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TMI Blog1992 (4) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... 66-67 to 1970-71/ 1966-67 to 1970-71/1966-67 to 1970-71 ? The assessees are three brothers and they, along with their father, owned and enjoyed a house property. In the course of the proceedings for assessment to wealth-tax, in respect of the assessment years set out earlier, each one of the assessees claimed exemption under section 5(1)(iv) of the Act. This claim for exemption was allowed in the original assessment, but an objection was raised subsequently by the Revenue audit, which led to the reopening of the assessments and the withdrawal of the exemption granted earlier to the assessees. On appeal by the assessees, the Appellate Assistant Commissioner held that each one of the assessees was entitled to the benefit of exemption under section 5(1)(iv) of the Act. On further appeal before the Tribunal by the Revenue, the Tribunal, purporting to follow the decision of a Special Bench of the Tribunal in W. T. A. Nos. 447 to 449/MDS/1974-75 in the case of one Sri V. N. Nichani, held that the test of exclusiveness of the user of the house must be determined with reference to the question whether the assessees' user of the house was as of right and since the assessees, as co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er interpretation of the provisions of section 5(1)(iv) of the Act, such a circular, being contemporanea expositio, would be legally binding on the Revenue which would justify the exemption granted to the assessees under section 5(1)(iv) of the Act. In answer to this, learned counsel for the Revenue, maintained that the circulars issued under section 13 of the Act may control the exercise of the power of the Officers of the Department in administrative, but not in quasi-judicial matters, and section 13 of the Act did not imply that any direction or instruction could be given to the Officers in the exercise of their quasi-judicial functions. It was also further contended, relying upon the decisions in A. L. A. Firm v. CIT [1976] 102 ITR 622 (Mad) ; Shri Shubhlaxmi Mills Ltd. v. Addl. CIT [1989] 177 ITR 193 (SC) ; Keshavji Ravji and Co. v. CIT [1990] 183 ITR 1 (SC) and A. L. A. Firm v. CIT [1991] 189 ITR 285 (SC), that there cannot be pre-emption of a judicial interpretation by a circular by which neither the Tribunal nor the High Court would be bound and the circular cannot detract from the provisions of the Act. Before proceeding to examine the contentions thus raised, it would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of exemption under section 5(1)(iv) of the Act could be claimed, the twin requirements of ownership of the part of the house and the user by the assessee of the part so owned, exclusively for residential purposes have to be satisfied. It may also be pointed out that the exclusive user by the assessee for residential purposes contemplated under section 5(1)(iv) of the Act cannot be so construed as to postulate the user by the assessee only, for residential purposes, for, when the purpose is stated to be residential, the assessee could use the house or the part of the house owned by him as a residence not only for himself but also for the other members of his family. It could not have been contemplated that, in order to get the benefit of exemption, the assessee was expected to lead alone the life of an ascetic or recluse, away from all the members of his family. Implicit in the use of the expression residential purposes is the idea that the assessee could live with the members of his family, but such user should be personal user for residence and not a commercial or non-residential user. Merely because the assessee uses the house or part thereof with the members of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention of the Act that the benefit of exemption should be lost and, therefore, the test of exclusiveness of the user must be determined with reference to the question whether the user of the house was as of right and since the assessee, as a co-owner, had a right to reside in the property, the benefit of exemption had been rightly granted to him. The Tribunal also took note of the omission of the words exclusively used by him for residential purposes occurring in section 5(1)(iv) of the Act by the Finance (No. 2) Act, 1971, with effect from April 1, 1972, to infer that the legislative intent was that exclusive user contemplated in section 5(1)(iv) of the Act should be construed with reference to the purpose. We have carefully perused the order of the Tribunal looking for the reasons in support of the conclusions arrived at by it. We find that the Tribunal had equated the right to use the house or a part of the house as one of actual user thereof by the assessee. Though ownership of a house or part of a house might include the right to use the house or part thereof, in order to avail of the benefit of exemption under section 5(1)(iv) of the Act, the mere existence of the