ORDER
Joginder Pall, A.M.
1. This is a bunch of five appeals filed by the Revenue against the orders dt. 31st Oct., 2003 of CWT(A), Jalandhar, for the asst, yrs. 1995-96, 1996-97, 1997-9E, 1998-99 and 1999-2000, respectively. Since the issue involved in all the appeals is common, these were heard together and are being disposed of by this consolidated order for the sake of convenience.
2. In these appeals, the Revenue has raised following two identical grounds. The same are as under:
1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in holding that the assessee rightly claimed the deduction under Section 5(1)(vi) of the WT Act in respect of land measuring 1 acre 7 Kanals and 12 Marias.
2. The learned CIT(A) has not appreciated the fact that the land in question was located outside the boundary wall of the residential house of the assessee as per sketch plan furnished by him before the AO during the assessment proceedings and as such it cannot be termed as land appurtenant to the residential house.
2.1 The facts common to all these grounds of appeal are that in response 1,0 notices issued under Section 17 of the WT Act, the assessee filed returns of wealth for the above-mentioned assessment years. In the returns of wealth filed, the assessee had claimed exemption under Section 5(1)(iv), now Section 5(1)(vi) in respect of bungalow at village Khurla Kingra along with the land appurtenant thereto. The assessee also submitted a note along with returns stating that the land at village Khurla Kingra where the assessee lived was allotted to assessee’s father and the same measured 17 acres and 6 Kanals. After the death of assessee’s father, the land was divided between the assessee and his brother. Thus, assessee’s HUF got land measuring 8 acres and 7 Kanals. The assessee built a residential house along with garden. On 2nd Sept., 1993 his family members filed a suit for their share in the land. The suit was decreed by order dt. February, 1994. The assessee got a residential house along with part of garden as his share. The land measuring 1 acre 7 Kanals and 12 Marias was stated to be part of the residential house and, therefore, exemption was claimed under Section 5(1)(vi). During the course of assessment proceedings, the AO found that the entire ancestral land of the HUF was partitioned in February, 1994 was sold for a sum of Rs. 1,64,47,750. Later on the land measuring 1 acres 7 Kanals 12 Marias, which came to assessee’s share, was also sold for a consideration of Rs. 41,76,271. On being asked the assessee furnished the site plan of the residential premises and the AO found that the land measuring 1 acre 7 Kanals 12 Marias owned by the assessee was located outside the boundary wall of the residential house and as such it could not be termed as land appurtenant to the residential house. The AO also observed that as per site plan, the area within the boundary wall comprised of residential house, servant quarters, sheds, guard rooms, lawn and garden having total area of 9 kanal 10 Marias. No portion of the land which was appurtenant to the residential house and situated within the boundary wall, had been sold. The AO, therefore, observed that the land measuring 1 acre 7 Kanals 12 Marlas which was marked and shown outside the boundary wall of the residential house in the site plan was not part of the land appurtenant to the residential house. He also observed that the land in question was an urban land liable to be included in the wealth of the assessee. Thus, the WTO estimated the value of the land measuring 1 acre 7 Kanals 12 Marias for the various assessment years and included the same in the wealth-tax assessments completed for these assessment years.
