TaxTMI 
TaxTMI 
2012 (8) TMI 595
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....e Assessing Officer in valuing the Awas Property at Rs. 22,22,068 at cost as against the same being included in the return at Rs. 26,563 under Third proviso to Rule 3 of Schedule Ill to the Act. 5. The learned CWT(A) erred in confirming the action of the Assessing Officer in holding that the Awas property was not exclusively used for residential purposes throughout the period of 12 months and thereby adopting the cost of the said property as value for the purpose of computing the net wealth." 3. The assessee has challenged the valuation of the property in question as well as the validity of the reassessment u/s 16(3) r.w.s 17 of the W T Act. 4. First we take up the ground nos 4 & 5 pertaining to the valuation of the property in question as per Rule 3 of Schedule III of Wealth Tax Rules. 4.1 The assessee owned a property at Awas, Alibag, Dist Raigadh. In the return of wealth tax filed in response to notice u/s 17 of the W T Act, the assessee has valued the same at Rs. 26,563/- on the basis of capitalisation of the net maintainable rent as per the third proviso to Rule 3 of Schedule III of the Wealth Tax Rules. The Assessing Officer noticed that the assessee h....
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....ut the house to any other person and exclusively used by the assessee for his residential purposes. The ld AR has further submitted that when an assessee has more than one residential house and the same are not let out, each of the house is in exclusive possession of the assessee and the same is also used for his residential purposes though may not be on each and every day. The authorities below have denied the claim of the assessee on the ground that the assessee has resided at his Mumbai house and therefore, has not used the property in question for his residence. 4a.1 The ld AR has pointed out that if that is the requirement, then any individual, who for his business purpose or for vacation goes out of place of his usual residence and therefore would not be treated as exclusive user of the residential house. The ld AR has submitted that the condition of exclusive user for the residential purpose is satisfied when the assessee has used it for his own residence by keeping the house with himself and not letting it out. In support of his contention, he has relied upon the decision of the Full Bench of the Hon'ble Madras High Court in the case of CWT v. Smt. Muthu Zulaikha [2000] ....
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.... be taken to be the value of the property under this rule : Provided also that the provisions of the second proviso shall not apply for determining the value of one house belonging to the assessee, where such house is acquired or the construction whereof is completed after the 31st day of March, 1974, and the house is exclusively used by the assessee for his own residential purposes throughout the period of twelve months immediately preceding the valuation date and the cost of acquisition or, as the case may be, the cost of construction, as increased, in either case, by the cost of any improvement to the house, does not exceed,- (a) if the house is situate at Bombay, Calcutta, Delhi or Madras, fifty lakh rupees; (b) if the house is situate at any other place, twenty-five lakh rupees : Provided also that where more than one house belonging to the assessee is exclusively used by him for residential purposes, the provisions of the third proviso shall apply only in respect of one of such houses which the assessee may, at his option, specify in this behalf." 5.1 The assessee has valued the property by applying third proviso. Rule 3 enumerates the basis and met....
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....residential, and it should be used exclusively for residential purposes. So, the argument of learned senior standing counsel for the Revenue that it should be read as "solely for residential purposes by the assessee" is not acceptable. What is required is that the house should have been exclusively used by him for residential purposes throughout the period of 12 months immediately preceding the valuation date meaning thereby it should not have been let out for rent or for the use of commercial purposes. In the instant case, the assessee is the co- owner and the right of the property was not at all disputed. The finding of the Tribunal that mere right to use will not satisfy the condition. As stated, the interpretation given by the Revenue that the words "exclusive use" should be read as "solely for residential purposes by the assessee" is not acceptable. In our view, the right of the property alone will play a prominent role and not the exclusive use. What is to be seen is whether the intention of the assessee is to live in the house. We are of the view that the expression "exclusive use" should be read to mean that the house should be used for residential purposes meaning thereby ....