1991 (7) TMI 32 - HC - Wealth-tax

Court denies exemption under Wealth-tax Act, finding contributed property didn't qualify as house property.

Commissioner Of Wealth-Tax Versus Susheela P. Thampy

Commissioner Of Wealth-Tax Versus Susheela P. Thampy - [1992] 196 ITR 442, 99 CTR 192, 63 TAXMANN 30 Issues:1. Whether the assessee is entitled to claim exemption under section 5(1)(iv) of the Wealth-tax ActRs.2. Whether the direction to grant exemption to the Wealth-tax Officer is justifiedRs.Analysis:The case involved the purchase of a house property by the assessee in Bangalore, with a portion of the funds belonging to the 'thavazhi' and the rest contributed by the assessee herself. The assessee contended that since she contributed a significant amount from her own funds, the property should be excluded from her net wealth under section 5(1)(iv) of the Wealth-tax Act. The assessing authority, however, deemed the contributed amount as converted property under section 4(1A) and denied the exemption. The Appellate Assistant Commissioner and the Appellate Tribunal had differing views on the matter.The main contention for the Revenue was that the exemption under section 5(1)(iv) could only be granted if the property is treated as converted property under section 4(1A). The Revenue argued that since the property was not a house or part of a house, the exemption claimed by the assessee should not be allowed. On the other hand, the assessee's counsel argued that as the house was purchased with funds belonging to the assessee as well, she should be entitled to the exemption under section 5(1)(iv).The court analyzed the provisions of the Wealth-tax Act, particularly section 4(1A) and section 5, to determine the applicability of the exemption claimed by the assessee. Section 4(1A) defines converted property and specifies that such property shall be deemed as belonging to the individual for wealth tax purposes. Section 5 lists assets for which wealth tax shall not be payable by an assessee. The court noted that the converted property need not pay wealth tax if it falls under the provisions of section 5.Referring to precedents from other High Courts, the court emphasized that the converted property should meet the criteria specified in section 5 to be exempt from wealth tax. In this case, the court found that the contributed property could not be considered a house property, thus rendering the claim for exemption under section 5(1)(iv) unsustainable. Consequently, the court held in favor of the Revenue, answering both questions in the negative and against the assessee.In conclusion, the court ruled that the assessee was not entitled to the exemption under section 5(1)(iv) of the Wealth-tax Act, based on the interpretation of relevant provisions and precedents. The judgment was delivered by one of the judges, and a copy was to be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.