2004 (7) TMI 282

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.... the action of the learned JCWT working out the value of the said flat by applying the second proviso to Rule 3 of schedule III to the Act. The learned CWT(A) failed to appreciate that as the appellant's share in the cost of acquisition of the said flat was less than Rs. 50,00,000 and the house was exclusively used by the appellant for his own residential purposes throughout the period of 12 months immediately preceding the valuation date the appellant was entitled to the benefit of the concession contained in the said proviso to Rule 3 of Schedule III to the Act. 2. The learned CWT(A) erred in law in the upholding the action of the learned JCWT in levying interest under section 17B of the Act amounting to Rs. 19,555." 3. The question inv....

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....he third proviso to Rule 3 of Schedule III comes into play if one house, and not a part of that house, is owned by the assessee and, (II) even l/3rd part of the house was not exclusively used by the assessee "as an owner", for his own residential purposes through out the period of 12 months immediately preceding the valuation date. 6A. On both counts, the CWT(A) is wrong. The proviso in question, i.e., the third proviso to Rule 3 of Schedule III, is sub-servient to the main Rule. The main Rule deals with valuation of immovable property, which has been defined in the body of the Rule, as being a building or land appurtenant thereto or part thereof. Therefore, at the very outset, it has been made clear by the Legislature that immovable prope....

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....enant thereto or part thereof. So, the observation of the learned CWT(A) is intrinsically contradictory. He is right in observing that where the Legislature intended considering even a part of a building for application of the provisions of the Act such specification has been made in the Act itself. However, he seems to be oblivious to the fact that the very Rule, the applicability of the third proviso whereof is in question here, prescribes "immovable property" to include part of a building. It is as if, the learned CWT(A) were reading the third proviso to Rule 3 as divorced from the Rule proper. This is not done. The proviso has to be read in consonance with the main section of Rule. That being so, the definition of "immovable property", ....

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....that the house should be exclusively used for own residence at all times in the relevant previous year and should not be used for any other purposes whatsoever at any time during that year. The condition of occupying the house for his own residence throughout the period of 12 months immediately preceding the valuation date can be fulfilled only in subsequent years following the initial year in which the property was purchased. In that case, the assessee had purchased a residential property on 29-7-1988 for Rs. 13 lakhs. The CWT(A) upheld the value of said self-occupied property at Rs. 13 lakhs as against the value of Rs. 87,178 worked out as per the third proviso to Rule 3 of Schedule III on the ground that the assessee did not occupy the s....