1991 (11) TMI 30 - HC - Wealth-tax

Summary

Issues:
Interpretation of section 5(1)(iv) of the Wealth-tax Act, 1957 regarding deduction for leasehold property.

Analysis:
The case involved a dispute over the assessee's claim for exemption under section 5(1)(iv) of the Wealth-tax Act, 1957, for a property in Calcutta. Initially, the Wealth-tax Officer estimated the value of the leasehold property and included it in the net wealth of the assessee. The assessee claimed deduction under section 5(1)(iv) as a portion of the property was used for residential purposes, which was allowed by the Appellate Assistant Commissioner.

The Revenue appealed to the Tribunal, arguing that the exemption could only be claimed for a house belonging to the assessee. They relied on a Supreme Court decision and contended that since the house did not belong to the assessee, no exemption should be granted. However, the Tribunal held that the assessee was entitled to the deduction under section 5(1)(iv) for his leasehold residential property, dismissing the Revenue's application.

During the hearing, it was argued that ownership was not a prerequisite for claiming the benefit of section 5(1)(iv). The court emphasized that a person did not need to be the exclusive owner but should have some right of ownership, not just possession. The lease in this case granted the assessee comprehensive rights, including the ability to demolish and reconstruct the building, indicating a significant level of ownership.

Citing previous judgments, the court highlighted that even possession of an interest less than full ownership could be considered as "belonging" under the Act. The court rejected the Revenue's argument that ownership was necessary for claiming the exemption, stating that possession without ownership did not render the asset exigible to wealth-tax.

The court also discussed the broad classification of ownership into legal ownership and the right to exercise ownership benefits, supporting the view that ownership could exist without full legal title. The decision concluded that the assessee was entitled to the deduction under section 5(1)(iv) for the leasehold property, answering the reference question in favor of the assessee.

In agreement with the judgment delivered by AJIT K. SENGUPTA J., SHYAMAL KUMAR SEN J. concurred with the decision in favor of the assessee.