1989 (2) TMI 103 - HC - Wealth-tax

Summary

Issues:
Whether the assessee is entitled to claim exemption for a residential house belonging to the minor son but included in the assessee's net wealth under the Wealth-tax Act.

Analysis:
The judgment pertains to a batch of five referred cases where the Revenue is the applicant, and the common assessee is the respondent under the Wealth-tax Act for the assessment years 1967-68 to 1971-72. The central question of law referred to the court was whether the assessee could claim exemption for a residential house belonging to the minor son but included in the assessee's net wealth. The Income-tax Officer and the Appellate Assistant Commissioner included the value of the house in the assessee's net wealth under section 4(1)(a)(ii) of the Act, while the assessee claimed exemption under section 5(1)(iv) for the same property.

The key contention revolved around the interpretation of sections 4(1)(a)(ii) and 5(1)(iv) of the Wealth-tax Act. Section 4(1)(a)(ii) allows the inclusion of assets held by a minor child in the net wealth of the individual transferring the assets, while section 5(1)(iv) provides for exemption for one house belonging to the assessee. The Wealth-tax Officer and the Appellate Assistant Commissioner held that the house must belong to the assessee to claim exemption under section 5(1)(iv), which was contested by the assessee.

The Appellate Tribunal, however, upheld the claim of the assessee by referring to decisions of the Madras and Karnataka High Courts. These decisions established that the property included in the net wealth of the assessee by section 4(1)(a) should be deemed to belong to the assessee for the purpose of claiming exemption under section 5(1)(iv). The court noted the decisions of the Madras, Karnataka, and Orissa High Courts, which supported this interpretation, allowing the exemption for properties included in the net wealth of the assessee by fiction.

In conclusion, the court held in favor of the respondent-assessee, affirming their entitlement to claim exemption for the residential house belonging to the minor son but included in the assessee's net wealth. The judgment was delivered against the Revenue in favor of the assessee, based on the interpretation of relevant provisions and precedent set by other High Courts.