1. These six appeals filed by the revenue are against the common order of Commissioner Wealth Tax (Appeals)-VH, Mumbai, dated 30-6-2004 relating to assessment years 1996-97 to 2001-02. All the appeals related to the same assessee were heard together and are being disposed off by this consolidated order for the sake of convenience.
2. Despite service of notice none appeared for the assessee. We decided to dispose off this matter after hearing Shri Sandeep Kumar, departmental Representative and on merits of the case.
3. In all the six appeals, the revenue has raised the under-mentioned common grounds of appeal: On the facts and circumstances of the case, the learned Commissioner (Appeals) erred in law: (i) In treating two separate independent residential flats having separate kitchen, bathroom, bedroom as a single House and granting exemption under Section 5(1)(vi) of Wealth Tax Act, 1957.
(ii) In treating that the assessee's flat at Jaipur exempt under Wealth Tax Act despite the fact that the assessee had failed to prove that the flat was occupied for purposes of business carried on by him.
(iii) In treating that the assessee's flat and shop at Pearl Heights, Khar (W), Mumbai as exempt under Wealth Tax Act despite the fact that the assessee had failed to prove that the flats and shops were occupied for business carried on by him.
4. Although same grounds of appeal have been raised in all the six years, i.e., assessment years 1996-97 to 2001-02 by the revenue, the Ground No. 1 arises in all the years, but the issue in Ground No. 2 arises in assessment years 1998-99 to 2001-02 and issue in Ground No. 3 arises in 2000-01 and 2001-02 only. Accordingly the Ground No. 2 raised by the revenue in assessment years 1996-97 and 1997-98 is dismissed as not arising from the appeal. Similarly the issue in Ground No. 3 raised by the revenue in assessment years 1996-97 to 1999-2000 is dismissed as it does not arise from the appeal.
5. In the first ground, the issue is regarding the exemption of two separate flats occupied by the assessee. The assessing officer observed that as per provisions of Section 5(1)(vi) of Wealth Tax Act, since the assessee is an individual, exemption of only one flat on occupation by the assessee for residential purpose is to be allowed and the value of other flat being Rs. 27,50,250 was brought to tax.
6. During the course of appellate proceedings, the learned Authorized Representative for the assessee pointed out that both the flats at Minal Tower, Jogeshwari (W),Mumbai were allotted to M/s. Master Constructions and were being occupied by the assessee and his family as one unit for residential purposes. Reliance was placed by the learned Authorized Representative for the assessee on Shiv Narain Chaudhari v.CWT . The Commissioner of Wealth Tax (Appeal) basing his reliance on the decision of Allahabad High Court in the case of Shiv Narain Chaudhari (supra) observed that in the circumstances of the case the entire unit consisting of the two flats should be considered as one house eligible for exemption under Section 5(1)(vi) of the Wealth Tax Act. Accordingly the value of the second flat was deleted from the assessed wealth of the assessee. The revenue is aggrieved and hence this appeal.
7. The learned Departmental Representative for the revenue vehemently placed reliance on the order of the assessing officer claiming that the two flats owned by the assessee were separate and independent residential flats having separate kitchen, bathroom, bedroom and there is no merit in treating the said two flats as a single house and granting exemption under Section 5(1)(vi) of the Wealth Tax Act.
8. We have heard the Departmental Representative and perused the records. Under the provisions of Section 5 of the Wealth Tax Act, wealth-tax is chargeable on assets included under Sub-section (ea) to Section 2 of the Wealth Tax Act, which define the term 'assets'. Assets to be charged to wealth-tax under the provisions of Wealth Tax Act, as per Clause (i) to Section 2(ea) of Wealth Tax Act are any building or land appurtenant thereto, which are to be included as an asset chargeable to wealth-tax but along with certain exemptions provided under Section 2(ea)(i) of the Act, which are as under: (1) A house meant exclusively for residential purposes and which isallotted by a company to an employee or an officer or a director whois in whole-time employment, having a gross annual salary of lessthan five lakh rupees.
(2) Any house for residential or commercial purposes which forms part of stock-in-trade.
(3) Any house which the assessee may occupy for the purpose of any business or profession carried on by him.
(4) Any residential property that has been let-out for a minimum period of three hundred days in the previous year.
(5) Any property in the nature of commercial establishments or complexes.
