2003 (9) TMI 68 - HC - Wealth-tax

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee is entitled to exemption under section 5(1)(iv) of the Wealth-tax Act in respect of cinema building owned by this firm ? - whether a cinema building can be treated to be a house for the purposes of section 5(1)(iv) - A cinema hall is not a building for human habitation or a dwelling or a home. Hence a cinema hall is not a house at all Held that cinema building can not be treated a house for the purposes of section 5(1)(iv)

Summary

Issues:
Interpretation of the term "house" under section 5(1)(iv) of the Wealth-tax Act for exemption regarding a cinema building owned by a firm.

Analysis:
The judgment pertains to a wealth-tax reference under section 27(1) of the Wealth-tax Act, 1957, involving the question of whether a cinema building can be considered a "house" for the purpose of exemption under section 5(1)(iv) of the Act. The firm in question owns a cinema building, and the dispute revolves around whether the assessee's 50% share in the cinema building's value is exempt from wealth-tax. The Wealth-tax Officer rejected the claim, but the Appellate Assistant Commissioner allowed it, leading to an appeal by the Department to the Tribunal.

The central issue in this case is the interpretation of the term "house" as used in section 5(1)(iv) of the Wealth-tax Act. The Act does not define the term "house," but it has used terms like "building" and "property" in different sections, indicating that these terms should be interpreted distinctively. The court noted that a house, in common parlance, refers to a place where people live, and while a residential building can be used for commercial purposes and still be considered a house, a cinema hall does not meet the criteria of a house. The court disagreed with the view that all buildings should be regarded as houses under section 5(1)(iv).

The judgment referenced legal definitions of a house from various sources, emphasizing that a house is typically defined as a place of dwelling or habitation. The court also cited precedents where a house was interpreted as a permanent building for human habitation. It highlighted that while earlier exemptions required exclusive residential use, this condition was removed from 1972 onwards, allowing for commercial use while still claiming exemption.

The court ultimately concluded that a cinema hall does not qualify as a house for exemption under section 5(1)(iv) of the Wealth-tax Act. To be eligible for exemption, the property must be a house in the first place, which a cinema hall inherently is not. Therefore, the reference was answered in the negative, in favor of the Department and against the assessee.