Co-owned residential property in undivided possession does not qualify for wealth-tax house exemption under the residential use test.

A co-owned house property held in an undivided state did not satisfy the requirement of exclusive residential use under section 5(1)(iv) of the Wealth-tax Act, 1957. The Madras High Court applied its earlier ruling on the same property and held that joint ownership by family members meant the assessee could not claim the exemption for a house said to be exclusively used for residential purposes. The Tribunal was therefore wrong in allowing the benefit, and the exemption was denied.

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Issues: Whether the assessee, being a co-owner of the house property jointly enjoyed with his family members, was entitled to exemption under section 5(1)(iv) of the Wealth-tax Act, 1957 for the assessment year 1971-72.

Analysis: The property was held in an undivided co-ownership arrangement, and the question turned on whether such joint ownership could satisfy the requirement of exclusive use of the house for residential purposes under section 5(1)(iv). The Court followed its earlier decision relating to the same property, which had held that where the assessees were co-owners and the portions were owned in an undivided state, the house could not be said to have been exclusively used by the assessees for residential purposes within the meaning of the exemption provision.

Conclusion: The assessee was not entitled to exemption under section 5(1)(iv) of the Wealth-tax Act, 1957, and the Tribunal was incorrect in granting the benefit.

Ratio Decidendi: A co-owned house property held in an undivided state cannot be treated as exclusively used by the assessee for residential purposes so as to qualify for exemption under section 5(1)(iv) of the Wealth-tax Act, 1957.

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