9911796707
TMI Blog1987 (1) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... ifications were sought in course of hearing. Since the facts pertaining to filing of the return originally showing a lesser amount of wealth and subsequently revising the same and properties and lands held by the assessee are not only detailed in the assessment order but also repeated in the order of the CWT(A), we intentionally avoid encumbering this order with those facts and come to the grounds individually seriatim. 2. The first ground reads as under: "On the facts and in the circumstances of the case, the CWT(A) has erred in law in allowing deduction of Rs. 1,90,000 in the valuation of agricultural land". Briefly to state the facts in the background of this issue, there was agricultural land covering 18 acres or so in which the assessee held 1/3rd share. This land was composed of 'chahi', 'nehri', 'Banjar' and gair-mumkin and some of the banjar and was not in possession of the assessee. This particular assessee had only 1/3rd share in the total area of agricultural land. In the statement of wealth, the assessee had disclosed 13.66 acres being the total area of land-both in the original and the revised return. He had taken the value of the same @ Rs. 7,000 per acre pit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.97 acres is cultivable out of total area of 13.66 acres, balance 2.69 acre being 'banjar'. He also submitted that even as per sale instance which had been made the basis by the Revenue, valuation of Rs. 1,10,000 shown by the assessee in revised return is on higher side because the same is based @ Rs. 8,000 per acre. He drew our attention to page 11 of the assessee's paper book in which the WTO had asked the assessee about fair market value of agricultural land indicting the area used and type of agricultural land and also took us through the assessee's compilation that regarding land at village Garhi Sikanderpur, five yearly average is enclosed which gives sales of 1979 and 1980 also. He also took us through his written submissions filed before the CWT(A) available at pages 63 onwards, on which he relied and submitted that average rate as per the WTO comes to Rs. 22,600 against that of Rs. 5,940 per acre given by patwari or revenue Department. Regarding total area of land, he agreed as pointed out by him before the CWT(A) that total area was with the villagers being 'banjar' land in adverse possession and was of no value. Then, he submitted, against Rs. 5,940 they have taken th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its or the rent of a number of years purchase should be resorted only when other evidence for computation of market value is not available". In that very judgment their Lordships further observed: "——That the said method should be adopted only in case other methods are not available". In the instant case, comparable cases even are available. We have sustained the addition of Rs. 40,000 in respect of 'banjar' land which is in possession of villagers because when the assessee had shown the value in the revised return in a sum of Rs. 1,10,000. it was shown in respect of the area of 13.66 acres only. It is too late in the day for the assessee to say that since the average rate of agricultural land as per the revenue's record on the basis of comparable cases in respect of all types of land comes to Rs. 5,940 and because the assessee had shown the rate of Rs. 8,000 per acre, it cannot be ignored that the assessee has shown higher rate for the reasons best known to it which may be situation or some other element such as that of yield in this particular case etc. Since the fact remains that the total area shown is 13.66 acres again 18 acres, we are in agreement with the learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land was received by him as individual and even alternatively if it is accepted, for the sake of argument, that in the immediately preceding year it was shown in the hands of the HUF and put in the common hotch-potch, on the strength of s. 4(1A) he ordered the deletion of the said addition. 7. The ld. Sr. D.R. in respect of this issue also went thoroughly thorough the gift-deed and highlighted over and again that since the expressions 'donor' and 'donee' were to mean and include their heirs, representatives, assignees, administrators, etc., it was a gift to HUF and more so since it was reflected in the books of the HUF. Besides, he relied on the order of the WTO. The learned counsel for the assessee, on the order hand, besides relying on the order of the CIT(A), submitted that first the donee was an individual Shri O.P. Shingla and not the HUF and secondly even if, for the sake of argument, it is taken to be so in the light of s. 4(1A), as rightly relied upon by the CIT(A), the same could not be included in the hands of the assessee HUF. 8. After taking into consideration the rival submissions and going into the relevant papers in the assessee's compilation in this respect, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by the ld. counsel for the assessee would remain of academic interest when we actually go to s. 2(r), which reads as under: "2(r) 'Valuation Officer' means a person appointed as a Valuation Officer under s. 12A, and includes a Regional Valuation Officer, a District Valuation Officer, and as Assistant Valuation Officer". Looking to the above definition, we hold that a notice