The above-said assets are outside the purview of Wealth Tax Act, though being a building of land appurtenant thereto. The Section was substituted by Finance (No. 2) Act, 1998 with effect from 1-4-1999 and prior to its substitution under Sub-clause (1) only three exemptions being Item Nos. (1), (2) and (3) were provided under Section 2(ea)(i) of the Wealth Tax Act.
9. Section 5 of the Wealth Tax Act provides exemptions in respect of certain assets wherein it has been provided that wealth-tax shall not be payable by an assessee in respect of the assets enumerated in Section 5. Such assets as referred to in Section 5 are not to be included in the net wealth of the assessee while computing his wealth under the provisions of Wealth Tax Act. The said provisions of Section 5 are in addition to Section2(ea) which is the definition clause under the Act. The Wealth Tax Act has undergone amendment by the Finance Act, 1992 with effect from 1-4-1993 and various provisions of the Act have been omitted and various other provisions have been inserted with effect from 1-4-1993. Initially Section 5(1)(iv) provided that value of one house or part of house belonging to the assessee was not to be included in the net wealth of the assessee on which no wealth-tax was payable under the provisions of the Act. But, after the amendment by the Finance Act, 1992, clauses under Section 5 have been renumbered and as per the renumbered Clause (vi) to Section 5 of the Act, it has been provided that 'one house or part of house belonging to an individual or a Hindu Undivided Family' is exempt from the provisions of the Wealth Tax Act. The aforesaid provision has been substituted by Finance (No.2) Act, 1998 with effect from 1-4-1999 and it has been provided that a plot of land comprising of an area of 500 sq. meters or less or one house or part of the house is exempted from the provisions of wealth-tax and no wealth-tax is payable on the value of one house or part of house or a plot of land belonging to an individual or Hindu Undivided Family 10. Under the provisions of Section 5(1)(vi), what is exempt from wealth-tax is a House or Part of House. The word 'house' is not defined under the Wealth Tax Act. Oxford Concise Dictionary defines the word 'house' as 'a building for human habitation' or 'a dwelling i.e., one of several in a building'. The New International Webster's Comprehensive Dictionary of the English Language defines 'House' as 'A building intended for human habitation, especially one used as a residence of a family or single tenant'.
11. The word 'house' is defined in Mitra's Legal and Commercial Dictionaryas 'The term 'house' embraces not only structure or building, but includes also adjacent buildings, cartilages, garden, courtyard, orchard and all that is necessary for the convenient occupation of the house, but not that which is only for the personal use and convenience of the occupier'. Kalipada Ghosh v. Tubidas Dutt . The word "house" extends to a building which is used for business and should not be restricted to a mere dwelling house. Tata Engg. & Locomotive Ltd. v. Gram Panchayat, Pimpri Waghere 12. Under Section 5(vi) of the Wealth Tax Act, exemption is provided in respect of one house or part of house. The question for determination is whether a house can be said to include only a single dwelling unit.
Per Halsbury, C. Grant v. Langston (1900) AC 390, it was held "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. To ascertain its meaning one must understand the subject-matter with respect to which it is used in order to arrive at the sense in which it is employed in a statute". In Lewin v. End (1906) App. Cas 299, it has been held that "House imputes a place of residence, but is a wider term than dwelling house".
13. Their Lordships of Allahabad High Court in Shiv Narain Chaudhari's case (supra) considered the case of a Hindu Undivided Family consisting of 4 adult members, each occupying one residential unit in the building bearing door Nos. 92-92A. The residential units were connected by common passages and had unity of structure. After the considering the facts of that case, their Lordships have held as under: Several self-contained dwelling units which are contiguous and situate in the same compound and within common boundaries and having unity of structure could be regarded as one house." Reliance was placed by their Lordships of Allahabad High Court on the decision of Okereke v. Borough of Brent (1966) 1 All ER 150; wherein it was observed at page 15 8 that "Indeed, in my view it is wrong to hold, if words have any meaning, that each tenement in a tenement block is a house. It may be, as counsel for the respondent suggests, that the occupier of a tenement sometimes refers to it loosely as his house, just as it is said figuratively that an Englishman's home is his castle. This, however is beside the pint, for it seems to me as impossible to hold that a single tenement is a house, as it would be to hold that a suburban villa is a castle.
14. Their Lordships of Allahabad High Court after considering the aforesaid decision is held as under: The aforesaid decisions also support the view we have taken, namely,that a house may consist of more than one self-contained dwelling unitand that if there is unit of structure, the mere fact that such self-contained dwelling units are occupied by different persons, will not makethat house into several houses.
