1997 (3) TMI 8 - SC - Wealth-tax

Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the buildings of the Khas Bagh Palace which were let out to different persons from whom rental income was received by the assessee were not in the occupation of the assessee within the meaning of section 5(1)(iii) of the Wealth-tax Act 1957 and hence the value thereof was includible in the net wealth of the assessee

Summary

Issues:
Interpretation of section 5(1)(iii) of the Wealth-tax Act, 1957 regarding exemption of a building in the occupation of a Ruler declared as his official residence under specific orders.

Detailed Analysis:
The case involved the interpretation of section 5(1)(iii) of the Wealth-tax Act, 1957, concerning the exemption of a building in the occupation of a Ruler declared as his official residence under specific orders. The late H. H. Nawab Sir Syed Raza Ali Khan, owner of Khas Bagh Palace, claimed exemption for the Palace in the wealth computation under the Act. The Wealth-tax Officer concluded that only the portion of the building in the occupation of the Ruler would be exempt, valuing the rented-out buildings separately. The High Court held that a liberal interpretation of the provision would entitle exemption only to the extent the assessee occupies the building or portion, favoring the Revenue.

The appellant argued that the expression "any one building" in section 5(1)(iii) should not be dissected to include portions, as it would amount to legislating, contending that the Palace's official residence status should exclude it from wealth tax. The appellant emphasized giving plain meaning to statutory words, citing relevant court decisions. Conversely, the Revenue's counsel asserted that literal interpretation of the provision necessitates exemption for the building or part in the Ruler's occupation as the official residence.

The Supreme Court analyzed the construction principles, emphasizing understanding statutory words in their ordinary sense unless leading to absurdity or context suggests otherwise. Referring to previous judgments, the Court highlighted the legislative intent to give effect to every part of a statute, especially in taxing statutes. The Court concluded that only the building or part in the Ruler's occupation, declared as the official residence, would be exempt under section 5(1)(iii), rejecting the appellant's argument that partial occupation by the assessee should still qualify for exemption.

In dismissing the appeal, the Court upheld the High Court's decision, stating that the interpretation favored the Revenue and did not warrant intervention. The Court emphasized adherence to the statutory language and rejected the appellant's contentions, leading to the dismissal of the appeal without costs.