2009 (2) TMI 115 - HC - Wealth-tax

Whether Tribunal was justified in directing the Wealth-tax Officer to grant exemption under section 5(1)(iv) of the Wealth-tax Act, 1957, to the assessee - under section 5(1) (iv) exemption is available to a house and not immovable property - hotel cannot be considered to be house so as to qualify for the exemption under section 5(1)(iv) of the Act - reference are accordingly, answered in favour of the Revenue.

Summary

Issues:
Interpretation of section 5(1)(iv) of the Wealth-tax Act, 1957 regarding exemption for one house or part of a house belonging to the assessee.

Analysis:
1. The references made by the Revenue in six assessment cases for the years 1973-74 to 1978-79 involved identical factual and legal issues, which were decided collectively.

2. The dispute arose when the Wealth-tax Officer issued a demand for valuation of Hotel Nagpal against book value, which was challenged through appeals. The Tribunal granted exemption under section 5(1)(iv) of the Wealth-tax Act. The reference sought the court's opinion on the Tribunal's decision.

3. The court examined the relevant section 5(1)(iv) post-amendment in 1972, which exempts "one house or part of a house belonging to the assessee" from wealth tax.

4. The term "house" was analyzed, noting that while not defined in the Act, it generally refers to a dwelling place but can include residential buildings used for commercial purposes.

5. The respondent's counsel cited the judgment in CWT v. Smt. Shushila Devi Tamakuwala, arguing in favor of the Tribunal's decision based on the interpretation of the term "house."

6. Another judgment in CWT v. Tulsi Dass was referenced, emphasizing that the house need not be exclusively used for residential purposes to qualify for exemption under section 5(1)(iv).

7. The court rejected the view that a hotel could be considered a house for exemption purposes, citing the judgment in Prakash Chand Modi v. CWT. It concluded that a hotel, factory building, or cinema house do not fall under the definition of "house" for the exemption.

8. Relying on legal interpretations and precedents, the court held that the hotel in question did not qualify as a house under section 5(1)(iv) and ruled in favor of the Revenue in the references.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the court's reasoning in interpreting the relevant legal provisions and precedents.