1. These references have been made at the instance of the Revenue in six assessment cases for the years ranging from 1973-74 to 1978-79. The factual and legal issues involved are identical, the same are being decided by this common order.
2. The assessee-respondent filed WT returns. A notice under Section 17 of the WT Act was issued and served upon the assessee for the valuation of the Hotel Nagpal in question, against book value. The property known as Nagpal Hotel was referred to the Valuation Cell of the Department and the Valuation Officer, vide his order dt. 20th Sept., 1977, valued the interest of the assessee in the property. The WTO issued demand under Section 16(3)/17 of the WT Act vide his order dt. 26th March, 1980. The order of the WTO was challenged by way of appeal before the AAC of wealth-tax who upheld the order of the WTO. Against the appellate order, further appeal was preferred before the Tribunal. The Tribunal granted the benefit of exemption under Section 5(1)(iv) of the WT Act. Under such circumstances, following reference has been made seeking opinion of this Court:
Whether on the facts and in the circumstances of the case the Tribunal was justified in directing the WTO to grant exemption under Section 5(1)(iv) of the WT Act, 1957 to the assessee?
3. Heard learned Counsel for the parties and perused the record.
4. It has been brought to our notice that the relevant Section 5(1)(iv), as it existed originally, was amended on 1st April, 1972 taking away the words 'exclusively used for dwelling purposes' and the relevant position of the law after the amendment for our purpose reads as under:
Section 5. Exemption in respect of certain assets.--(1) Subject to the provisions of Sub-section (1A), wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee....
(iv) one house or part of a house belonging to the assessee.
5. The house has neither been defined in the WT Act nor in the General Clauses Act. However, the word 'building' has been used in Section 5(1)(iii) and word 'property' has been used in Section 5(1)(i) of the WT Act. In a common parlance, the 'house' means a dwelling place where the people live. However, a residential building or house can also be used for commercial purposes. The dictionary meaning of 'house' reads as under:
In New Shorter Oxford English Dictionary, the word 'house' is defined as follows : 'a building for human habitation, a dwelling, a home'. In Legal Thesaurus by William C. Burton a house is defined as 'abode, dwelling place, home, habitation, living place, living quarters, residence, etc.'
In Chapman v. Royal Bank of Scotland (1881) 7 AB 136, 140, it was held that a house means a permanent building in which the tenant, or the owner and his family, dwells or lives.
6. Learned Counsel for the respondent-assessee has submitted that the order of the Tribunal is just and proper and in support of his plea, he has relied upon the judgment delivered in case title CWT v. Smt. Shushila Devi Tamakuwala (1996) 130 CTR 229 (Pat) : (1995) 212 ITR 203 (Pat). The reasoning given by the learned Division Bench is in favour of the assessee and is extracted below:
In determining the assets of the assessee under the WT Act, one house belonging to the assessee shall not be included in the net wealth of the assessee. The question which arises for consideration is whether the residential house will take within its fold the factory building belonging to the assessee? The CBDT in Circular letter F. No. 317/23/73 WT, dt. 24th July, 1973, referring to the exemption under Section 5(1)(iv) of the Act states thus:
After the amendment of the above section from 1st April, 1972, it reads as under:
One house or part of a house belonging to the assessee.
The point for consideration is whether exemption is available for residential house only or to business premises also (of course within the limit laid down in the section).
In this connection, attention is invited to Sections 22 - 27 of the IT Act, 1961, which refer to income from house property. These sections are applicable to income from house property whether the house property is residential or it is used for business. In the circumstances, it is presumed that the exemption to house property under Section 5(1)(iv) is available both to residential as well as business premises whether used by the association or let out.
7. Responding the similar reference, the Court relied upon the judgment delivered in case title CWT v. Tulsi Dass of the Patna High Court and case title CWT v. Smt Shushila Devi Tamakuwola (supra) and decided in favour of the assessee observing as under:
Thus, while construing that section, it has been held that the house should be used for residential purposes which would necessarily mean-the house is a residential house for claiming exemption. The decision of the Full Bench has also no application to the present section wherein the assessee is entitled to exemption under Clause (iv) of Section 5(1) in regard to one house or part of a house belonging to the assessee. It is not required that the house should be exclusively used by the assessee for residential purposes and as a necessary corollary-it should be a residential house.
