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Issues involved: Interpretation of exemption u/s 5(1)(iv) of the Wealth-tax Act for an incomplete house under construction.
Summary: The case involved a reference made by the Wealth-tax Appellate Tribunal regarding the extension of exemption u/s 5(1)(iv) of the Wealth-tax Act to an incomplete house under construction. The assessee had started construction of a house in 1972-73, which was completed in 1975-76. The issue was whether the incomplete house could be considered for exemption under the Act. The WTO rejected the exemption claim stating the incomplete house was not fit for human habitation. The AAC agreed that an incomplete house was included in the term "house" but rejected the claim due to lack of habitability. The assessee argued that even a house under construction should be considered a part of a house for exemption purposes. The Tribunal considered the common parlance meaning of "house" and held that denying exemption during construction would discourage house construction. It accepted the assessee's claim for exemption, emphasizing the statutory purpose of the provision. The High Court analyzed the evolution of the exemption provision from 1964 to 1972, emphasizing the concept of habitability in defining a "house." It stated that an incomplete house must reach a habitable stage to qualify for exemption. The Court suggested the Tribunal assess whether the construction was habitable on the relevant dates to determine exemption eligibility. In conclusion, the Court advised the Tribunal to evaluate the habitability of the incomplete house on the relevant dates to decide on the exemption eligibility, ensuring a fair assessment for the assessee. No costs were awarded in the judgment. Judge J. K. Mohanty concurred with the decision.
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