Per Shri G. R. Raghavan, Accountant Member - WT Appeal Nos. 258 and 259 (Nag.) of 1983 are by Prem Raj Gupta, HUF, and they relate to the assessment years 1977-78 and 1978-79. WT Appeal No. 260 (Nag.) of 1983 relating to the assessment year 1978-79 is by Prem Raj Gupta, individual. WT Appeal No. 150 (Nag.) of 1983 relating to the assessment year 1977-78 is by the revenue against the order of the AAC in his Appeal No. 10-WT-Cir. III (4) of 1982-83 dated 16-3-1983 and the Cross-objection No. 58 (Nag.) of 1983 is by the assessee. The appeals filed by the HUF as well as individual arise out of the orders of the AAC in his Appeal Nos. 9-WT-Cir. III (4) of 1982-83 dated 17-9-1983, 1-WT-Cir. III (4) of 1983-84 dated 19-9-1983 and 1-A WT-Cir. III (4) of 1983-84 dated 17-9-1983. As a common question is involved in all these appeals, they are disposed of by this common order. The question for consideration in all these appeals is, whether the assessee, both in his capacity as HUF as well as individual, is entitled to claim that the respective shares owned by the HUF and the individual in the property at 20, Barakhambha Road, New Delhi, used exclusively for residential purposes, should be valued as per the provisions of section 7(4) of the Wealth-tax Act 1957 (the Act). There are certain other grounds relating to the non-application of rule 1BB of the Wealth-tax Rules 1957 (the Rules) while valuing residential properties as also the non-acceptance or the report of the Valuation Officer to whom a reference was made under section 16A of the Act. The facts in this regard are briefly as under.
2. The assessee in its capacity as HUF owned one-third share in the property at 20, Barakhambha Road, New Delhi, during the previous year relevant to the assessment year 1977-78. Its share in the same property during the previous year relevant to the assessment year 1978-79 was one-ninth. The assessee has in his capacity as individual also owned one-thirty-sixth share of the same property during the previous years relevant to the assessment years 1977-78 and 1978-79. The value of one-third share of the assessee HUF, in this property was shown at Rs. 1,69,800 in the wealth-tax returns filed for 1977-78 and 1978-79. In the case of the individual, the value or one-thirty-sixth share was shown at Rs. 42,450 for both the years in the returns filed for 1977-78 and 1978-79. The assessee claimed before the WTO during the course of the assessment proceedings, that this property should be valued according to the provisions of sub-section (4) of sections 7 of, in other words, that its value should be pegged at the value of the property as on the valuation date relevant for the assessment year 1971-72, as the portions of the house belonging to the assessee, both as individual as well as HUF, were exclusively meant and as well as used for residential purposes. It was submitted that though the karta and his family were residing at Nagpur, they resided in the portions of the house belonging to them, whenever they happened to go to Delhi during the courses of the year, and as such, the property in question was exclusively meant for residential use. It was also submitted that the property was never used for any other purpose, meaning, that it was not put to any commercial use. The WTO negatived this contention on the ground that what section 7(4) required was exclusive user of the property for residential purposes throughout the period of 12 months immediately preceding the valuation date, and inasmuch as, the assessee had only occasionally used the property for such purposes on his visits to Delhi, the main requirement of the section of exclusive user for 12 months was not satisfied. He tried to strength this argument by referring to the fact that in the income-tax return filed for the assessment year 1978-79, the annual letting value of the assessees share in the property was shown at nil, thereby tacitly admitting that the house was not actually occupied during the previous year concerned.