3. Being aggrieved, the assessee filed appeals before the CWT(A). It was submitted before the CWT(A) that the land in question was part and parcel of the residential house. It was submitted that on a portion of land, the assessee constructed the residential house in 1973 and also carried on the farming activities and on account of decree in favour of the sons of the assessee, the land was divided in four portions. The assessee became owner of the house and land measuring 1 acre 7 Kanals 12 Marias. It was also submitted that a sketch plan of the residential house was prepared in the year 2002 and this sketch plan was submitted before the AO. It was also submitted that prior to that it was only a piece of land having a boundary wall and gate to approach this land for safety. It was submitted that there was no evidence to show that the land in question was not appurtenant to house and the same was used by the assessee for any other purposes. It was submitted that the land was enjoyed by the assessee for himself and, therefore, it was claimed that the value of the land along with the house was exempt under Section 5(1)(vi) of the WT Act. Reliance was also placed on the judgment of Hon’ble Madras High Court in the case of M.K. Kuppuraj (HUF) and Ors. v. CWT (2002) 178 CTR (Mad) 175 : (2002) 257 ITR 718 (Mad), the decision of Tribunal, Jaipur Bench in the case of WTO v. N.N. Atal (1998) 61 TTJ (Jp) 496 : (1998) 64 ITD 348 (Jp), in support of the contention that if a person had acquired a house for being used as a residential house and that house happened to have a large open space around it for house as godown or a play area or other purposes, the same would qualify for exemption under Section 5(1)(vi) of the WT Act as long as the house was used solely for residence. It was also submitted that the assessee had exclusive right over the entire land and, therefore, the same was exempt. Accepting the contentions of the assessee, the learned CWT(A) held that the land owned by the assessee was appurtenant to the house and, therefore, the same was entitled to exemption. The findings recorded by the CWT(A) in para 1.5 for the asst. yr. 1996-97 are as under :
1.5. I have considered the submissions from both the sides and find that though the claim of residential house being exempt under Section 5(1)(vi) of the WT Act have been accepted by the AO yet the same exemption was held not eligible for the appurtenant land, sold by the appellant on the basis as mentioned in the assessment order whereas it was consistently claimed by the appellant that residential house with land was one unit and the land which was sold was appurtenant to the residential house. The case of the AO is based on site plant that the land in question was located outside the boundary wall of the residential house whereas the appellant claimed it as one piece of land, having furnished the sketch plan with boundary wall which was prepared and filed as desired by the AO and vide Court decree the residential house and 1 acre 7 kanal 12 Marias of land was decreed in favour of appellant. It is not established by any independent enquiry than the material made available by appellant as per requirement of the AO that the land in question was outside the boundary wall of house. There is no finding that the land was used by the appellant for any other purposes and there being no agricultural income or any other income from the said land as per return of appellant, the natural conclusion is that the land appurtenant to the house was enjoyed by the appellant exclusively for residential purpose. The capital gain on sale of land was surrendered for taxation and proceedings under wealth tax were initiated by the AO to bring to the tax the value of said land around the residential house and that too within urban limits but without any independent material or enquiries to support his finding, the AO based its case on merely the site plan. The statute has not laid down any limit as to what should be the size of the house or extent of open space or garden, which as person should have for the house in which he lives. It has been judicially held that the open area is necessary for quiet and peaceful and convenient enjoyment of the property and the benefit of Section 7(4) has to be extended to the open land, which is appurtenant to the house property. This view has been taken by the Hon’ble Tribunal, Madras Bench, in the case reported at ITO v. Smt. M. Kalpagam (1980) 10 TTJ (Mad) 201, by the Hon’ble Indore Bench in the case reported at (1985) Tax 76 (6) 57 and by Hon’ble Allahabad Bench vide Masood Halim v. WTO (1987) 28 TTJ (All) 101 : (1987) 20 ITD 310 (All). There is no finding that the land was not appurtenant to the house and was used for any other purposes and in this respect I find that the case of the appellant gets covered by the decision of Hon’ble Madras High Court (supra) wherein it was held that the open space around the house was used by the assessee in that case for self and the benefit of the open space was confined to the residents of the house and said open space represented a part of the house eligible for exemption under Section 5(1)(vi) of the WT Act. Same are the facts in the case of the appellant as land was used for self/for the benefit of the residents of the house thus it remains a part of the house. The case of the appellant also gets supported by the decision of the Hon’ble Jaipur Tribunal Bench (supra). Therefore, the appellant rightly claimed the exemption under Section 5(1)(vi) of the WT Act and the addition of Rs. 52,15,700 made by the AO in view of the said exemption cannot be sustained and is deleted. I also find merits in the contentions of the appellant that value was not properly determined by the AO as by adopting the same method, its valuation would have been much less than determined by the AO but since the main issue is decided in favour of appellant, the valuation issue becomes redundant.
4. This order was followed for all other assessment years. The Revenue is aggrieved by the order of the CWT(A). Hence these appeals before us.