right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of exemption without the need to satisfy the exclusive user by the assessee for residential purposes. When we turn to the facts in these references,we find that the assessees had not even put forward any claim that at least a portion of the house, referable to their shares, were in the occupation of the assessees and the members of their families for residential purposes. The Tribunal had also not found that some portions referable to the shares owned by the assessees, were in their use, as and for their residence with the members of their families. When it is not disputed that the assessees were all in the position of co-owners, it is difficult to accept that they could have asserted exclusive user over a part of the house for residential purposes. We are unable to accept that a house property portions of which had been owned by the assessees, in an undivided state, could have been exclusively used by the assessees for residential purposes, as contemplated under the latter part of section 5(1)(iv) of the Act. We, therefore, hold that the view taken by the Tribunal in W. T. A. Nos. 447 to 449/(MAD) of 1974- 75 by its order, dated March 23, 1978, is not correct and cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(iv) of the Act. This decision does not support the case of the assessee for claiming the benefit of exemption under section 5(1)(iv) of the Act on the facts of these references. In CWT v. Smt. Vimlabai Kantilal Porwal [1983] 141 ITR 484 (MP), the assessee had purchased a house jointly with two others and one of them claimed the benefit of section 5(1)(iv) of the Act with reference to one-third of the interest. The Wealth-tax Officer, after taking into account the total value of the house and giving statutory deduction admissible under section 5(1)(iv) of the Act, brought to tax the assessee's one-third share, though the assessee claimed that full exemption under section 5(1)(iv) of the Act should be allowed on the one-third of the total value of the property. On appeal, the Appellate Assistant Commissioner held that the value of the property should be first determined and divided amongst the joint owners and from the value of such divided shares, the statutory deduction under section 5(1)(iv) of the Act should be given to each joint owner. The Tribunal upheld the interpretation of the Appellate Assistant Commissioner and on further reference, the view of the Tribunal was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the Revenue, points out that judicial powers cannot be controlled by circulars issued under section 119 of the Income-tax Act, 1961, and those circulars could be regarded as pertaining to administrative aspects and not judicial aspects of the administration of the Act and that the circulars of the Central Board had no binding force with reference to the assessment in question. In A. L. A. Firm v. CIT [1991] 189 ITR 285 (SC), on appeal from A. L. A. Firm v. CIT [1976] 102 ITR 622 (Mad), the Supreme Court, while confirming the decision of this court in A. L. A. Firm v. CIT [1976] 102 ITR 622, took the view that the terms of the circular cannot be of any assistance to the assessee in answering the issues and in that view, the Supreme Court refrained from answering the third question posed by the Tribunal. It is thus seen that the Supreme Court had not pronounced about the binding nature of the circular in the decision referred to by learned counsel for the Revenue. In Shri Shubhlaxmi Mills Ltd. v. CIT [1989] 177 ITR 193 (SC), relied on by learned counsel for the Revenue, it was laid down by the Supreme Court that a condition to be satisfied for securing the benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circulars would be binding either on the Tribunal or even this court. In K. P. Varghese v. ITO [1981] 131 ITR 597 (SC), with reference to the scope of the circulars issued by the Central Board in regard to the administration or implementation of section 52(2) of the Income-tax Act, 1961, the Supreme Court pointed out that the circulars would be binding on the Department in the administration or implementation of section 52(2) of the Income-tax Act, 1961. Though this decision had proceeded on the footing that the circulars would be binding on the Department in so far as the administration and implementation of section 52(2) of the Income-tax Act, 1961, are concerned, it could not be understood as laying down that such a circular would be binding on the Tribunal or the High Court and at best, it could be treated as containing merely administrative directions, not in any manner affecting the judicial interpretation of the relevant provisions of the Act on the facts and the circumstances of a particular case. On a due consideration of the several decisions referred to by counsel on both sides, we are of the opinion that the reliance placed by the assessee on the circular cannot preemp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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