He, therefore, proceeded to value the assessees share in the property, without allowing the benefit of the provisions of section 7(4). While doing so, he noticed that an agreement of sale was entered into for the sale of the property during the accounting year relevant for the assessment year 1978-79 and on the basis of the same, he determined the value of the HUFs one-third share in the property at Rs. 13,50,000 for 1977-78 and Rs. 13,08,297 for 1978-79. Similarly, in the case of the individual for 1977-78, he determined the value of the one-thirty-sixth share at Rs. 6,50,000. For 1978-79, the value of such share was determined at Rs. 6,54,148. He adopted the above values, both in respect of the individual as well as the HUF, despite the fact that a reference was made to the Valuation Officer under section 16A and the valuation Officer had proposed lower valuations in respect of the shares of the assessees. The reason given by him for ignoring the values proposed by the Valuation Officer was that the Valuation Officer had, while valuing the respective shares of the assessees in the property, had applied the provisions of section 7(4) and thereby exceeded the powers vested in him for the purpose of valuation under section 16A.3. Aggrieved with the valuations taken by the WTO, both in respect of the individual as also the HUF, appeals were preferred before the AAC.The appeals relating to the HUF for both the years as well as the appeal relating to the individual for the assessment year 1978-79 were decided by the AAC on 19-9-1983 and he confirmed the orders of the WTO in all these cases. The appeal relating to the individual for 1977-78 was decided by his predecessor on 16-3-1983 by upholding the right of the assessee for freezing the value of the property in question under section 7(4) at its value relevant for the assessment year 1971-72.
4. The department being aggrieved with AACs order relating to the assessment year 1977-78 in the case of the individual has filed an appeal before us. In the cross-objection filed by the assessee, apart from supporting the order of the AAC in this behalf, the assessee has contended that the AAC had failed to consider and decide the ground taken before him, namely, that rule 1BB should have been applied in valuing the residential property. The assessee has filed appeals against the AACs orders relating to the assessment years 1977-78 and 1978-79 in respect of HUF and relating to the assessment year 1978-79 in respect of the individual. The contentions taken in all these appeals are common, namely, that the provisions of section 7(4) should have been applied for freezing the value of the property at its value for the assessment year 1971-72 and also that while ascertaining the same, the provisions of rule 1BB should also be taken into consideration.
5. The AAC, who decided the appeals of the HUF for 1977-78 and 1978-79 and that of the individual for 1978-79, negatived the claim of the assessee in this behalf for the following reasons.
According to him, no portion of the house was ear marked separately or distinctly for the assessee or any other person having an interest in the house and as the house was still used jointly by all the members of the rest while HUF, though for residential purposes, the requirement of Explanation to section 7(4) namely, that a house includes a part of a house, being an independent residential unit, was not satisfied. He held that the house was incapable of division into independent residential units. As regards valuation, he held that the sale agreement concluded during the accounting year relevant to the assessment year 1978-79 clinched the issue in this behalf, inasmuch as, the sale value as per the agreement would represent the market value of the property in question. The AAC, who decided the appeal in the case of an individual for 1977-78, agreed with the assessee that a liberal interpretation should be placed on section 7(4) so as to include within its purview even constructive user of property, as long as the same was not put to any commercial use.
6. Shri Bahri, appearing for the assessee, made the following submissions before us.
He mentioned that the property in question as well as the assessees share therein were exclusively meant for residential use, whenever the assessee visited Delhi. He submitted that while applying this section, a literal interpretation of the words used therein should not lead to the denial of the exemption allowed under this section, if it is found that the property in question is genuinely meant for residential use and in fact the same was not put to any commercial use. In this connection, he submitted that beneficial valuation allowed under this section would extend even to properties which are meant for residential use, though they may not be actually occupied throughout the previous year. He submitted that on the parallel of section 5(1) (iv) of the Act prior to its amendment with effect from 1-4-1972 which has been liberally interpreted by the various High Courts, this section also should be given a liberal interpretation, so as not to exclude genuine cases. In support, he referred to a number of decisions of various High Courts, some of which are referred to hereunder : In CWT v. Mrs. Avtar Mohan Singh  83 ITR 52, while interpreting the words for residential purposes in section 5(1) (iv), the Delhi High Court held, that what is essential is that the property should not be used for non-residential purposes such as commercial purposes and, secondly, that the house should be used by the assessee solely as a residence and not with a view to making any profit.
In CWT v. B. M. Bhandari  123 ITR 554 the Andhra Pradesh High Court held, that section 5(1) (iv) should be interpreted pragmatically, fairly and reasonably and not in a pedantic sense. They further held, that unless the assessee has let out the house or used the house for any other commercial purpose, it cannot be said that the house was not exclusively used for residential purposes.
In CWT v. Smt. Vimlabai Kantilal Porwal  141 ITR 484 the Madhya Pradesh High Court held, that exemption under section 5(1) (iv) was available even in respect of a share of the property held by the assessee as a tenant-in-common.