sent by the CWT(A), to the Valuation Officer was sufficient opportunity granted to the Valuation cell for representing the case and in the instant case so much so the Valuation Officer Sh. Ram Singh was also present in the course of hearing before the CWT(A). The third ground raised by the Revenue in appeal, in respect of which the above preliminary objection was raised by the DVO is rejected by us. The ground reads as under: "The CWT(A) was not justified in law and on facts in ignoring the valuation of the immovable properties comprising of factories and residential houses as made by the departmental valuation cell". This ground of appeal on the face of it may not be termed as misconceived but is is not very clear and can safely be termed as ambiguous and not happily worded. There are many a prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 38,962. which was increased by 30 per cent as provided in r. 1BB (3)(ii) as per which it come to be determined at Rs. 50,650, against which the assessee had shown it at Rs. 1,41, 595. The CWT(A) observed that the value shown by the assessee was even higher than what could be worked out under r. 1BB and, therefore, he elected not to interferes. In the course of arguments, the ld. counsel for the assessee had also pointed out under s. 7(4) valuation of the house was to be frozen as on the valuation date next following the date on which the assessee became the owner of the house. We are unable to support the valuation given by the DVO on which reliance was placed by the WTO and the ld. Sr. D.R. because as per special Bench decision in the case of Biju Patnaik the Valuation Officer could not ignore r. 1B and, more strictly speaking, as per the said decision, even reference to valuation cell was unwarranted. In the said decision, it has been held that r. 1BB is mandatory, it has also spoken about the jurisdiction of the WTO for making a reference and binding nature of r. 1BB for Valuation Officer and it is further observed therein that the said r. 1BB has been made for giving a bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied property at a lesser figure than that arrived at by the registered valuer, he cannot be denied that benefit. There is no merit in the contention that the assessee having returned higher valuation, can not take advantage of r. 1BB to claim reduction in the valuation. "6. To hold that a person who owns a residential house, even though let out, would get the benefit of r. 1BB but one who is occupying that house himself would not get the benefit, would neither be the correct inter-pretation, nor a harmonious construction of the sections and the rules. The benefit should be more readily available to a self occupied property than to let out property, though both are residential. Accordingly, even after 1st April, 1976, when s. 7(4) came on the statute book, the assessee has an option either to value the self occupied property by application of s. 7(4) or by application of r. 1BB, whichever is more beneficial to him". Looking to the above said decision, even the assessee could be granted relief of the difference which is there between the value returned by him and the value determined as per r. 1BB but, it seems, the assessee did not press the same before the CWT(A) nor he was out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperties, as his attempt and the attempt of the ld. DVO was that though the property in question was rented out the land and building method should have been adopted as tenants were either relations of the assessee or allied concerns. In that connection, he pointed out the facts in brief while attaching the order of the CWT(A) vehemently that there were two blocks of the building—one is owned by the firm styled as Steel Krafts and the other is owned by Indian Conduit Industries. Both these firms have partly let out the premises to sister concerns. Steel Krafts has rented out the portion of his shed, godown and factory known as Metal Tubes Pvt. Ltd. and another firm Steel Krafts Lencing Tubes on an annual rent of Rs. 3,600 each. But he was unable to controvert fact that the said tenancies were since 1962. His main theme of argument was that since the tenants were allied concerns, land capitalisation method should not be basis of valuation as the type of tenants in the instant case are such which can be thrown out anytime. The ld. DVO also projected with the assistance of the valuation report that the value of the building in question is enormous and the land building method is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the CWT(A), we are unable to interfere in his findings. Once there is no controversy about the fact that the properties in questions are tenanted and he tenancy has not been created during the year under consideration or a year or two earlier but are coming in right from 1962 and the assessee owners have been subjected to tax in respect of the said rents and in the hands of the tenants, some of which are firms or even the companies, the same have been allowed, it will be just an imagination or a surmise of the Revenue that it was because of collusion. Simply because the landlords and tenants are relations or connected by blood, should not go against the assessee because though blood is thicker than water, money, more often than not, has been he dearest ones standing in Courts against each others, brother against brother, son against father, wife against husband, what to talk of collaterals. We do not find it necessary to go into the valuation adopted by the VO, supported by the WTO and the ld. Sr. DR before us because the properties in question are tenanted and rent capitalisation method having been adopted, which has been confirmed by the CWT(A), no interference's in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of sale of similar lands with building proximate in time to the date of the notification under s. 4. Therefore, the method which is generally restored to in determining the value of the land and building, specially those used for business purposes, is the method of capitalisation of return actually received from the land and the building". 