FOURTH WEALTH-TAX OFFICER v. M.V. PATEL
[Citation -1987-LL-0128-9]

Citation 1987-LL-0128-9
Appellant Name FOURTH WEALTH-TAX OFFICER
Respondent Name M.V. PATEL
Court ITAT
Relevant Act Wealth-tax
Date of Order 28/01/1987
Assessment Year 1977-78, 1980-81
Judgment View Judgment
Keyword Tags single residential unit • internal arrangement • immovable property • debatable issue • audit objection • net wealth
Bot Summary: The WTO held that as per the above decision of the Supreme Court each residential unit is by itself a house and that having regard to the number of residential blocks in the building and the total property value, the value of each residential unit will not exceed Rs. 10,000. Arguing for the Revenue, Shri Thomas stated that the entire value of the property cannot be exempt under s. 5(1)(iv) since it is available only to a house or a part of a house and inasmuch as the building in question consists of several tenements each being a separate residential unit. Their Lordships of the Supreme Court were construing the meaning of the word house used in Bombay Village Panchayat Act and the question was whether 'house' included a factory building also. In Grant vs. Langston AC 390, Halsbury C. States: A hundred years ago there was not much difficulty in saying what was a 'house', but builders and architects have so altered the construction of houses, and the habits of people have so altered in relation to them, that 'house' has acquired an artificial meaning and the word is no longer the expression of a simple idea. Their Lordships concluded that if the building should otherwise come within the meaning of the word 'house', fact that the four male members were living separately in different self contained portion did not make the four different portions of the building into many houses. In Benabo vs. Wood Green Corporation KB 38, it was held that a house let separately to two or more tenants was not by reason of that letting, more than one house. Considering all these English authorities, their Lordships of the Allahabad High Couurt summed up in Shivnarain Chaudhari vs. CWT 1977 CTR 149: 108 ITR 104 at 110: The aforesaid decisions also support the view we have taken, namely, that a house may consist of more than one self contained dwelling unit and that if their is unity of structure, the mere fact that such self contained dwelling units are occupied by different persons, will not make that house into several houses.


BALASUBRAMANYAM, J.M. point in appeals is short one. It is concerned with meaning of word "house" in s. 5 (1) (iv), WT Act in relation to these cases, it is whether building having several residential units is one house for purpose of s. 5(1)(iv) to get maximum relief. Among assets included in net wealth, is share in immovable property called "Bhaveshnagar property". assessee is co-owner alongwith two others, each having one-third share. WTO fixed value of assessee's one-third share at Rs. 95,000 as against Rs. 84,677 returned by him, and allowed exemption on full value under s. 5(1)(iv ) in original assessments. On account of audi objection, WTO started proceedings under s. 35 meaning to set right few mistakes one of them being about exemption allowed in respect of Bhaveshnagar property. WTO heard party and passed orders which had effect of reducing extent of exemption. In these appeals point is restricted to extent of exemption allowable under s. 5(1)(iv) as that was only question carried by assessee in appeal. Bhaveshnagar property consists of several independent residential flats. It had been suggested in audit objection that in view of decision of Supreme Court in case of TELCO (AIR 1976 SC 2463), each residential block is by itself 'house' and that original assessments granting exemption for full value of building was mistake. To notice issued assessee objected and contentions were two-fold. One was that whether exemption is allowable only in respect of one tenement regarding that as house or whether whole of building is to be taken as house is debatable issue and that WTO did not have jurisdiction to decide over such extremely doubtful proposition in rectification proceedings under s. 35. other was on merits. WTO held that as per above decision of Supreme Court each residential unit is by itself house and that having regard to number of residential blocks in building and total property value, value of each residential unit will not exceed Rs. 10,000. He, therefore, ruled that exemption is allowable only to extent of Rs. 10,000 and that resulted in increasing value of net wealth by Rs. 85,000. assessee carried matter in appeals. Before AAC, same contentions had been urged. In regard to merits, reliance had been placed upon decision of Allahabad High Court in case of Shivnarain Chowdhari vs. CWT (All) (1977) 108 ITR 104 (All). AAC passed consolidated order accepting claim of assessee. revenue is in appeal. Arguing for Revenue, Shri Thomas stated that entire value of property cannot be exempt under s. 5(1)(iv) since it is available only to house or part of house and inasmuch as building in question consists of several tenements each being separate residential unit. argument proceeded on premise that each residential promises are house and that exemption is not allowable for entire block comprising of several dwellings. Sri Warde replied that, in first place, question raised by Revenue regarding exemption is on face of it ticklish point of law and WTO did not have jurisdiction to decide such issue while exercising powers under s. 35. On merits, he not only distinguished