5. The learned Departmental Representative, Sh. P.S. Sachdev submitted that the Hon’ble Andhra Pradesh High Court in the case of CIT v. Zaibunnisa Begum (1985) 46 CTR (AP) 48 : (1985) 151 1TR 320 (AP) had an occasion to consider the meaning of “land appurtenant” to house for the purpose of considering exemption from capital gain. He submitted that the tests laid down by the Andhra Pradesh High Court are equally relevant for deciding whether the land under consideration could be considered forming part of the house for the purpose of allowing exemption under Section 5(1)(vi) of the WT Act. He submitted that the first test is if the building together with the land was treated as indivisible unit and enjoyed as such by the persons occupying the building, it is an indication that the entire extent of land is appurtenant to the building. He submitted that in the present case, the assessee himself submitted site plan which indicated that there was a boundary wall to the building. The present land fell outside the boundary wall. Drawing our attention to para 3 of the assessment order, the learned Departmental Representative submitted that as per site plan submitted by the assessee, the area within the boundary wall consisted of residential house, servant quarters, sheds, guard rooms, lawn and garden, etc. having a total area of 9 kanal 10 Marias. He submitted that this area measuring 9 kanal 10 Marias falling within boundary wall was considered to be land appurtenant to the house and was allowed exemption. He submitted extent of area owned by the assessee forming part of the residential house is not material provided it was part of the residential house. He submitted that in this case, the land in question was outside the boundary ‘wall and, therefore, the same was not considered forming part of the residential house. He submitted that the AO was fair enough to consider the land measuring 9 kanal 10 Marias within boundary wall having residential house, lawn and garden forming part of the residential house and allowing exemption thereof. He further submitted that the second test laid down by the Andhra Pradesh High Court was whether the land contiguous to the building could be put to independent user without causing any detriment to the enjoyment of the building as such. He submitted that the traditionally land was being used for agriculture. In fact, the land outside the boundary wall had been put to independent use. He further submitted that this is evident from the fact that the land outside the boundary wall measuring 1 acre 7 Kanals 12 Marias was sold subsequently by the assessee as an independent unit. Thus, he submitted that the land outside the boundary wall did not form part of the single unit of the residential house, and, therefore, was not part of the residential house. He particularly emphasized that as per Andhra Pradesh High Court’s judgment, the land used by the occupants for commercial or agricultural purposes although forming part of the land adjacent to the building does not qualify to be treated as land appurtenant to the building. He submitted that this test squarely applies to the facts of the present case as the land outside the boundary wall was being used for agricultural purposes and was also sold as an independent unit. Therefore, the same was not part of the residential house. He submitted that the learned CIT(A) has erroneously relied on the judgment of Hon’ble Madras High Court in the case of MX. Kuppumj (HUF) and Ors. v. CWT (supra) and the decision of the Tribunal, Jaipur Bench in the case of WTO v. N.N. Atal (supra) which are clearly distinguishable on facts. He submitted that only the area falling within boundary wall measuring 9 Kanals 10 Marias having residential house, lawn and .garden along with servant quarters could be considered land appurtenant to the house for which the AO had himself allowed the exemption for the same. He also relied on the judgment of Hon’ble .Gujarat High .Court in the case of CWT v. Shamatilal Popatlal (HUF) , where the action of the CWT under Section 25(2) of the WT Act was upheld by the Gujarat High Court. Thus, he submitted that the learned CWT(A) was not justified in treating the land, in question as forming part of the residential house and allowing exemption thereof.
6. The learned Authorised Representative, on the other hand, heavily relied on the orders of the CWT(A) and reiterated the submissions made before the authorities below. He submitted that the learned CWT A) has duly noted the facts of the case on pp. 2 and 3 in paras 1.1 and 1.2 of the impugned order for the asst. yr. 1996-97. He submitted that the assessee’s father had received 17 acres of land in claim on, partition. The said land was divided between two brothers in which the assessee got about 8 acres 7 Kanals as his share. There was a division among the family members in 1993 and the assesses got the residential house along with the land measuring 1 acre 7 Kanals 12 Marias. His sons got only the land. The land in question was part of the same house and one portion of the same was sold in 1999. He submitted that the land in question formed part of the same residential premises as the same had orchard grown thereon as part of the residential bungalow. The land was never used for agricultural purposes and no agricultural income from the same had been shown by the assessee. He submitted that the CWT(A) had rightly relied on the judgment of Hon’ble Madras High Court in the case of M.K. Kuppuraj (HUF) and Ors. v. CWT (supra) where the High Court has held that no limit on land appurtenant to residential house was prescribed under the WT Act for the purpose of allowing exemption to residential house. He also submitted that the learned CWT(A) rightly relied on the decision of the Tribunal, Jaipur Bench in the case of WTO v. N.N. Atal (supra) because in this case, the assessee had an exclusive right over the entire land. He also stated that the land in question stood sold in 1999 and since it formed part of the residential house, the assessee was entitled to exemption under Section 5(1)(vi) of the WT Act.
