rule 6 are also to be applied. In instant case also restrictions placed vide Circular dated 8- 2-1998, issued by Ministry of Urban Development, it is not permissible to raise any new construction in excess of plinth area covered by existing structure. There is no dispute that existing structure on plot measured 1138 sq. meters. Thus remaining area has to be left open under restrictions placed under Circular of Ministry of Urban Development and such area has to be treated as minimum area which is to be considered as specified area for purpose of rule 3 read with rule 6 of Schedule III. 22. In view of above, we uphold order of learned CWT(A) for all three assessment years in case of assessee. Consequently grounds taken by revenue in these appeals are rejected. 23. In result, all three appeals of revenue are dismissed. C.O. Nos. 140 to 142/Delhi/2007 24. In cross objections assessee has supported order of learned CWT(A) by taking grounds No. 1, 2, 4, 5 & 6. Since we have uphold order of learned CWT(A) for all three assessment years, these grounds taken by assessee in cross objections stand allowed. 25. Ground No. 3 has challenged validity of report of DVO dated 22-3-2002. learned CWT(A) has considered this issue in para 7.1 of his order and has observed as under: "7.1 Appellant has also taken plea that value determined by Valuation Officer under section 16A(5) in terms of valuation report dated 3- 12-1996 is binding on Assessing Officer and ought to have been taken in consideration by Assessing Officer According to assessee, amended report dated 22-3-2003 is patently illegal and also time barred and as such same has to be ignored considered altogether. Although, this ground is not pressed; however, it is important to note that in valuation report dated 3-12-1996, Rule 3 of Schedule III had been followed. This further adds strength to view taken by me, otherwise on merit." 26. In fact revenue has not taken any ground to challenge observations of learned CWT(A). Hence, ground cross-objection by assessee in all three years deserves to be allowed. cross objections, therefore, stand allowed. WTA Nos. 93 to 95/Delhi/2006 & CO Nos, 145 to 147/Delhi/2007 27. In WTA Nos. 93 to 95/Delhi/2006 in case of M/s. Narendra Lal Shadi Lal (HUF) grounds taken by revenue are identical to grounds taken in case of Rajendra Lal & Sons (HUF), these grounds are rejected in view of our observations and finding given hereinabove in WTA Vos. 90 to 92/Del/2006 as facts are identical. Similarly cross objections filed by assessee are also disposed of accordingly in view of our findings given in cross objections in case of M/s. Rajendra Lal & Sons (HUF). 28. In result, whereas all three appeals filed by revenue are dismissed, cross objective filed by assesses are allowed. *** Assistant Commissioner of Wealth-tax, Circle-I, Muzaffarnagar v. Rajendra Lal & Sons (HUF)