Last but not least, our attention was also invited to the decision of the Tribunal, Cochin Bench in H. H. Gouri Lakshmi Bayi v. WTO  7 ITD 548 which is directly on the issue in question namely, whether continuous residence of 12 months in the property in question is necessary for claiming the beneficial effect of section 7(4). The Tribunal held, that what was required was only, that the house should be intended for the residence of the assessee and should not have been let out or given out for residence of somebody else.
7. The departmental Representative made the following submissions. The assessee was not using the property throughout the year. Section 7(4) by specific mention requires, that the property should have been used for residential purposes throughout the period of 12 months. Plain reading of the words of section 7(4) would indicate, that continuous use for a period of 12 months is necessary in this context. Words used in the statute, not being used without purpose, should be given their logical meaning. Analogy of interpretations relating to section 5(1) (iv) of the 1957 Act and section 23 of the Income-tax Act, 1961 are not apposite inasmuch as, part user is permitted under those sections whereas section 7(4) specifically requires user for residential purposes for 12 months. The residential portion of the house has not been demarcated and is not capable of such demarcation. Though the Explanation to section 7(4) enlarges the scope so as to include a part of a house but, however, its effect is restrictive inasmuch as, a part of the house should be an independent residential unit. Our attention was also invited to certain observations at the bottom of page 485 in Three New Taxes of Sampath Iyengar 5th edn. All the decisions cited by the assessee relate to interpretation of section 5(1) (iv) whereas under section 7(4) active user for residential purposes for 12 months is an absolute must.
8. We have carefully considered the arguments on either side. Our decision in this case has been made simple for us in view of the decision of the Tribunal, Cochin Bench in H. H. Gouri Lakshmi Bayis case (supra) with which we are in full agreement. Under identical facts and circumstances, the Bench has held that the provisions of section 7(4) would be applicable even in cases where the property may not have been occupied by the owner for the entire period of 12 months. In that case, the assessee had a share in a residential palace but, however, she resided there only on special occasions during the year as she was obliged to stay mainly with her husband, who owned a palace of his own.
The house was, however, not used for any other purposes. The WTO rejected the claim to freeze the value of the house as on 1-4-1971 under the provisions of section 7(4) for the reason that she had not resided in the house throughout the period of 12 months. On appeal, the Tribunal held as follows : "It is not correct to give too literal an interpretation to section 7(4) as otherwise, the result will be that the benefit could be claimed only if the assessee resided in the house for the whole of 12 months and may lose the benefit if he is absent from the house even for a single day. Further, proviso to sub-section (4) shows that the assessee can have two residential houses and in that case, he can choose one of the residential houses for the benefit of sub-section (4). It is clear that in such cases the assessee would not have been actually residing in both the houses. A situation may arise where an assessee is hospitalised for the entire period of 12 months immediately preceding the valuation date and that he could not actually reside in the house during this period. Similarly, an assessee may be compelled to go and reside with his children or close relatives due to unavoidable reasons.
The requirement of the section seems to be that the house should be intended for the residence of the assessee and should not have been rented out or given out for the residence of the somebody else. The lower authorities were, therefore, not justified in rejecting the assessees claim." (p. 549) In the present case also, it is not disputed by the department that the house at Delhi was not put to any commercial use. The portions owned by the assessees were admittedly meant for their residential use whenever they visited Delhi. Following the rational of the above mentioned decision of the Tribunal, we uphold the claim of the assessee for freezing the value of the house as relevant to the assessment year 1971-72 under section 7(4).
9. As regards the other claim of the assessee that rule 1BB should have been applied, we uphold the claim of the assessee in this behalf, as properties which are whole or mainly used for residential purposes should be valued as per the provisions of this rule. Relying on the decision of the Delhi Bench A (Special Bench) of the Tribunal in Biju Patnaik v. WTO  1 SOT 623, we direct that this rule should be applied while ascertaining the value of this property as applicable for the assessment year 1971-72 under the provisions of section 7(4).
10. The appeal filed by the department in WT Appeal No. 150 (Nag.) of 1983 is dismissed. The cross-objection of the assessee for this year as well as the appeals filed by the assessee relating to the assessment years 1977-78 and 1978-79 in respect of the HUF and that by the individual for the assessment year 1978-79 are allowed.