7. We have heard both the parties and carefully considered the rival submissions with reference to facts, evidence and material on record. We have also gone through the orders of the authorities below. The only reason given by the AO for treating the land in question as not part of the residential house is that there was a boundary wall between the residential house along with the land and the extended portion of the land measuring 1 acre 7 Kanals 12 Marias. From the facts discussed above, it is obvious that the land in question formed part of the house and was adjacent to the building. The same was not located at a distance. The contention of the assessee that the land was not used for agricultural purposes and the income therefrom had not been shown as agricultural, has not been rebutted by the Revenue. On the contrary, the contention of the assessee that the land in question has orchard grown on it and was part of the residential house which was exclusively used by the assesse, remains unchallenged. No material has been brought on record that the assessee had in fact used the land in question for agricultural purposes and had earned agricultural income, which was disclosed in the return of income. Once the land was adjacent to the residence and had, orchard grown on it, the same would continue be part of the house even if there was a boundary wall on the same because no evidence or material is placed on record to show that the land in question was used for any other purposes. In the case of M.K. Kuppumj (HUF) and Ors. v. CWT (supra) relied upon by the CWT(A) and the assessee, it was held that the tests required to be satisfied to attract the proviso to Section 7(4) are (i) that the property must belong. to the assessee, and (ii) that it should be used exclusively for residential purpose. In the present case, the assessee fulfilled two conditions. The assessee was owner of the property and was used for residential purposes. No enquiry has been made by the AO to establish that the property in question was used for any purpose other than residential house. In fact, the AO has not even considered necessary to call for the assessee and record his statement or to verify this fact and also to verify the Revenue record to see whether the land in question was used for any other purpose. In the case of M.K. Kuppuraj (HUF) v. CWT (supra), the Madras High Court has also held that the AO could not question the size of the house for the purpose of considering the case under Section 7(4) of the WT Act. Even in the case of WTO v. N.N. Atal (supra) relied upon by the CWT(A) and the assessee, it was found that the assessee had a building along with open lawn which used to be earlier valued as appurtenant land and benefit was given under Sub-section (4) of Section 7, However, for the subsequent assessment year, the AO allowed benefit only upto 600 sq. mts and rest treated as excess land. The Tribunal observed that the assessee had exclusive right over the entire land. It was held that the balance land was also an appurtenant land and was eligible to benefit of Section 7(4) of the WT Act. In the case of CWT v. Mahal Chand Pandia , the facts before the Gauhati High Court were that the house was partly used as residence and partly as godown. On these facts, this Gauhati High Court held that the entire house was entitled to exemption under Section 5(1)(iv) of the WT Act. In the present case, the Revenue has not even established that the remaining land was used for purposes other than residential house.
7.1 The learned Departmental Representative has heavily relied on the judgment of Andhra Pradesh High Court in the case of CWT v. Zaibunnisa Begum (supra) which was on the issue of allowing exemption from capital gain. The said judgment was not on the issue of considering the meaning of land appurtenant to house for the purpose of allowing exemption under Section 5(1)(vi) of the WT Act. In fact, the Hon’ble High Court has itself noted that the meaning assigned to expression in WT Act, Urban Ceiling and Regulation Act is not relevant for the purpose of considering exemption from capital gains, moreso, when the Revenue has not established that the land in question was used for any other purpose than the residential house. The very fact that there was a boundary wall and this portion of land was subsequently sold would not make any difference because for the assessment years under consideration, the land in question was being used only for residential purpose and the same was also adjacent to residential house. The other judgment relied upon by the learned Departmental Representative is CWT v. Shamatilal Popatlal (HUF) (supra) is again distinguishable on facts. The issue related to exercise of revisionary powers by the CWT(A) and not for the purpose of considering the property for the purpose of allowing exemption under Section 5(1)(vi) of the WT Act.
7.2 In the light of these facts and circumstances of the case and the reasoning given by the CWT(A) with which we agree, we are of the opinion that the CWT(A) was justified in allowing exemption under Section 5(1)(vi) of the WT Act in respect of land in question as forming part of the residential house. We confirm his orders and reject the grounds of appeals of the Revenue for all the assessment years. 8. In the result, all the appeals of the Revenue are dismissed.