1991 (9) TMI 47 - HC - Wealth-tax

Summary

Issues:
Interpretation of section 5(1)(iv) of the Wealth-tax Act, 1967 regarding exemption for buildings with multiple self-contained units.

Detailed Analysis:
The judgment involved a batch of five cases concerning the interpretation of section 5(1)(iv) of the Wealth-tax Act, 1967, related to the same question of law. The cases revolved around whether the assessee was entitled to exemption under section 5(1)(iv) in respect of the value of the entire building or only a proportionate value of one of the self-contained units within the building.

The respondent-assessee's net wealth included a building with four self-contained shop rooms in Ernakulam, valued at Rs. 80,500. The assessee claimed exemption for the entire building under section 5(1)(iv) of the Act, while the Wealth-tax Officer limited the exemption to the value of one shop room. This decision was upheld by the Appellate Assistant Commissioner but overturned by the Tribunal based on a previous case involving a similar scenario.

The Tribunal, citing a decision of the Allahabad High Court, held that multiple self-contained units within one building, under the same roof and sharing a single municipal number, could be considered as one house for the purpose of exemption under section 5(1)(iv). The Tribunal concluded that the assessee was entitled to exemption for the entire building, subject to the Act's limitations.

During the hearing, it was acknowledged that the exemption under section 5(1)(iv) applied even to commercial properties, based on a circular letter from the Central Board of Direct Taxes. The court relied on the Allahabad High Court's decision in Shiv Narain Chaudhari's case to support the Tribunal's interpretation that unity of structure and common boundaries justified treating multiple self-contained units as one house for exemption purposes.

The court agreed with the Tribunal's interpretation and held that the assessee was entitled to exemption for the entire building, not just one self-contained unit within it. The question posed by the Revenue was answered in favor of the assessee in all five cases, and the judgment was forwarded to the Income-tax Appellate Tribunal, Cochin Bench for further action.