COMMISSIONER OF WEALTH TAX VS SMT. SHUSHILA DEVI TAMAKUWALA
1996 P T D 643
[212 I T R 203]
[Patna High Court (India)]
Before K.S. Paripoornan, C.J. and A.K. Ganguly, J
COMMISSIONER OF WEALTH TAX
versus
Smt. SHUSHILA DEVI TAMAKUWALA
Taxation Case No. 167 of 1979 with Taxation Case No. 168 of 1979, decided on 05/04/1994.
Wealth tax---
----Exemption---Residential house ---CBDT circular stating that exemption under S.5(1) (iv) would be available whether it was house property or it was used for business purpose---Factory building owned by assessee entitled to exemption-- Indian Wealth Tax Act, 1957, S. 5(1)(iv)---CBDT Circular F.No.317/23/73, dated 24-7-1973---Effect.
The Central Board of Direct Taxes Circular F. No. 317/23/73 W.T., dated July 24, 1973, states that the exemption under section 5(1)(iv) of the Wealth Tax Act, 1957, would apply whether it was house property or it was used for business purposes. This circular promulgated by the Central Board of Direct Taxes gives relief to the assessee, and such relief so afforded should be given effect to by all the authorities enforcing the Act. Even if the language of the Act; strictly construed, may not apply to the situation, in view of the circular, the relief will be afforded to the assessee:
Held accordingly, that the Tribunal was justified in holding that the factory building owned by the assessee was entitled to exemption under section 5(1)(iv) of the Wealth Tax Act, 1957.
K.K. Vidyarthy, Senior Advocate and S.KS Sharan for - the Commissioner.
Nemo for the Assessee.
JUDGMENT
At the instance of the Revenue, the Income Tax Appellate Tribunal, 'A' Bench, Patna, has referred the following question of law for the decision of this Court:
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the factory building owned by the assessee was entitled to exemption under section 5(1)(iv) of the Wealth Tax Act, 1957?"
We heard counsel for the Revenue. The matter arises under the Wealth Tax Act, 1957. We are concerned with the assessment years 1974-75 and 1975-76: The assessments relate to the land and factory building. The assessee-Hindu undivided family was the owner of 3/4ths share of the factor building and claimed exemption for the. said building under section 5(1)(iv) of the Wealth Tax Act. Originally, it was accepted by the Wealth Tax Officer. Subsequently, the proceeding was reopened and the Wealth Tax officer withdrew the exemption. The assessee assailed the said order in appeal. The plea of the assessee that the factory building was exempt from wealth tax under section 5(1)(iv) of the Wealth Tax Act was negatived. In second appeal, the Income-tax Appellate Tribunal held that the assessee will be entitled to exemption of the factory building under, section 5(1)(iv) of the Act. Placing reliance on a letter of the Central Board of Direct Taxes, which was relied on ill Sampath Iyengar's Three New Taxes, Vol. I, 1976, 4th Edition, page 344, the Tribunal upheld the assessee's claim. It was, thereafter, at the instance of the Revenue that this reference has been made to this Court for its decision.
We heard counsel for the Revenue. Section 5(1)(iv) of the Wealth Ta\ Act, 1957, which is relevant, is to the following effect:
"S.5. Exemption in respect of certain assets.--(1) Subject to the provisions of subsection (lA), wealth tax shall not be payable by an assessee in respect of the following assets, and such assets shall not he included in the net wealth of the assessee-- ... ... ...
(iv) one house or part of a house belonging to the assessee."
In determining the assets of the assessee under the Wealth Tax Act, oleo house belonging to the assessee shall not be included in the net wealth of the assessee. The question which arises for consideration is whether the residential house will take within its fold the factory building belonging to the assessee The Central Board of Direct Taxes in Circular Letter F.No.317/23/73 W.-T., dated July 24, 1973, referring to the exemption under section 5(1)(iv) of the Act, states thus:
"After the amendment of the above section from April 1, 1972, it reads as under:
One house or part of a house belonging to the assessee
The point for consideration is whether exemption is available for residential house only or to business premises also (of course within the limit laid down in the section).
In this connection; attention is invited to sections 22 to 27 of the Income Tax Act, 1961, which refer to income from house property. These sections are applicable to income from house property whether the house property is residential or it is used for business. In the circumstances, it is presumed that the exemption to house property under section 5(1)(iv) is available both to residential as well as business premises whether used by the association or let out. "
(See Chaturvedi and Pithisaria's Wealth Tax Act, Vol. 1, page 152).
It is significant to note that the point that was considered was whether the exemption is available for the residential house only or to the business premises also. It was held that the provisions would apply even for business premises also. It was further held that the exemption would apply to a property whether it was house property or it was used for business purposes. In Sampath Iyengar's Three New Taxes, - Vol. l, 1976, page 344, the law is stated thus:
"This exemption is available for all kinds of houses, whether, residential buildings, or business premises or factory premises, without any restriction as to their user. "
Relying on the above circular letter, the Income Tax Appellate Tribunal held that the assessee will be entitled to exemption under section 5(1)(iv) with regard td the factory building owned by it. We see no error in the said conclusion of the Tribunal. The circular promulgated by the Board of Revenue and referred to hereinabove gives administrative relief to the assessee, and such relief so afforded should be given effect to by all the authorities enforcing the Act. Even if the language of the Act, strictly construed, may not apply to the situation, in view of the circular, the relief will be afforded to the assessee. In this view of the matter, we hold that the Appellate Tribunal was justified in holding that the factory building owned by the assessee was entitled to exemption under section 5(1)(iv) of the Wealth -Tax Act. The question referred to this Court is answered in the affirmative, in favour of the assessee and against the Revenue. The two references are disposed of as above.
Let a copy of this judgment be forwarded to the Income-tax Appellate Tribunal, 'A' Bench, Patna, under the signature of the Registrar and the seal of this Court.
M.B.A./1074/F Order accordingly.