2004 (11) TMI 18 - HC - Wealth-tax

Whether the Income-tax Appellate Tribunal is legally correct in holding that the assessee was entitled to exemption under section 5(1)(iv) of the Wealth-tax Act in respect of his share in the value of immovable property which belonged to the firm of which the assessee is a partner? held that exemption under section 5(1)(iv) of the Act is not available to a partner or to an assessee in respect of cinema building.

Summary

Issues:
Interpretation of exemption under section 5(1)(iv) of the Wealth-tax Act for a partner's share in the value of immovable property owned by a partnership firm.

Analysis:
The Wealth-tax Appellate Tribunal referred a question of law under section 27(1) of the Wealth-tax Act, 1957 to the High Court regarding the entitlement of exemption under section 5(1)(iv) of the Act for a partner's share in the value of immovable property owned by a partnership firm. The specific query was whether the Income-tax Appellate Tribunal correctly held that the assessee was entitled to such exemption in relation to an immovable property named Sree Talkies, Agra, owned by the partnership firm in the assessment year 1981-82.

During the proceedings, the respondent, a partner in the partnership firm owning Sree Talkies, Agra, claimed exemption under section 5(1)(iv) of the Act for the said building. The Wealth-tax Officer initially denied the exemption, but the Appellate Assistant Commissioner accepted the claim, a decision that was subsequently upheld by the Tribunal. However, the High Court, after hearing the arguments presented by the learned standing counsel for the Revenue, delved into the interpretation of whether a cinema building, such as Sree Talkies, could be classified as a "house" for the purposes of the Act.

In its analysis, the High Court referenced a previous decision in the case of CIT v. Jai Kishan Gupta, where it was established that a cinema building does not qualify as a house. The court emphasized that a cinema building is not a dwelling place where people reside, thereby making it ineligible for the exemption under section 5(1)(iv) of the Act, which is applicable to a house. Consequently, the High Court concluded that exemption under the said provision is not available to a partner or an assessee in relation to a cinema building, affirming the decision in favor of the Revenue and against the assessee. The judgment was made in line with the precedent set by the aforementioned case law, and no costs were awarded in the matter.