Residential-use valuation relief under Schedule III applies even without daily occupation, if the house is used exclusively for own residence.

The third proviso to rule 3 of Schedule III to the Wealth-tax Act applies where a house is used exclusively by the assessee for own residential purposes throughout the preceding 12 months, subject to the metropolitan city ceiling. In this context, "throughout" means uninterrupted residential use and does not require the assessee's daily physical occupation for every day of the year. Passport entries showing visits to India, with no evidence of letting or non-residential use, were sufficient to satisfy the condition. The valuation therefore had to be made under the proviso rather than on the cost basis.

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Issues: Whether the assessee was entitled to the benefit of the third proviso to rule 3 of Schedule III to the Wealth-tax Act in respect of the flat, so that its value had to be determined under the rule rather than on the cost basis.

Analysis: Rule 3 of Schedule III prescribes valuation by capitalising net maintainable rent, while the second proviso brings in cost of acquisition for properties acquired after 31 March 1974, and the third proviso excludes that cost basis where a house is exclusively used by the assessee for own residential purposes throughout the preceding 12 months, subject to the monetary ceiling for metropolitan cities. The assessee produced passport entries showing visits to India during the relevant period, and there was no evidence that the flat was let out or used for any non-residential purpose. The word "throughout" was read in context as requiring uninterrupted residential user, not occupation on every single day of the year. On that construction, the assessee satisfied the statutory condition.

Conclusion: The assessee was entitled to the benefit of the third proviso to rule 3 of Schedule III, and the valuation adopted by the departmental authorities was not sustainable.

Ratio Decidendi: For the third proviso to rule 3 of Schedule III, "throughout" denotes uninterrupted residential user and does not require daily physical occupation throughout the full 12-month period, provided the house is used exclusively for the assessee's own residential purposes and is not put to any other use.

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