1994 (4) TMI 32 - HC - Wealth-tax

Summary

Issues:
Whether the factory building owned by the assessee is entitled to exemption under section 5(1)(iv) of the Wealth-tax Act, 1957?

Analysis:
The case involved a dispute regarding the exemption of a factory building owned by the assessee under section 5(1)(iv) of the Wealth-tax Act, 1957. The assessments for the years 1974-75 and 1975-76 were related to the land and factory building owned by the assessee. Initially, the Wealth-tax Officer accepted the exemption claimed by the assessee for the factory building. However, upon reopening the proceedings, the exemption was withdrawn. The assessee appealed against this decision, but the plea for exemption was rejected. Subsequently, the Income-tax Appellate Tribunal ruled in favor of the assessee, allowing the exemption for the factory building under section 5(1)(iv) of the Act. The Tribunal relied on a circular letter of the Central Board of Direct Taxes and upheld the assessee's claim, leading to the reference to the High Court.

The key issue was whether a factory building could be considered under the exemption provision of section 5(1)(iv) of the Wealth-tax Act, which pertains to the exemption of one house or part of a house belonging to the assessee. The Central Board of Direct Taxes, in a circular letter, clarified that the exemption under this section is applicable not only to residential houses but also to business premises, without any restriction on their use. The Tribunal, based on this circular and legal references, concluded that the assessee was entitled to the exemption for the factory building. The High Court upheld the Tribunal's decision, emphasizing that the circular provided administrative relief to the assessee, which should be honored by all authorities enforcing the Act. Despite any strict interpretation of the Act's language, the relief granted through the circular was deemed applicable to the assessee, justifying the exemption for the factory building.

In conclusion, the High Court affirmed the Tribunal's decision, ruling in favor of the assessee and against the Revenue. The judgment confirmed that the factory building owned by the assessee was entitled to exemption under section 5(1)(iv) of the Wealth-tax Act. The court directed the judgment to be communicated to the Income-tax Appellate Tribunal, 'A' Bench, Patna, for further action.