TaxTMI 
TaxTMI 
1996 (7) TMI 86
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....erefore, the entire capital gains is exempt under section 54 of the Act for the assessment year 1975-76 ? " The assessee is an individual. The assessee sold a plot of land measuring 10 grounds and 29 sq. ft. for a sum of Rs. 2,70,000 in the assessment year 1975-76. With the proceeds, the assessee constructed a new house and claimed relief under section 54 of the Income-tax Act in the computation of capital gains exigible to tax. The Income-tax Officer was of the opinion that applying the norms of the Urban Land Ceiling Act, only an area of 2 grounds and 580 sq. ft. could be taken as land appurtenant to the building and the balance of the vacant land should be treated as separate asset. Accordingly, the Income-tax Officer apportioned the sale consideration of Rs. 2,70,000 as Rs. 1,10,000 for the value of the building and the appurtenant land so restricted by him and the balance of Rs. 1,60,000 relating to the piece of the vacant land. On appeal, the first appellate authority found that the house which was situated at Thiruvanmiyur, about eight miles away from the city of Madras, did not fall under the provisions of the Madras City Municipal Act and, therefore, no part of the l....
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....ounding the main building should be considered as appurtenant to the main building. In order to support his contention, learned standing counsel for the Department relied upon a decision of the Andhra Pradesh High Court in the case of CIT v. Zaibunnisa Begum [1985] 151 ITR 320 wherein the Andhra Pradesh High Court has enumerated five tests to understand the meaning of the word appurtenant. Learned standing counsel also relied upon the decision of the Supreme Court in the case of Larsen and Toubro Ltd. v. Trustees of Dharmamurthy Rao Bahadur Calavala Cunnan Chetty's Charities [1988] 4 SCC 260. While considering the word " appurtenant " the Supreme Court held that whether a particular piece of land is appurtenant to the main building or not depends upon the facts and circumstances of each case. Therefore, according to learned standing counsel, the Tribunal was not correct in coming to the conclusion that the entire extent of the land of 10 grounds 29 sq. ft. would form one unit and, therefore, there is no separate appurtenant land to be assessed as a separate asset. On the other hand, learned counsel appearing for the assessee while supporting the order passed by the Tribunal subm....
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....ring the facts arising in the case and on looking into the plan submitted by the assessee relating to the property in question, the Tribunal has come to the conclusion that the entire 10 grounds and 29 sq. ft. was utilised by the assessee and, therefore, the Tribunal was of the view that the entire area of 10 grounds and 29 sq. ft. would be appurtenant to the main building. In Kalipada Ghosh v. Tulsidas Dutt, AIR 1960 Cal 467, the Calcutta High Court while considering section 4 of the Partition Act, 1893, held that the terms " house " or " dwelling house " are ambiguous terms and for the purpose of section 4 of the Partition Act must be liberally construed. The terms should be taken to mean not only the structure or building, but also adjacent buildings, garden, court-yard, orchard and all that is necessary for the convenient occupation of the house. So also the Andhra Pradesh High Court in CIT v. Zaibunnisa Begum [1985] 151 ITR 320, while considering section 54 of the Income-tax Act, 1961, pertaining to the meaning of the words " land appurtenant " formulated the following five tests to understand the meaning of the words " land appurtenant " more precisely : " (1) If the bu....
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....nant " in Larsen and Toubro Ltd. v. Trustees of Dharmamurthy Rao Bahadur Calavala Cunnan Chetty's Charities [1988] 4 SCC 260. After taking into consideration the various provisions of the Tamil Nadu City Tenants Protection Act, the Supreme Court held as under : " The question, therefore, whether certain land is appurtenant or not is one of fact. The High Court has applied its mind to the nature of the building as well as to the terms of the lease deed. It has kept in mind that the lease relates to a period about 35 years ago, a time when residential houses occupied large extents of land. There used to be a building in the middle surrounded by a vast area covered by garden, arbor, trees and the like. The lease also describes the building as " Club Chambers " with a municipal door number. The building is itself a substantial one occupying as many as two grounds. Having regard to the position pertaining at the time when the lease was executed, the first appellate court and the High Court came to the conclusion that the land in this case was appurtenant to the building. We see no reason to disturb this finding. On the other hand, we agree that the use of the land, in the circumstanc....