AIR 1976 (SC) 2463 on facts, but placed k reliance upon Allahabad High Court's decision in case of Shivanrain Chaudhari (supra). Inasmuch as we are satisfied that on merits claim of assessee is substantial, we straightway decide that issue on assumption that proceedings under s. 35 were competent. To recapitulate facts which are not in region of controversy. Bhaveshnagar property has several independent residential units occupied by different tenants and all used for residential purposes. All these tenements are independent residential portions contained in one building borne on municipal record in one number. value of entire building stands settled at Rs. 2,85,000. assessee's share comes to Rs. 95,000. According to submission of learned counsel for assessee, number of residential units in building is about 60. WTO observes that value of any one of residential units will not exceed Rs. 10,000. It appears to us that building is something like 'Chawl' where different tenants occupy separate portions, but all tenement are housed in one structural block. WTO was influenced by statement of Jessel MR in Morkshire Insurance vs. Klayton 8 QHD 424 found in TELCO's case AIR 1976 SC 2463, para 15: "Formerly, houses were built so that each house occupied separate site. In modern time practice has grown up of putting separate houses one above t h e other. They are built in separate flats or storeys. For legal and ordinary purposes they are separate houses. Each is separately let and separately occupied. One has no connection with those above or below, except in so far as it may derive support from those below instead of from ground as in case of ordinary houses". Their Lordships of Supreme Court were construing meaning of word "house" used in Bombay Village Panchayat Act and question was whether 'house' included factory building also. In Grant vs. Langston (1990) AC 390, Halsbury C. States: "A hundred years ago there was not much difficulty in saying what was 'house', but builders and architects have so altered construction of houses, and habits of people have so altered in relation to them, that 'house' has acquired artificial meaning and word is no longer expression of simple idea. To ascertain its meaning one must understand subject matter with respect to which it is used in order to arrive at sense in which it is employed in statute". above has been stated with approval in case of Ramavatar vs. Asstt. STO, Akola (1962)1 SCR 279: AIR 1961 SC 1325, and again in TELCO's case (supra). word "house" is not defined in WT Act. To know construction of word 'house' in s. 5(1)(iv) of WT Act, one has to understand subject-matter in respect to which it is used in Act. facts in Shivnarain Chaudhari vs. CWT 1977 CTR (All) 149: (1977) 108 ITR 104 (All) may not be closely comparable to case of assessee. However, observations of their Lordships and few English decisions to which judgment makes reference do provide guide. In Shivnarain Chaudhari's case (supra), there was one building occupied by HUF consisting of four adult members, each one occupying separate residential unit. What is more, building was having two different municipal numbers. Their Lordships concluded that if building should otherwise come within meaning of word 'house', fact that four male members were living separately in different self contained portion did not make four different portions of building into many houses. building related to these appeals was assessed as one for purpose of municipal rate. statement of Lawrence, J. in Annicola Investments Ltd. (1965) 3 All ER 850, is pertinent in this connection. It reads: "...the same word occurring in different enactments has to be given meaning in relation to context, object and purpose of that enactment, w e shall advert to few decisions in which question whether building in which there are several dwelling units, can be regarded as one house, was considered". In Benabo vs. Wood Green Corporation (1946) KB 38, it was held that house let separately to two or more tenants was not by reason of that letting, more than one house. It was case where construction of word 'house' was being ascertained for purposes of rating under Housing Act, 1936. In Okereke vs. Borouugh of Brent (1966) 1 All ER 150, building consisted of three separate self: contained dwellings, each rated separately, and occupied b y different families. It was viewed that it would be wrong to hold that each tenant in tenement block is house. Considering all these English authorities, their Lordships of Allahabad High Couurt summed up in Shivnarain Chaudhari vs. CWT 1977 CTR 149 (All): (1977) 108 ITR 104 (All) at 110: "The aforesaid decisions also support view we have taken, namely, that house may consist of more than one self contained dwelling unit and that if their is unity of structure, mere fact that such self contained dwelling units are occupied by different persons, will not make that house into several houses". It appeals to our mind that meaning of word 'house' is not restricted or controlled to single residential unit and we see no controlling provisions in statute and word, it seems to us, takes into itself whole physical erection or amalgamated building without any reference to interior or internal arrangement created for occupation of several tenants. exemption allowed in original assessments was, therefore, proper. For these reasons, we sustain appellate order cancelling order passed under s. 35. appeals are dismissed. *** FOURTH WEALTH-TAX OFFICER v. M.V. PATEL
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