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TMI Blog1984 (9) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... ir shares in the residential property situated at Karnal. While considering the correctness or otherwise of the decision of the AAC, an interesting question has arisen for consideration. We would discuss the same as also the facts of the case and our decision thereon hereunder. 2. All the assessees are partners of Hotel Skylark, which own a building in which the hotel business is carried on at Nagpur. Besides, they also own jointly certain buildings and agricultural lands. One such co-owned building was being used as a residential house at Karnal. In the wealth-tax returns filed by each of the co-owners, exemption was claimed under section 5(1)(iv) in respect of the share of each co-owner in the residential property at Karnal. The value of the building was Rs. 18,500. The WTO allowed the claim under section 5(1)(iv), in respect of the share of each co-owner, in the respective assessments. It should be noted at this stage that there was no claim by the assessees for exemption under section 5(1)(iv), in respect of any other building than their individual share in the value of the property used as a residential house at Karnal. The WTO allowed the exemption under section 5(1)(iv), in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been used exclusively for residence with effect from 1-4-1972 and, since it would be beneficial to claim this exemption in respect of the building owned by Hotel Skylark, he should have suo motu allowed such exemption in place of the exemption claimed in the returns filed by the assessees in respect of their shares in the Karnal property. He seems to have relied on the passage in Sampath Iyengar's The Three New Taxes, stating that an assessee would be eligible for the exemption in respect of any one building, which would give him the maximum tax benefit. Accordingly, he directed the WTO to allow exemption in respect of Hotel Skylark building as against what was claimed by the assessees and allowed by the WTO in the assessments. 4. Aggrieved with this decision of the AAC, the revenue is in appeal before us. The arguments of the learned departmental representative, Shri V.T. Muley, may be summarised hereunder. The original claim for exemption before the WTO was in respect of each assessee's share in the residential property at Karnal. At the time of assessment, there was no claim for substitution of the Skylark building for the Karnal building for purposes of the exemption und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in agricultural lands could be included in his net wealth and the full deduction under section 5(1)(iva) be allowed to him in his hands. The Karnataka High Court upheld this view. In the second mentioned case, an AOP owned certain properties. The question was whether exemption admissible under section 5, in respect of properties owned by the association, could be allowed in the hands of the individual member while computing his wealth-tax assessment. The Bombay High Court held that the stage at which the exemption is to be considered and allowed is the stage after the share of wealth from the communion is brought to the individual's assessment. In the last mentioned decision, it was held by the Patna High Court that in determining for purposes of the net wealth of the assessee, the net wealth of the firm by reference to rule 2 of the Wealth-tax Rules, 1957, the exemption under section 5(1)(iv) was admissible. With reference to the above-mentioned decisions, it was argued by the learned departmental representative that when there was conflict of opinion between different High Courts as to the stage at which the exemption under section 5(1)(iv) is to be allowed in respect of a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was once again invited to the Board's circular, referred to earlier, and it was submitted that in the light of that circular, the WTO was duty bound to allow what was more beneficial to the assessee suo motu while completing an assessment. Reference was made to rule 2. Our attention was also invited to CWT v. I Butchi Krishna [1978] 119 ITR 8 (Ori.), wherein it was held that exemption under section 5(1)(a) was available in the hands of the partner in respect of assets owned by the firm. Our attention was particularly invited to the reference made to the decision of the Madras High Court in Purushothamdas Gocooldas' case and it was observed that the special mode provided for, under the scheme of the Act, to work out the valuation of the asset on deemed dissolution, had been lost sight of and the ratio of the Supreme Court's decision, which has only application in the case of any partnership property, had been relied upon by the Madras High Court. It was, therefore, submitted by the learned representative for the assessees that the AAC was justified in directing the WTO to allow exemption under section 5(1)(iv), in respect of the building owned by Hotel Skylark, even though no such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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