It is a well established rule of interpretation that when the taxing statute is interpreted, the words used in the section have to be given strict meaning. The section does not require that for claiming exemption the house should be a residential house; the exemption can certainly be claimed for non-residential as well as residential accommodation. The only requirement is that the house or part of house should belong to the assessee.
The letter/Circular F. No. 317/23/73 WT, dt. 24th July, 1973, issued by the Department reads:
After the amendment of the above section from 1st April, 1972, It reads as under:
One house or part of a house belonging to the assessee.
The point for consideration is whether exemption is available for a residential house only or to business premises also (of course within the limit laid down in the section).
In this connection, attention is invited to Sections 22 - 27 of the IT Act, 1961, which refer to income from house property. These sections are applicable to income from house property whether the house property is residential or it is used for business. In the circumstances, it is presumed that the exemption to house property under Section 5(1)(iv) is available both to residential as well as business premises whether used by the association or let out. Please confirm.
8. In rebuttal, the learned Counsel for the Revenue has relied upon the judgment of this Court where a different view has been taken to that what has been taken by the earlier Division Bench in case title Prakash Chand Modi v. CWT . This judgment has been referred in the judgment delivered in Tulsi Dass case (supra). We find from the perusal of both the judgments that the judgment delivered in Tulsi Dass case (supra) is mainly based on the circular letter of the Department. The circular letter has been issued to seek confirmation as to whether the word 'house' or 'part of the house', which is referred in Section 5(1)(iv) of the WT Act mean the house used for commercial purposes and would the assessee be entitled to get the benefit of exemption. On perusal of the circular letter, we find that a doubt was raised where some observation was recorded by the concerned officer of theDepartment and he sought confirmation with regard to his observation as to whether the benefit of exemption can be extended to the assessees. It has not been shown that the issue raised in the circular was clarified and confirmed. Thus, such observation seeking clarification has no statutory force and cannot be applied for determining exemption and otherwise it was only a circular letter.
9. Similar reference was before the Allahabad High Court in case title CWT v. Smt. Angoori Devi and Ors. : [2005]273ITR500(All) where the Division Bench has answered the reference in favour of the Revenue observing as under:
So far as the first question is concerned, we are of the opinion that under Section 5(1)(iv) of the Act exemption has been granted to one house or part of the house belonging to the assessee. House is a building where people live and reside. It is mainly for residential purposes. Cinema building cannot by any stretch of imagination be treated as a house. This Court in IT Ref. No. 238 of 1983, CIT v. Jai Kishan Gupta, decided on 23rd Sept., 2003 [reported at ] has held that cinema building is not a house and, therefore, the assessee is not entitled for exemption under Section 5(1)(iv) of the Act. This Court in the case of Vinod Kumar (1999) UPTC 606 has proceeded on the assumption that exemption under Section 5(1)(iv) of the Act is available to immovable property whereas under the aforementioned section exemption is available to a house and not immovable property. Thus the aforesaid decision is not applicable.
10. In view of the aforesaid position of law, we are of the considered view that the hotel cannot be said to be a house. A factory building, hotel or a cinema house are different and distinct things and cannot fall within the definition of house. House has been explained in the dictionary as noted above. Therefore, we have no hesitation in holding that the findings recorded by the learned Division Bench in Tulsi Dass case (supra) are not based on correct interpretation of statutes rather it is based on a circular letter which is not having a statutory force. Therefore, we hold that it is not a correct law. The correct law has been laid down in the case of Prakash Chand Modi (supra). Thus, we confirm the aforesaid judgment and hold that a hotel cannot be considered to be house so as to qualify for the exemption under Section 5(1)(iv) of the Act.
The references are accordingly answered in favour of Revenue.