14. The facts in the background and submissions of both the parties in respect of properties let out by Indian Conduit Inds. and another sister-concern Steel Krafts and Samarat Woollen Mills, are also similar. It was pointed out in the course of arguments that portions to M/s Steel Krafts were stated to have been let out as early as in 1954 whereas to Samrat Woollen Mills it was some time in 1964. For the very same reasons, therefore, given above in respect of other tenanted properties, valuation of these properties too on rent capitalisation method was held in return and the CWT(A) was nowhere in error in adopting the same instead of rents and building method adopted by the valuation cell and the Revenue. In the light of the above discussion and for the reasons given by the CWT(A) in this order, his action is hereby confirmed. 15. Now w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riate. However, regarding the determination of the fair market value of land, determination of the cost of the construction of the building and the quantum of depreciation to be allowed against the cost of construction worked out in view that the appellant has filed details of comparable cases. 28. Considering the facts and circumstances of the case, it would be fair and reasonable to adopt the rate of land at Rs. 8 per sq. yd. The WTO is directed to value the self-occupied portion of the land belonging to the above mentioned two firms @ Rs. 8 per sq. yd. 29. Regarding the determination of the present cost of construction of the said self-occupied portion of the above mentioned properties, it appears, the V.O. has made certain inconsistencies in the valuation report regarding the low cost of material. In my opinion it would be fair and reasonable to hold that the cost of construction of the shed and stores under the self-occupation of M/s Indian Conduit Inds. excepting one open shed, which appears to have been correctly valued @ Rs. 193 per sq. mt. be determined by applying a rate of Rs. 331 per. sq. mt. as against the different rate ranging from Rs. 263 to Rs. 412 per sq. mt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The contention of the learned counsel for the assessee that decisions to CIT vs. Inderjit Singh (1984) 43 CTR (P H) 221 : (1985) 153 ITR 372 and CIT vs. Shri Radhey Mohan (1984) 43 CTR (P H) 236 : (1985) 153 ITR 399 (P H) 43 CTR (P H) 236 : (1985) 153 ITR 399 (P H) can go to the limited extent of supporting the order of the CWT(A), his action having been confined, the Revenue also fails in this ground. 17. The fourth ground in the revenue's appeal reads as under: 'The CWT(A) was further not justified in deleting the addition of Rs. 61,440 by holding that it belongs to larger HUF M/s Phool Chand Chhaju Ram". As in respect of earlier ground, the ld. Sr. DR in respect of this ground as well, before addressing us attempted to clarify the situation and read out at length the orders of the two lower authorities, because reading of the ground alone would have caused more confusion than clarity. He submitted that there was a bigger HUF styled as M/s Phool Chand Chhaju Ram which was constituted of O.P. Shingla, B.D. Shingla, other brothers and their mother. There was partial partition some time in 1957 and the assessee's contention was that he with B.D. Shingla and their mother c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various properties was filed. The contention of the assessee was that this suit was filed with a limited purpose. There is also no dispute about the fact that till 1974-75, the said HUF continued to be assessed. It is also a fact that a memorandum dt. 11th July, 1974 evidencing a total partition in the family was found in the course of a search but this is also on un-controvered fact that the said HUF of Shri O.P. Shingla and B.D. Shingla was assessed to income-tax till 1974-75. The aspect of the matter that one man cannot be Karta of two HUFs does not find favour with us. The death of mother of O.P. Shingla and B.D. Shingla also could not make any difference to the claim of the assessee and the fact that there was neither by claim of partition on behalf on O.P. Shingla and B.D. Shingla before the IT authorities under s. 171 nor any partition was granted. Under the circumstances, even if, partition which is projected by the Revenue to have been taken place in 1974 could not be fatal to the assessee's claim in respect of properties income held jointly earlier by O.P. Shingla and B.D. Shingla, who were assessed as independent HUFs. Since order under s. 171 after any partition of a HU ..... X X X X Extracts X X X X X X X X Extracts X X X X
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