1981 (6) TMI 102 - AT - Wealth-tax

Summary

Issues:
- Dispute over the claim of exemption under section 5(1)(iv) of the Wealth Tax Act for a house property belonging to an Hindu Undivided Family (HUF) used for residential purposes.

Detailed Analysis:

1. The appeal before the Appellate Tribunal ITAT MADRAS-C arose from the Wealth Tax assessment for the assessment year 1970-71 concerning a house property at No.125, Lakshmipuram, Courtalam, occupied by an HUF. The valuation of the property was in dispute, with the WTO valuing it at Rs. 55,000 and the assessee returning it at Rs. 35,000. The key issue was whether the HUF, as a juridical person, could claim exemption under section 5(1)(iv) of the Wealth Tax Act for a property exclusively used for residential purposes by the family members, including the Kartha. The WTO contended that the HUF, not being a natural person, could not use the property for residential purposes. The departmental representative relied on the Karnataka High Court decision, while the assessee's representative cited the Allahabad High Court decision and a Supreme Court ruling emphasizing that the term "individual" includes groups of individuals.

2. Section 5(1)(iv) of the Wealth Tax Act exempts "One house or part of a house belonging to an assessee" exclusively used for residential purposes. The tribunal noted that the HUF was an assessee and the property in question belonged to the assessee. The dispute centered on whether the property was exclusively used by the assessee for residential purposes. Prior to April 1, 1970, the condition required exclusive use by the assessee. The tribunal highlighted that the amendment in 1971 intended to grant exemption even if the property was not used by the assessee directly. The tribunal reasoned that the family's use of the property should be considered the assessee's use, and the HUF should be treated as a group of individuals, eligible for the exemption. The tribunal distinguished the Karnataka High Court decision, emphasizing that the HUF was using the property as a residence in the ordinary sense, unlike a co-operative society. Consequently, the tribunal held that the assessee satisfied the requirements of section 5(1)(iv) and was eligible for the exemption, dismissing the departmental appeal.

3. In conclusion, the Appellate Tribunal ITAT MADRAS-C upheld the decision granting the exemption to the HUF for the house property used exclusively for residential purposes, emphasizing that the family's use should be attributed to the assessee. The tribunal clarified the interpretation of the term "individual" to include groups of individuals, supporting the eligibility of the HUF for the exemption under the Wealth Tax Act.