2001 PLP 1233 (PTD)

Tax Cases Nos. 891 of 1994 and 89 of 1994 relate to the assessment made on the Hindu undivided family of which Mr. D. Krishnamurthy is the Karta. The assessment years are 1983‑84 and 1986‑

87. Tax Case No. 89 of 1994 relates to the assessment of the same D. Krishnamurthy as individual and the assessment year is 1983‑

84. The Hindu undivided family of the assessee comprises of the said Krishnamurthy, his wife and three minor children and the land belonging to the Hindu undivided family assessee has been leased by Krishnamurthy to put up a residential building thereon, and that building has been assessed as an asset belonging to him as an individual, while the land on which it is constructed has been assessed as an asset of the Hindu undivided family for the purpose of wealth tax. The Income‑tax Officer had sought to value the land and building separately by applying rule 1BB while the assessee invoked section 7(4) of the Wealth Tax Act, as it then stood, as the building was used by him as a residential house and had been so used by him in the 12 months immediately preceding the assessment year. The claim of the assessee was rejected by the Income‑tax Officer, but, was accepted by the Appellate Authority and the Tribunal. 'The value of the house by applying section 7(4) was determined at Rs. 5,03,054 and applying the same provision the value of the land was determined at Rs. 1,50,

000. The first question referred in all these references is common, viz.: "Whether, .on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the house, the superstructure of which is owned by the assessee in his individual capacity and the land on which the building stands is owned by the assessee as Karta of the Hindu undivided family could be valued by applying the provisions of section 7(4) of the Wealth Tax Act?" The second question in Tax Cases Nos. 891 and 892 of 1994 is set out as under: "Whether, on the facts and circumstances of the case, the Appellate Tribunal is right in law in valuing the entire property at Rs. 6,53,054 by applying the provisions of section 7(4) of the Wealth Tax Act and thereby fixing the value of the land belonging to the Hindu undivided family at Rs. 1,50,000 and value of the house belonging to the individual at Rs. 5.03,054?" The second question referred in Tax Case No. 89 of 1994 is set out as under: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in valuing the entire property by applying the provisional of section 7(4) of the Wealth Tax Act and thereby fixing the value of the land belonging to Hindu undivided family at Rs. 1,50,000?" The facts are not in dispute. The Hindu undivided family as noticed earlier consists of husband, wife and three minor children. The Hindu undivided family owns a plot of urban land and a residential building has been constructed thereon wherein the family lives. The building has been put up by the Karta of the Hindu undivided family in his individual capacity. Though the building is owned by him as an individual, the building is used for the residence of all the members of the Hindu undivided family and the valuation of these assets of land and building in the circumstances is intertwined and it would be wholly inappropriate to value them separately by applying different provisions of the Act. Looking to the substance it is evident that the land on which the building has been erected by the Karta in his individual capacity is in fact the land used for putting up the building in which they live. The building is thus, used for residential purpose of the individual who put it up as also by all the members of the Hindu undivided family of which he is the Karta. The individual who owns the building has substantial share as the coparcener of the Hindu undivided family property. The Appellate Authority and the Tribunal have held that section 7(4) of the Wealth Tax Act is the appropriate provision to be applied for valuing the land and building, That provision enables the owner of a house, who uses it exclusively for residential purpose throughout the period of twelve months immediately preceding the valuation date to value the same on the valuation date next following the date on which he became the owner of the property or on the valuation date, relevant to the assessment year commencing on April 1, 1971, whichever date is later. Applying that provision the value of the building as also the land on which it rests was determined by the Appellate Authority at Rs. 5,03,054 as the value of the‑ building and Rs. I,50,000 as the value of the land. Though the Hindu undivided family is not the owner of the building, it is the members of the Hindu undivided family who admittedly reside in the building and the building is used exclusively for residential purpose. It is on account of the fact that the Karta is a member of the Hindu undivided family and the building has been put up by him though' in his individual capacity on the land belonging to the Hindu undivided family. The valuation of the land and building together initially and thereafter allocating the value towards the building and the land separately and assessing the value of the building in the hands of the individual and the value of the land in the hands of the Hindu undivided family, in the circumstances, was the correct approach to be adopted. We do not find any infirmity in the order of the Tribunal. We answer the questions referred to us in these references in favour of the assessee and against the Revenue. M.B.A./459/FC Reference answered.