1971 (4) TMI 4 - HC - Wealth-tax

Exemption u/s 5(1)(iv) - house - whether house can be said as exclusively used for residential purposes

Summary

Issues:
1. Interpretation of section 5(1)(iv) of the Wealth-tax Act, 1957 regarding exemption for one house used exclusively for residential purposes.
2. Determination of whether the assessee is entitled to exemption under section 5(1)(iv) for a house property shared with her husband who pays her rent.

Detailed Analysis:

Issue 1: The judgment addressed the interpretation of section 5(1)(iv) of the Wealth-tax Act, 1957, which exempts one house exclusively used for residential purposes from wealth tax. The court analyzed the requirements for claiming this exemption, emphasizing that the house must be used by the assessee, exclusively by her, and solely for residential purposes. The court highlighted that the ownership of the house by the assessee and her family residing with her did not negate the exclusiveness of her use. The judgment explained that exclusiveness does not require the assessee to live alone but rather focuses on the legal right to use the house solely for residential purposes.

Issue 2: The judgment delved into whether the assessee was entitled to exemption under section 5(1)(iv) for a house shared with her husband, who paid her rent. The court examined the nature of the payments made by the husband to the assessee, emphasizing that the character of the payment as rent or compensation for residence impacted the exclusiveness of the assessee's use of the house. The court scrutinized the legal capacity in which the husband resided in the house, highlighting that systematic payments for residence altered the right to use the property. The judgment concluded that the shared use of the house with the husband, who paid rent, precluded the assessee from claiming exemption solely for residential purposes.

In conclusion, the judgment provided a detailed analysis of the interpretation of section 5(1)(iv) of the Wealth-tax Act, 1957, and determined that the assessee was not entitled to exemption under this section due to the shared use of the house with her husband, who made payments resembling rent. The court emphasized the legal nuances of exclusiveness and residential purposes in assessing the eligibility for wealth tax exemption under the specified provision.