15. In the facts of the present case, the assessee is owning two flats being Flat Nos. 101 and 102, Jogeshwari (W), Mumbai and had claimed exemption under Section 5(vi) of the Wealth Tax Act. It is an admitted fact before the Commissioner (Appeals) that the two flats occupied by the assessee are being used by the joint family of the assessee and the Commissioner (Appeals) has observed "it is not under dispute that the assessee is staying with the joint family in the two adjacent flats which as per the assessee are connected". During the course of appellate proceedings, the Commissioner (Appeals) was also considered the stand of assessing officer that the two independent flats which are adjacent and connected and occupied by the joint family as two independent houses. But, the Commissioner (Appeals) based on the reliance of the assessee on the decision of Shiv Narain Chaudhari 's case (supra) it was held that the one house may consist of multiple dwelling units would be considered as one unit for the purpose of Wealth Tax Act as a House provided there is a unity of structure.
16. In the facts and circumstances of the case wherein the flats being adjacent to each other are being used by the assessee as a common residence for himself and his joint family members, there is no merit in considering each flat as a separate unit and denying exemption under Section 5(vi) of the Wealth Tax Act. The exemption under- Section 5(vi) of the Act is allowable to a house, which is a unity of structure and may consist of more than one dwelling units. We find support from CWT v. S.D. Jadeja , wherein their Lordships of Gujarat High Court have held as under: Held, that once the Tribunal had found on the facts, and there was no challenge to the finding, that the two buildings were contiguous, existed in one compound and within common boundaries, in the absence of any finding that either of the buildings was used for non-residential purposes, i.e., commercial purposes, no infirmity could be found in the order of the Tribunal, when it held that both the buildings constituted a house belonging to the assessee exclusively used by him for residential purposes within the meaning of Section 7(4). The assessee was entitled to exemp- tion in respect of both the buildings.
17. In our considered view, both the flats being adjacent to each other and being used as a common unit of residence by the assessee and his family members is to be considered as a house within the meaning of Section 5(vi) of the Act and is eligible for the aforesaid exemption provided under the Act. The value of the both the flats are not to he included as part of the assessed wealth of the assessee; for the purpose of levy of wealth-tax. This ground of appeal raised by the revenue is dismissed.
18. In ground No. 2, the issue is regarding the exemption from wealth-tax, as the property in question is used for business purpose.
19. The brief facts relating to this issue are that the assessee owns a Flat bearing No. B-5, Hanuman Nagar, Shirshi Road, Khatopur, Jaipur valued at Rs. 19,81,000. During the assessment years 1998-99 to 2001-02, the assessee had claimed depreciation under Section 32 of the Income Tax Act in the return of income and income-tax authorities had allowed the depreciation. It was conclusively affirmed by the Income-tax department as immovable property and is the 'business asset'. From the facts, it is apparent that the flat is used by the assessee for carrying on his business activities. The assessee relied upon the decision of Floatglass India Ltd. v. Asstt. CWT (2004) 89 ITD 542 (Mum-Trib) to support his claim before the CWT(A).
20. On perusal of records, it is observed that during the course of appellate proceedings, the Commissioner of Wealth Tax (Appeals) observed that the assessing officer had simply disallowed the claim of exemption of the assessee without specifying any reason. From the facts of the present case, it is palpable that the assesseeis using the above-mentioned flats only for the purpose of its business. Theasset being a business asset was exempt under Section 2(ea)(1)(3) of Wealth Tax Act. Therefore, we confirm the findings of Commissioner of Wealth Tax (Appeals) in this regard, and dismiss the Ground No. 2 of the appeal raised by the revenue.
21. In Ground No. 3 the issue is regarding the exemption from wealth-tax, as the property in question is used for business purpose.
22. The facts related to this issue are that the assessee owns a Flat bearing No. 102, Shop No. 2, Pearl Height, 6th Road, Khar (West), Mumbai - 400 052 valued at Rs. 69,50,000. During the assessment years 2000-01 and 2001 -02, the assessee had claimed depreciation under Section 32 of the Income Tax Act in the return of income and income-tax authorities had allowed the depreciation. It was conclusively affirmed by the income-tax department as immovable property and is the 'business asset'.
23. In view of our decision in para No. 20 hereinabove, we confirm that the flat at Khar being a business asset, was not includible in the net wealth of the assessee being exempt under Section 2(ea)(1)(3) of the Wealth Tax Act.
24. In the result, all the six appeals being in WTA Nos. 268 to 273/Mum./2004 filed by the revenue are dismissed.