Commissioner of Wealth-tax Vs. Tulsi Dass - Court Judgment

Excerpt:
- section 2(k), 2(1), 7 & 40 & juvenile justice (care and protection of children) rules, 2007, rule 12 & 98 & juvenile justice act, 1986, section 2(h): [altamas kabir & cyriac joseph, jj] determination as to juvenile - appellant was found to have completed the age of 16 years and 13 days on the date of alleged occurrence - appellant was arrested on 30.11.1998 when the 1986 act was in force and under clause (h) of section 2 a juvenile was described to mean a child who had not attained the age of sixteen years or a girl who had not attained the age of eighteen years - it is with the enactment of the juvenile justice act, 2000, that in section 2(k) a juvenile or child was defined to mean a child who had not completed eighteen years of a ge which was given prospective prospect - appellant was about sixteen years of age on the date of commission of the alleged offence and had not completed eighteen years of age when the juvenile justice act, 2000, came into force - juvenile act, of 2000 has been given retrospective effect by rule 12 of juvenile justice rule, 2007 - as such, accused has to be treated as juvenile under the said act. - the use of the word 'and' between the words 'one house or part of a house belonging to the assessee' and 'exclusively used by him for residential purposes' would clearly establish that only a cumulative fulfilment of ownership by the assessee of a house or a part of it and exclusively owned by the assessee would enable the assessee to claim the benefit of the exemption. 14. 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. 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.p.p. naolekar, j. 1. the following questions of law have been referred to the high court under section 27(1) of the wealth-tax act, 1957 (for short, 'the act of 1957') : '1. whether, on the facts and in the circumstances of the case, the tribunal was justified in law in holding that the valuation report was non est and should not have been taken note of in the present assessment 2. whether, on the facts and in the circumstances of the case, the tribunal was justified in law in holding that a partner was entitled to claim deduction under section 5(1)(iv) of the wealth-tax act in respect of his interest in a firm which owned immovable properties ?' 2. the facts, in brief, relevant for the purpose of answering the questions are that shri tulsi dass (hereinafter shall be referred to as 'the assessee') is a partner in gopal talkies, alwar, a partnership firm. the assessee submitted a return of his properties before the wealth-tax officer and had shown the credit balance in gopal talkies, alwar, amounting to rs. 1,03,210 (rupees one lakh three thousand two hundred and ten only). the partnership firm, gopal talkies, in its books of account had shown the value of gopal talkies at rs. 7,25,000 (rupees seven lakhs twenty-five thousand) inclusive of the cost of the building. during the assessment proceedings of the assessee-tulsi dass, the wealth-tax officer came to the prima facie conclusion that the valuation of gopal talkies at rs. 7,25,000 reflects undervaluation of the property. the assessing officer made a reference to the valuation officer by letter dated january 6, 1978, to make fresh valuation of gopal talkies. after revaluation, the valuation officer has assessed the value of gopal talkies at rs. 14,73,000 and accordingly the assessee-tulsi dass was assessed for wealth-tax taking the valuation given by the valuation officer of gopal talkies. aggrieved bythe said order, the assessee preferred an appeal before the appellate assistant commissioner of income-tax. the submission made by the assessee that the valuation report was made by the valuation officer without giving notice to him, has found favour with the appellate authority and accordingly the valuation report was struck down. the appellate authority has also given to the assessee the benefit of section 5(1)(iv) of the act of 1957 to the extent of rs. 1,00,000 and accordingly assessed the assessee for wealth-tax purposes. 3. aggrieved by the said order, the revenue preferred an appeal before the income-tax appellate tribunal. the tribunal has rejected the appeal filed by the revenue. thereafter on an application moved by the revenue, the aforementioned questions have been referred to the high court. 4. the submission of learned counsel for the revenue, shri r. b. mathur, is that before the valuation was made by the valuation officer of gopal talkies, the notice was given to gopal talkies, the firm, and, therefore, the valuation could not have been struck down on the basis that the assessee was not given notice. it is an admitted fact that no notice whatsoever was ever issued by the valuation officer to the assessee as required by the provisions contained in section 16a(2) of the act of 1957. section 16a(2) of the act of 1957 requires that the valuation officer before estimating the value of any asset in pursuance of the reference made under sub-section (1) of section 16a, may serve a notice on the assessee requiring him to produce or cause to be produced on a date specified in the notice, such accounts, records or other documents as the valuation officer may require. 5. prima facie the purpose of service of notice on the assessee is for production of the documents as mentioned in the notice to help the valuation officer to value the property but at the same time the purpose of service of notice on the assessee would be giving him an opportunity to put forth material before the valuation officer which would support the valuation put by him on the property. this is clear from sub-section (3) of section 16(a) of the act of 1957 under which the valuation officer can give his opinion in writing that the value of the asset has been correctly declared in the return made by the assessee under section 14 or section 395 and 39715 of the act of 1957. if the assessee is not given a notice, he would not be in a position to satisfy the valuation officer that the valuation put forth by him in the return is the correct valuation of the property. giving notice to the person who would be affected by the revaluation of his property appears to us in consonance with the principles of natural justice. 