1977 (4) TMI 34 - HC - Wealth-tax

Property Consolidation Ruling: Exemption for Combined Dwelling, Not for Separate Property

The court held that the properties at Darbhanga Castle with Municipal Nos. 92 and 92-A constituted 'one house' and were exempt under section 5(1)(iv) of ... Provisional Assessment Issues Involved:1. Whether the house properties bearing Municipal door Nos. 92, 92-A, Darbhanga Castle, and 17/33, Mahatma Gandhi Marg, Allahabad, occupied as residences by different members of the assessee-Hindu undivided family together constitute 'one house' belonging to the assessee and as such are exempt u/s 5(1)(iv) of the Wealth-tax Act, 1957.Summary:Issue 1: Exemption u/s 5(1)(iv) of the Wealth-tax Act, 1957The primary question was whether the properties at Darbhanga Castle (Nos. 92 and 92-A) and Mahatma Gandhi Marg (No. 17/33) could be considered as 'one house' for the purpose of exemption u/s 5(1)(iv) of the Wealth-tax Act, 1957. The court examined the facts that the assessee, a Hindu undivided family, lived in four independent residential units connected by a common passage in the building at Darbhanga Castle, and also owned another building at Mahatma Gandhi Marg.The Wealth-tax Officer had exempted only the portion of the house bearing door No. 92, but not the other portions. The Tribunal upheld this decision, emphasizing that the separate Municipal door numbers indicated independent units of assessment.Arguments and Legal Provisions:The assessee argued that the entire building at Darbhanga Castle should be considered one house as it was used exclusively for residential purposes by the family. They also contended that the building at Mahatma Gandhi Marg should be exempted. The department countered that only one house could be exempted u/s 5(1)(iv).The court referred to the definition of 'assessee' u/s 2(c) and the charging provision u/s 3 of the Act. It also examined the relevant portion of section 5(1)(iv), which allows exemption for 'one house or part of a house' used exclusively for residential purposes.Court's Analysis:The court noted that the term 'house' was not defined in the Act and referred to various judicial interpretations. It emphasized that the context and purpose of the Act should guide the interpretation. The court concluded that the two portions of the building at Darbhanga Castle, despite being built at different times and having separate door numbers, constituted one house due to their contiguity, common boundary, and unity of structure.However, the building at Mahatma Gandhi Marg was separate and partly let out, thus not qualifying for exemption as 'one house' with the Darbhanga Castle properties.Conclusion:The court held that the properties bearing Municipal Nos. 92 and 92-A, Darbhanga Castle, together constituted one house and were exempt u/s 5(1)(iv) of the Wealth-tax Act. However, the property at 17/33, Mahatma Gandhi Marg, did not qualify for the exemption. The parties were directed to bear their own costs.