2003 (4) TMI 12 - HC - Wealth-tax

Whether, Tribunal is right in holding that the assessee (HUF) despite its being an Hindu undivided family is entitled to benefit of section 7(4) of the Act in respect of a property known as Dhairya Prasad ? The house in question was exclusively used by the assessee for residential purposes, and, in view of the assessee having opted to specify this house for the purpose of valuation under sub-section (4) of section 7, the fact that in the past assessment years, the assessee had claimed an exemption in respect thereof under section 5(1)(ivb), was hardly relevant and such exemptions availed of in the past in respect of that house did not preclude the assessee from exercising its option under the proviso to sub-section (4) of section 7 for the purpose of claiming the benefit of sub-section (4) Thus question is answered in positive

Summary

Issues:
Interpretation of section 7(4) of the Wealth-tax Act, 1957 for a Hindu undivided family claiming benefit for a property known as "Dhairya Prasad".

Analysis:
The dispute revolved around the valuation of a building named "Dhairya Prasad" owned by a Hindu undivided family (HUF) for the assessment years 1979-80 and 1981-82. The Wealth-tax Officer initially rejected the HUF's claim under section 7(4) citing estoppel and the HUF not being a natural person. However, the Commissioner of Wealth-tax (Appeals) ruled in favor of the HUF, emphasizing that estoppel does not apply to taxation laws and that the HUF qualifies as an "assessee" under section 7(4). The appellate authority directed the Wealth-tax Officer to grant the benefit of section 7(4) to the HUF for the property "Dhairya Prasad".

Subsequently, the Wealth-tax Officer challenged the decision before the Tribunal, which upheld the Commissioner's decision. The Tribunal clarified that the benefit of section 7(4) is available to an HUF if the conditions are met, irrespective of prior claims made by the HUF. It affirmed that the HUF's previous exemption claim under a different section did not prevent it from claiming benefits under section 7(4) for subsequent years. The Tribunal found that the property in question was used exclusively for residential purposes by the HUF, as confirmed by the Departmental Valuation Officer's report.

The Tribunal's decision was based on the fact that the HUF had exercised its option under section 7(4) for the property "Dhairya Prasad" and had met the conditions for valuation under this section. It clarified that sections 5 and 7 operate in distinct fields, with section 7 specifically dealing with asset valuation. The Tribunal rejected the Revenue's argument that an HUF cannot claim benefits under section 7(4), highlighting that the Act recognizes HUFs as assessable entities subject to wealth-tax.

In conclusion, the High Court affirmed the Tribunal's decision, stating that the HUF was entitled to the benefit of section 7(4) for the property "Dhairya Prasad". The Court emphasized that the Act does not exclude HUFs from availing benefits under this section, as HUFs are recognized as assessable entities under the Act. The judgment favored the HUF, dismissing the Revenue's contentions and disposing of the reference in favor of the assessee.