6. it is not a case where the assessee is a firm and notice has been served on the managing partner of the firm which could be held to be a notice to all the partners of the firm or the firm itself. the present case is against the assessee as an individual who happened to be the partner of the firm which owns the gopal talkies and thus would be entitled to notice under section 16a(2) of theact of 1957. the order of the tribunal striking out the valuation put forth by the valuation officer on the ground of non-service of notice on the assessee does not require any interference and the question is answered accordingly. 7. as regards another question which has been referred to us whether the assessee is entitled for exemption under section 5(1)(iv) of the act of 1957. the relevant provision reads as under : 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 : provided that, where the value of such house or part exceeds one hundred thousand rupees, the amount that shall not be included in the net wealth of the assessee under this clause shall be one hundred thousand rupees ;' 8. prior to the amendment, clause (iv) read--one house or part of a house belonging to the assessee and exclusively used by him for residential purposes.9. by the amendment dated april 1, 1972, the legislature has deleted the words 'exclusively used for residential purposes'. 10. it is submitted by learned counsel for the revenue that the assessee is not entitled for exemption under section 5(1)(iv) of the act of 1957 in respect of the property belonging to the firm as its partner and has placed reliance on the judgment of the rajasthan high court in prakash chand modi v. cwt , wherein the division bench while construing section 5(1)(iv) of the act of 1957 has held that the assessee, a partner of a firm, is not entitled to exemption under section 5(1)(iv) of the wealth-tax act, 1957, in respect of factory land and building owned by the partnership-firm. 11. the assessee has referred to the judgment of the apex court in cwt v. t. s. sundaram : [1999]237itr61(sc) , wherein it has been held that in computing the net wealth of a firm under rule 2 of the wealth-tax rules, 1957, the assets exempt under section 5 of the wealth-tax act, 1957, should be included and then apportioned among the partners for granting exemption in their individual assessments after computing their own individual net wealth. thus, the apex court has held that the partner is entitled under section 5 of the act of 1957 to exemption on his apportioned share of the property belonging to the partnership firm of which he is a partner. the decision rendered by the apex court is binding and thus the submission made by learned counsel for the revenue is not accepted. 12. it is then submitted by learned counsel for the revenue that the assessee would be entitled to exemption only if the house or part of the house, belongs to the assessee, is a residential accommodation and not a business or commercial accommodation. for this submission, he has placed reliance on the decision rendered in cwt v. v. t. ramalingam : [1993]201itr839(mad) in which, while construing unamended section 5(1)(iv) of the act of 1957, the madras high court has held that the availability of the exemption thereunder is inextricably linked to and bound up with the ownership by the assessee of a house or part thereof and the user of what is owned by him for residential purposes only. the use of the word 'and' between the words 'one house or part of a house belonging to the assessee' and 'exclusively used by him for residential purposes' would clearly establish that only a cumulative fulfilment of ownership by the assessee of a house or a part of it and exclusively owned by the assessee would enable the assessee to claim the benefit of the exemption. the judgment turns on the words of section 5(1)(iv) of the act of 1957, as they stood, wherein the assessee is entitled to exemption for a house or part of house belonging to the assessee and exclusively used for residential purposes. the section makes it abundantly clear that exemption can only be given if the house belongs to the assessee and it is being used for residential purposes, which necessarily means that entitlement of the assessee to exemption is only for use of a house which is a residential house and not a business or commercial accommodation. 13. another decision on which reliance is placed is a full bench judgment of the madras high court in the matter of cwt v. smt. muthu zulaikha : [2000]245itr800(mad) , wherein, while construing section 7(4) and unamended section 5(1)(iv) of the act of 1957 which read 'one house or part of a house belonging to the assessee and exclusively used by him for residential purposes', the full bench has held that for claiming exemption what is required is that the house should have been exclusively used by the assessee for residential purposes and that means that it should not have been let out for rent or for use of commercial purposes. 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. 14. 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 the house should belong to the assessee. 15. the letter/circular f. no. 317/23/73-wt, dated july 24, 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 to 27 of the income-tax 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.' 16. the letter/circular issued by the department in the absence of the statutory provisions or the rules repugnant to that, is binding on the department. 17. for this also we are of the view that the assessee is entitled to claim exemption under section 5(1)(iv) of the act of 1957 to the extent of his proportionate share in the partnership property, i.e., house which has been used as non-residential or commercial property. the questions referred to above are answered accordingly.