JUDGMENT R.K. Agrawal, J.
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 :
"Whether, on the facts and circumstances of the case, the Tribunal was correct in law in holding that the term 'house' will include all the unbuilt vast area of land and whether the immunity as envisaged under Section 7(4) can be given to such an unbuilt vast area of land ?"
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 Section7(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.
4. We have heard Sri A.N. Mahajan, learned counsel for the Revenue, and Sri Vikram Gulati, learned counsel appearing for the respondent.
5. It is not in dispute that the entire area of the land and the house constructed thereon, popularly known as Bashir Lodge, was taken to be as one residential unit in the earlier wealth-tax assessment prior to the assessment year 1976-77. With the introduction of Sub-section (4) in Section 7 of the Act by the Finance Act, 1976, with effect from April 1, 1976, the position of the residential house would not change. It only provided for freezing the valuation of the residential house at the option of the assessee and nothing more. In the present case, the respondent-assessee had opted for valuation as on April 1, 1971, i.e., the date fixed in Section Section 7 of the Act by the Finance Act, 1976 of the Act which valuation was done by the Departmental Valuation Officer. It is common knowledge that in several cities there are old bungalows having large area running into several acres of land but none the less they are treated as one residential house. The vacant land which is there in the house is being used as garden, lawns, etc. There is no allegation that there is any proposal of selling the land. The land, thus, could not have been valued separately. In this view of the matter, we do not find any infirmity in the order of the Tribunal.
6. In view of the foregoing discussion, we answer the question of law referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue. There shall be no order as to costs.