1990 (2) TMI 129 - AT - Income Tax

Tribunal grants appeal on WT Act relief denial, clarifies 'exclusively used.'

MSP RAJAH (HUF). Versus WEALTH TAX OFFICER.

The Tribunal allowed the appeals challenging the denial of relief under s. 7(4) of the WT Act, 1957 by the CWT(A) for owning a residential house. It held ... - Issues:1. Denial of relief under s. 7(4) of the WT Act, 1957 by CWT(A) for owning a residential house.2. Interpretation of the term 'exclusively used' under s. 7(4) for residential property.3. Eligibility of an HUF for relief under s. 7(4) of the WT Act.4. Addition of a sum to net wealth for a firm's interest.5. Disallowance of deficit in the Estate Account for agricultural estates.Analysis:1. The appeals involved a common contention of denial of relief under s. 7(4) of the WT Act, 1957 by the CWT(A) for owning a residential house. The appellant's plea for exemption under s. 7(4) was rejected based on the property not being used for residential purposes throughout the year and the appellant being an HUF. The Tribunal agreed with the appellant that the term 'exclusively used' only required the house to be reserved for the appellant without being let out, allowing freezing of the value as on a specific date for one residential house.2. The interpretation of the term 'exclusively used' under s. 7(4) was crucial in determining the eligibility for relief. The Tribunal emphasized that the property need not be occupied for all 365 days of the year, as long as it was ready for occupation by the appellant without being let out. The Tribunal's decision was supported by the absence of restrictive language in the provision and the appellant's sole ownership of the property for residential purposes.3. The issue of eligibility of an HUF for relief under s. 7(4) of the WT Act was addressed by referring to a circular from the CBDT stating that HUFs were entitled to the benefit of s. 7(4). The Tribunal held that the provision did not restrict the benefit to individual assesses, and the use of the term 'him' did not exclude artificial persons like HUFs. Consequently, the appellant, being an HUF, was allowed the benefit of s. 7(4) for all the years.4. Another issue involved the addition of a sum to the net wealth for a firm's interest, where disputes among partners led to auctioning of the firm's properties. The Tribunal directed a fresh examination by the WTO based on new facts presented in the appeal, emphasizing the need to verify the balance sheet to determine the inclusion of the sum in the assessment.5. The final issue concerned the disallowance of deficit in the Estate Account for agricultural estates owned by the appellant. The disallowance was based on concerns of excessive expenses exceeding the value of the estates. The Tribunal ordered a re-examination by the WTO with reference to balance sheets, highlighting the need for a proper assessment based on the working of deficits in accordance with law.In conclusion, the Tribunal allowed the appeals for statistical purposes and provided detailed analysis and directions for each issue raised in the judgment.